Valid service of assessment notice is essential; best judgment assessment fails without it, and appellate set-aside can still stand.

Valid service of notice under section 143(2) is essential before completing a best judgment assessment, and the assessment cannot be sustained where the foundational notice was not properly issued and addressed in accordance with section 282(2)(a). The availability or dismissal of an application under section 146 does not restrict the appellate authority's power under section 251(1)(a) to set aside an assessment founded on invalid service. The assessment was therefore treated as contrary to the requirement of reasonable opportunity and natural justice, and the order directing a fresh assessment after proper notice was affirmed.

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Issues: Whether the assessment made under section 144 was vitiated for want of valid service of notice under section 143(2), and whether the Appellate Commissioner could set aside the assessment notwithstanding the remedy under section 146.

Analysis: In the absence of valid service of notice under section 143(2), the Income-tax Officer was not justified in completing a best judgment assessment at a figure higher than the declared income. The record did not show that the notice had been issued and addressed to either partner of the firm as contemplated by section 282(2)(a). The availability or dismissal of an application under section 146 did not curtail the appellate power under section 251(1)(a) to set aside the assessment where the foundational notice itself was not validly served. The assessment, therefore, stood contrary to the requirement of reasonable opportunity and the principles of natural justice.

Conclusion: The setting aside of the assessment by the Appellate Commissioner was upheld and the Revenue's challenge failed.

Final Conclusion: The assessment could not be sustained in the absence of valid notice, and the appellate order directing a fresh assessment after giving proper opportunity was affirmed.

Ratio Decidendi: A best judgment assessment cannot be sustained where notice under section 143(2) of the Income-tax Act, 1961 is not validly served, and the appellate authority may set aside such assessment under section 251(1)(a) notwithstanding section 146.

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