1989 (1) TMI 63 - HC - Income Tax

Summary

Issues: Assessment year 1976-77 - Penalty proceedings under section 271(1)(a) of the Income-tax Act - Opportunity to be heard before imposing penalty - Validity of orders passed by different authorities - Jurisdiction of the Appellate Tribunal - Questions of law formulated for reference to the High Court.

Analysis:
The judgment pertains to a case involving the Revenue as the petitioner and an assessee to income tax as the respondent for the assessment year 1976-77. The penalty proceedings were initiated under section 271(1)(a) of the Income-tax Act. The assessment was completed on March 21, 1979, and the penalty was imposed on March 18, 1981, by the successor Income-tax Officer. The respondent filed a reply, and the Appellate Assistant Commissioner later held that the penalty could not be sustained as the assessee was not given an opportunity to be heard before the penalty was levied. The Appellate Assistant Commissioner set aside the penalty order and directed the Income-tax Officer to pass a fresh order after affording the assessee an opportunity to be heard.

The Revenue did not appeal against the order of the Appellate Assistant Commissioner, making it final subject to further orders by the Tribunal or the court. The Appellate Tribunal, however, quashed the proceedings of both the Income-tax Officer and the Appellate Assistant Commissioner, stating that the penalty order was void as the successor Income-tax Officer did not provide an opportunity to the assessee before passing the order. The main issue raised was whether the Appellate Tribunal was justified in canceling the orders of both the Appellate Assistant Commissioner and the Income-tax Officer without directing the Income-tax Officer to pass a fresh order after giving the assessee an opportunity to be heard.

The High Court found that the questions of law formulated in the original petition did not precisely address the issues arising from the Tribunal's order. The High Court directed the Income-tax Appellate Tribunal to refer specific questions of law for decision, including whether the Tribunal was justified in interfering with the Appellate Assistant Commissioner's order and if the order of remit passed by the Appellate Assistant Commissioner was infirm or subject to interference by the Tribunal. The High Court disposed of the original petition by instructing the Tribunal to refer the questions of law within two months for the court's decision.