1989 (6) TMI 77 - AT - Income Tax

Summary

Issues:
- Appeal against CIT(A)'s combined order for assessment years 1982-83 and 1983-84.
- Disallowances made by Assessing Officer including special reserve, expenses on Udyog Bandhu Scheme, agency charges, and other expenses.
- Lack of opportunity for the assessee to be heard before CIT(A).
- CIT(A) passing a sketchy order without considering the assessee's viewpoint.
- Applicability of principles of natural justice in income tax assessment and appeal proceedings.

Analysis:
The judgment involves two appeals by the assessee against the CIT(A)'s combined order for the assessment years 1982-83 and 1983-84. The common question in both appeals relates to various disallowances made by the Assessing Officer, such as special reserve, expenses on Udyog Bandhu Scheme, agency charges, and other expenses. The CIT(A) confirmed these disallowances except for the deduction claimed under section 80M of the Income Tax Act, 1961. However, the CIT(A) directed the Assessing Officer to recompute the deduction under section 80M based on given directions.

One of the main issues raised was the lack of opportunity for the assessee to be heard before the CIT(A) made a decision. The authorized representative for the assessee argued that the notice of hearing was served after the scheduled date, depriving the assessee of a fair chance to present their case. The CIT(A) passed a sketchy order without considering the assessee's viewpoint, leading to a violation of the principles of natural justice applicable to income tax assessment and appeal proceedings.

The Tribunal, after hearing both parties, found that the notice issued by the CIT was served after the scheduled date of hearing, indicating a lack of adequate opportunity for the assessee to be heard. The Tribunal referenced legal provisions and judicial decisions emphasizing the importance of providing a substantive opportunity for the assessee to present their case. The Tribunal held that the CIT(A) was unjustified in deciding the appeal without affording a reasonable opportunity of being heard to the assessee. Consequently, the impugned order was quashed, and the CIT(A) was directed to decide the appeal on merits after giving the assessee an adequate opportunity to be heard.

In conclusion, the appeals were allowed for statistical purposes, highlighting the significance of procedural fairness and adherence to principles of natural justice in income tax proceedings.