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Issues:
1. Imposition of fine under section 131(2) of the Income Tax Act without providing opportunity of being heard. 2. Violation of principles of natural justice in the assessment proceedings. 3. Validity of the notice for appearance in relation to imposing fine. Analysis: 1. The appellant, an individual, filed the return of income for the assessment year 1974-75 showing an income of Rs. 5,305. The Income Tax Officer (ITO) completed the assessment under section 144 of the Income Tax Act on 9th February 1977 due to the appellant's non-appearance on 8th February 1977. Additionally, a fine of Rs. 500 was imposed under section 131(2) of the Act for default. The appellant challenged the order before the Appellate Assistant Commissioner (AAC), who upheld the decision. The appellant contended that the fine was excessive and that natural justice principles were violated as no opportunity of being heard was provided before imposing the fine. 2. The appellant's representative had attended the ITO's office on 3rd February 1977, questioning the purpose of the appellant's personal appearance as no specific reason was provided. The ITO later canceled the assessment order under section 144 on the appellant's application under section 146, indicating a lack of basis for the initial assessment. The Appellate Tribunal noted that the ITO did not specify the purpose for the appellant's personal appearance, which is a minimum requirement under section 131(2) of the Act. The Tribunal held that the fine imposed lacked basis and set aside the orders of the lower authorities. 3. The Tribunal further examined the contention that the notice for appearance was invalid and that the principles of natural justice were violated. The Departmental Representative argued that the word "fine" in section 131(2) is distinct from "penalty" and does not necessitate a show cause notice. However, the Tribunal disagreed, stating that the dictionary meanings of "fine" and "penalty" are similar. It emphasized that quasi-judicial authorities must provide an opportunity to be heard before imposing fines or penalties. As no such opportunity was given to the appellant, the Tribunal held that the orders were void and set them aside, emphasizing the importance of adhering to natural justice principles. In conclusion, the appeal was allowed, and the orders imposing the fine were set aside based on the lack of opportunity for the appellant to be heard and the violation of natural justice principles in the assessment proceedings.
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