Invalid return cannot sustain section 143(3) assessment or be converted into best judgment assessment under section 144.

A return filed in an incorrect prescribed form in response to notice under the Income-tax Act could not support an assessment under section 143(3), because that provision depends on a valid return. The assessment also could not be recharacterised as a best judgment assessment under section 144, since that provision applies only where there is no return and carries separate consequences, including the assessee's remedy under section 146. Treating the matter as section 144 would wrongly remove that remedy, and a mere wrong statutory reference could not cure the absence of the statutory basis for either provision.

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Issues: Whether a return filed in an incorrect form in response to notice under section 148 of the Income-tax Act, 1961 could sustain an assessment under section 143(3), and whether such an assessment could be treated as one under section 144.

Analysis: The return was required to be furnished in the prescribed form under the applicable rules, and the form used was not the correct one. On that basis, an assessment under section 143(3) could not stand because that provision proceeds on the basis of a valid return. However, the existence of an invalid return did not mean that the assessment could automatically be converted into a best judgment assessment under section 144. Section 144 applies where there is an absence of a return and carries its own statutory consequences, including the assessee's remedy under section 146. Treating the assessment as one under section 144 would wrongly deprive the assessee of that remedy. The principle that a wrong statutory reference does not invalidate an otherwise competent act was held inapplicable because the issue here was not a mere misdescription of power but the absence of a valid basis for section 143(3) and the absence of material to show that the officer actually proceeded under section 144.

Conclusion: The Tribunal was not justified in directing that the assessment be treated as one under section 144; the question was answered in the negative, in favour of the assessee.

Final Conclusion: The assessment could not be sustained under section 143(3), but it also could not be transposed into a best judgment assessment under section 144 so as to defeat the assessee's statutory remedy.

Ratio Decidendi: An assessment made under a provision requiring a valid return cannot be converted into a best judgment assessment under a different provision where the statutory preconditions for that provision are absent and such conversion would prejudice a distinct statutory remedy.

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