Best Judgement Assessment - A Thoughtful Analysis!

Best Judgment Assessment

Section 144 of the Income Tax Act outlines the procedure for making assessments when a taxpayer fails to fulfill certain obligations, such as submitting returns or complying with notices issued by the Assessing Officer. Here's a summary:

1. Assessment Procedure

If a person fails to submit a return as required under section 139(1) and hasn't submitted a return or a revised return as per section 139(4) or 139(5), or fails to comply with a notice issued under section 142(1) or a direction under section 142(2A), or fails to comply with the terms of a notice issued under section 143(2) after submitting a return, the Assessing Officer will make the assessment of the total income or loss based on the best of his judgment.

2. Assessment's Opportunity

The Assessing Officer must provide the assessment with an opportunity to be heard before making the assessment. This opportunity is given by serving a notice specifying the date and time for the assessment to show cause why the assessment should not be completed to the best of the Assessing Officer's judgment.

3. Exception

However, there's an exception to providing this opportunity if a notice under section 142(1) has been issued before the assessment under this section.

Few case laws validating the fact that the Assessment must be provided sufficient opportunity to be heard for this section to be triggered

HIGH COURT OF CALCUTTA Triyogi Narayan Singh V. Commissioner of Income- Tax-X, Kolkata

It is not open to Assessing Officer to make best judgment assessment under section 144, otherwise than, on basis of all relevant materials which he had gathered after giving an opportunity of hearing to assessment.

HIGH COURT OF KERALA Shree Narayan Dharma Sabah Shreya's V. Additional/Joint/Deputy/Assistant Commissioner of Income-tax/Income-tax Officer/National E-Assessment Centre, New Delhi

Where show cause notice issued to assessment failed to provide sufficient opportunity to assessment to respond, violation of principles of natural justice was manifest and, accordingly, the assessment order was to be set aside.

HIGH COURT OF DELHI Bengal & Assam Company Ltd. V. National Faceless Assessment Centre

Where the Assessing Officer issued statutory show cause notices to assessment at e-mail address which was not in use, impugned best judgment assessment order deserved to be set aside.

I tried to simplify the section, hope this is useful!