The Assessing Officer, after considering all relevant material which he has gathered, is under an obligation to make an assessment of the total income or loss to the best of his judgment in some cases. Such cases are –
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if any person fails to submit his return;
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if any person fails to comply with all the terms of a notice under section 142(1);
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if a person fails to comply with the direction to get his accounts audited;
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if a person fails to respond to a scrutiny notice under section 143(2) or
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if the Assessing Officer is not satisfied about the correctness or the completeness of the accounts.
A best judgment assessment can only be made after giving the assessee an opportunity of being heard. |
Opportunity must be given to the assessee before making Best Judgement Assessment :
The best judgment assessment can only be made after giving the assessee an opportunity of being heard by giving notice to the assessee to show cause why the assessment should not be completed under section 144. However, it will not be necessary to give such notice where a notice under section 142(1) has already been issued prior to making assessment under this section.
Best Judgemnet Assessment on Rejection of Accounts:
Section 145(3) empowers the Assessing Officer to reject the account books which are unreliable, false or incorrect or incomplete. The Assessing Officer can reject the books of account on the following grounds and may make the assessment in the manner provided in section 144:
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He is not satisfied about the correctness or completeness of the accounts of the assessee,
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Although the accounts of the assessee are correct and complete to the satisfaction of the Assessing Officer but the method of accounting employed is such that, in the opinion of the Assessing Officer, profits cannot be correctly arrived therefrom,
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Where the method of accounting adopted by the assessee has not been regularly followed by him, or
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Where income has not been computed in accordance with the standards notified under section 145(2)"
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