1985 (7) TMI 124 - AT - Income Tax

Assessee s Appeal, Assessment Year, Cash System, Interest Income, Res Judicata, Service Of Notice

Summary

Issues Involved:
1. Validity of the ex parte order passed by the Tribunal.
2. Service of notice to the assessee regarding the adjournment.
3. Tribunal's authority to reconsider its own decisions.
4. Method of accounting followed by the assessee.
5. Applicability of the principle of res judicata in income tax matters.

Detailed Analysis:

1. Validity of the ex parte order passed by the Tribunal:
The Tribunal initially dismissed the assessee's appeals for the assessment years 1974-75 and 1975-76 ex parte due to the absence of representation from the assessee. The assessee contended that it did not receive notice of the hearing date. The Tribunal, upon reconsideration, recalled the ex parte order, acknowledging that the notice of adjournment might not have reached the assessee. The Tribunal noted that "the presumption of the service of a notice arises only in the case of a registered letter and not in the case of an ordinary post."

2. Service of notice to the assessee regarding the adjournment:
The Tribunal accepted the assessee's claim that it did not receive the intimation for the hearing on 4-6-1981. The Tribunal emphasized that "as the assessee did not receive the intimation regarding the fixation of its appeals on 4-6-1981, it did not make any arrangement for representation before the Tribunal on that date." The Tribunal concluded that the non-intimation of the adjournment date was a valid ground for recalling its ex parte order.

3. Tribunal's authority to reconsider its own decisions:
The Tribunal addressed the preliminary objection raised by the revenue that it became functus officio after passing the order on 30-12-1982. The Tribunal rejected this objection, stating that "within a statutory period, as provided under section 254(2) of the Income-tax Act, 1961, it is open to the parties in appeal before the Tribunal to move miscellaneous application." The Tribunal held that it was justified in recalling the ex parte order based on the second miscellaneous application.

4. Method of accounting followed by the assessee:
The core issue was whether the assessee followed the cash system or mercantile system of accounting. The Tribunal had previously decided against the assessee for the assessment year 1973-74, concluding that the assessee followed the mercantile system. The Tribunal noted, "the slender evidence on the basis of which the Tribunal came to the conclusion that the assessee had been following mercantile system of accounting was the conversion of interest from the bank on fixed deposits in fresh deposits." Despite the assessee's arguments, the Tribunal found no new compelling evidence to deviate from its earlier decision.

5. Applicability of the principle of res judicata in income tax matters:
The Tribunal acknowledged that the principle of res judicata does not apply to income tax matters, stating, "each assessment year being independent, if there are additional features, which have not been noticed earlier, the same may be pressed into service to ask the revenue to accept a particular contention and claim, which have been earlier rejected." However, in this case, the Tribunal found no new facts to reconsider the method of accounting followed by the assessee.

Conclusion:
The Tribunal dismissed the appeals, holding that the assessee failed to provide sufficient new evidence to overturn the previous decision regarding the method of accounting. The Tribunal also justified its authority to recall the ex parte order and rejected the preliminary objections raised by the revenue. The decision emphasized the importance of proper service of notice and the Tribunal's practice of reconsidering decisions under statutory provisions.