30 August 2013
Section 144 of the IT Act says the ITO can make best-judgment assessment when the assessee fails to file return under Section139(1), belated return under Section139(4) or revised return under Section139 (5) of the IT Act. The ITO can also use his discretion when the assessee does not comply with all the terms of a notice issued under Section142(1) of the IT Act, requiring the assessee to file the return of income or production of accounts and documents or furnish the information called for.
The ITO can use his judgement if the assessee fails to comply with direction issued under Section142(2A) to get the accounts audited and furnish the audit report or comply with the notice issued under Section143(2) of the IT Act.
Before the amendment made by the Direct Tax Laws (Amendment) Act, 1987, the ITO could determine the sum payable or refundable to the assessee. But from assessment year 1988-89 (financial year 1987-88), i.e., after amendment, the words "or refundable to the assessee" were omitted. No refund can be granted under best judgement assessment.
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