Commissioner Of Income-Tax, ... vs Riviera Apartments Private ...
1987 Latest Caselaw 11 Del

JUDGMENT

This petition on behalf on the Commissioner of Income-tax raises an interesting point but it appears to us that as pointed out by the Tribunal, the language of the section is quite clear and that a reference is not called for.

The assessment of the assessed was completed under section 144 of the Income-tax Act for two sets of defaults : (1) failure to file a return and comply with the notices under section 142(1); and (2) failure to comply with the directions under section 142(2A) of the Income-tax Act.

Subsequently, the assessed filed an application under section 146 of the Income-tax Act. In this application, it gave an explanation for not filing its return of income within time and for also not complying with notice under section 142(1). The Appellate Tribunal was satisfied with this explanation. The Appellate Tribunal, on this, held that the terms of section 146 were fulfillled and that the Income-tax Officer was bound to cancel the assessment under section 146. The Tribunal did not go into the question whether there was failure of the assessed to comply with the directions under section 142(2A), which is also a condition for the assessment made under section 144, and, if so, whether there was reasonable cause for not complying therewith.

On behalf of the petitioner it is submitted that an assessment under section 144 could be completed for non-compliance with the directions under section 142(2A) and that, when this is one of the reasons for the best judgment assessment, the provisions of section 146 did not apply. It is pointed out that before an application under section 146 is allowed, all the conditions referred to in section 146 should be cumulatively satisfied and that since this section does not refer to the default under section 142(2A), the assessed cannot take advantage of this section when the best judgment assessment has been competed, inter alia, for non-compliance with the direction under section 142(2A) of the Act. It is pointed out that though sections 142, 144 and 146 of the Act were amended simultaneously in 1975 with effect from April 1, 1976, the Legislature has refrained from making a reference to section 142(2A) in section 146. This, it is contended, shows that where a best judgment assessment is completed under section 144 for failure to comply with the direction under section 142(2A), the provision of section 146 cannot be invoked.

Though the argument is quite interesting, we are of opinion that it is plainly untenable on the language of section 146. Section 146 could be evoked in all cases where an assessment is completed under section 144. In order to have an assessment under section 144 cancelled, an assessed has to satisfy the Income-tax Officer that the three defaults mentioned in section 146 were due to reasonable cause. Once this satisfaction is arrived at, then there is no justification for refusing to reopen the assessment as the terms of section 146 stand completely fulfillled.

Learned counsel for the petitioner contended that this interpretation would render section 142(2A) and a default there under as a condition for a best judgment assessment totally nugatory. This contention is not correct. For instance, in a case where a best judgment assessment is completed only for the failure to comply with the direction under section 142(2A), there is no ground on which the assessed can invoke the provisions of section 146. In the present case and in other cases where in section 146, there is no reason why an assessed should not be permitted to resort to section 146 provided he is able to satisfy the Income-tax Officer that the defaults referred to under section 146 were due to reasonable cause.

We are of the opinion that the view taken by the Tribunal flows from the clear language of the section and that the failure to mention section 142(2A) in section 146 cannot redound to the advantage of the Revenue. We, therefore, dismiss this petition. No order as to costs.