1. The petitioner was assessed by the respondent, the Income-tax Officer, B-Ward, Ernakulam, for the year 1969-70, under Section 144 of the Income-tax Act, 1961, fixing his total income to the best of judgment at Rs. 40,000. Exhibit P-2 dated January 30, 1971, is a copy of the order of assessment. Section 144 was resorted to since the petitioner did not file a return of the total income ; and he did not also respond to the notices issued to him by the respondent. The order of assessment states, among other things, that during the relevant accounting year the petitioner had constructed a building whose estimated cost came to Rs. 40,000. The respondent estimated the petitioner's professional income for the year at Rs. 25,000; and he estimated the balance of Rs. 15,000 to be the income from other sources. That is how the assessment was made. This petition has been filed to quash the said order of assessment on the ground that the addition of Rs. 15,000 from other sources was made without giving the petitioner an opportunity for being heard.
2. It is necessary to notice some of the provisions of the Act in order to appreciate the rival contentions advanced by counsel of both parties. Section 142 of the Income-tax Act, 1961, deals with enquiry before assessment. Sub-section (3) of that section alone is relevant for the purpose of this case, which reads :
' The assessee shall, except where the assessment is made under Section 144, be given an opportunity of being heard in respect of any material gathered on the basis of any enquiry under Sub-section (2) and proposed to be utilised for the purpose of the assessment.'
3. Section 144 deals with best judgment assessment and it reads as follows:
' If any person-
(a) fails to make the return required by any notice given under Sub-section (2) of Section 139 and has not made a return or a revised return under Sub-section (4) or Sub-section (5) of that section, or
(b) fails to comply with all the terms of a notice issued under subsection (1) of Section 142, or
(c) having made a return, fails to comply with all the terms of a notice issued under Sub-section (2) of Section 143,
the Income-tax Officer, after taking into account all relevant material which the Income-tax Officer has gathered, shall make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment.
4. On the basis of Sub-section (3) of Section 142, counsel for the revenue contends that an assessee has no right for an opportunity of being heard in respect of any material gathered by the Income-tax Officer for the purpose of assessment, when it is made under Section 144, which is a case of default. Counsel submits that the principle of natural justice, which is embodied in Sub-section (3) of Section 142, is confined to a case when the assessee files a return and complies with the notices issued to him ; and it is denied by the statute to a defaulting assessee. It is also contended that there is no constitutional objection to such a provision. I decline to express any opinion on the latter submission. But, on a reading of Section 144, it appears to me that the contention cannot be accepted. What that section requires the Income-tax Officer to do in the case of a defaulting assessee is to make an assessment of his total income to the best of judgment, after taking into account all relevant materials which the Income-tax Officer has gathered. An assessment to the best of judgment is a quasi-judicial process, and it has to be based on the materials gathered. Any quasi-judicial process requires an opportunity for being heard before decision. The decision can be arrived at best, or as correctly as possible, only if the assessee is given an opportunity to say why on the materials gathered by the Income-tax Officer, the income should not be assessed in the manner proposed to be done by him. There is no express denial of this well-established common law right in Section 142(3) of the Act. All that is argued is that it is impliedly there. It appears to me that Sub-section (3) of Section 142 deals with a stage before the Income-tax Officer conies to a tentative decision or proposal to determine the total income at a certain amount on the basis of the materials gathered by the Income-tax Officer. Those materials can be used against an assessee only after giving him an opportunity of being heard. The assessee is entitled to have a second opportunity to show cause why the total income should not be determined in the manner proposed to be done by the Income-tax Officer. It is only the first opportunity that is denied by Sub-section (3) of Section 142 to a defaulting assessee. He is entitled to show cause why, on the materials gathered by the Income-tax Officer, his total income should not be assessed in the manner proposed by the Income-tax Officer. This view has got support in the decision of a learned single judge of this court in Koyammankutty v. Fourth Addl. Income-tax Officer,  58 I.T.R. 871 (Ker.).
5. Counsel for the petitioner in this case has also rightly sought support for his contention from Section 69 of the Act. It reads :
' Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. '
6. It is clear from the above provision that before the amount of the undisclosed investment is included in the total income of an assessee, he is entitled to an opportunity to explain it. The petitioner's case attracts the application of Section 69 of the Act. The Income-tax Officer was, therefore, bound to give an opportunity to the petitioner to explain about the nature and source of his investment before that was treated as his income.
7. For the reasons stated above, I quash the impugned order of assessment, and remit the case to the respondent for being disposed of according to law and in the light of the observations herein. No costs.