1983 (2) TMI 60 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of notices issued under section 25(2) of the Wealth-tax Act, 1957.
3. Adequacy of opportunity of hearing provided to the assessees.
4. Jurisdiction and proceedings under section 25(2) of the Wealth-tax Act, 1957.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal filed by the first son of Vinai Mohan (P.) Trust, Lucknow, was delayed by six days. The assessee explained that the delay occurred due to the papers being sent to Bombay and receiving attention only on 3-1-1982. The Tribunal found the delay to be bona fide and for a reasonable cause, thus condoning the delay and holding the appeal to be entertainable and in time.

2. Validity of Notices Issued Under Section 25(2) of the Wealth-tax Act, 1957:
The assessees argued that the notices issued by the Commissioner were invalid as they referred to section 263(1) of the Income-tax Act instead of section 25(2) of the Wealth-tax Act, 1957. The Tribunal observed that the provisions of section 263(1) of the Income-tax Act are in pari materia with section 25 of the Wealth-tax Act. The Tribunal held that the notices, despite some inaccuracies, were in substance and effect in conformity with the intent and purpose of section 25(2). The Tribunal emphasized that the assessees had understood the notices correctly, as evidenced by their adjournment applications, and therefore, the notices were valid.

3. Adequacy of Opportunity of Hearing Provided to the Assessees:
The assessees contended that they were not given a fair and adequate opportunity of hearing, as the notices were served on 16-10-1981 for a hearing on 19-10-1981, and their adjournment requests were denied. The Tribunal found that the refusal to grant adjournment was unjustified, especially since the assessees' counsel was unavailable. The Tribunal noted that the Commissioner was primarily concerned with the cases becoming time-barred, which was not a sufficient reason to deny adjournment. The Tribunal concluded that the opportunity of hearing provided was inadequate and unreasonable.

4. Jurisdiction and Proceedings Under Section 25(2) of the Wealth-tax Act, 1957:
The Tribunal addressed the consequence of the inadequate opportunity of hearing. Citing the Supreme Court's decision in Guduthur Brothers, the Tribunal held that if proceedings were lawfully initiated and an illegality occurred later, the authority's jurisdiction is not nullified. The Tribunal set aside the Commissioner's orders and directed him to decide the matter afresh, providing a reasonable and sufficient opportunity of hearing to the assessees. Consequently, the Tribunal did not address the merits of the case or the justification of setting aside the WTO's orders in their entirety.

Conclusion:
The appeals filed by the assessees were allowed, and the matter was remanded to the Commissioner for a fresh decision after providing a reasonable opportunity of hearing.