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Issues:
1. Whether the Tribunal was justified in holding the AO's order as illegal and void due to a violation of natural justice? 2. Whether the Tribunal was correct in deleting certain additions made by the AO without giving the assessee an opportunity? 3. Whether the Tribunal was justified in deleting the addition of rental income from a property in the name of the minor son of the assessee? Issue 1: The Department filed a reference application questioning the legality of the AO's order, alleging a violation of natural justice. The Tribunal found the AO's actions to be null and void as no opportunity was given to the assessee before making additions to the income. Citing legal precedents, including the case of Ponkunnam Traders vs. Addl. ITO, the Tribunal emphasized the importance of natural justice and held that the AO's failure to provide an opportunity amounted to a miscarriage of justice. Additionally, the Tribunal relied on decisions like CIT vs. Shyam Lal and R.B. Sriram Durga Prasad & Fatehchand Nursing Das vs. Settlement Commission, supporting the view that orders made in violation of natural justice principles are considered nullities. Consequently, the Tribunal ruled in favor of the assessee, declaring the AO's order as ab initio void. Issue 2: The Tribunal also addressed the issue of the additions made by the AO without affording the assessee an opportunity. The CIT(A) had set aside certain additions for reassessment but confirmed the addition of rental income earned by the minor son of the assessee. Upon further appeal, the Tribunal found that the investment in the property in the name of the minor son was from independent funds, leading to the rental income being considered the son's income and not that of the assessee. By following the principles established in Prakash Narain vs. CIT, the Tribunal concluded that the rental income could not be clubbed with the assessee's income. Therefore, the Tribunal's decision to delete the addition of rental income was based on factual findings and legal principles, not constituting a referable question. Issue 3: Regarding the deletion of the addition of rental income from the minor son's property, the Tribunal's decision was based on factual determinations and legal principles, particularly the established case law of Prakash Narain vs. CIT. The Tribunal found that the property was not benami and that the rental income belonged to the minor son, aligning with legal precedents. As the Tribunal's decision was grounded in factual findings, it was deemed non-referable. Therefore, the Tribunal rejected the Department's reference application in this regard. In conclusion, the Tribunal's judgment addressed the issues raised by the Department comprehensively, emphasizing the importance of natural justice and legal principles in assessing the validity of the AO's actions and the treatment of income related to the minor son of the assessee. The Tribunal's decisions were based on established legal precedents and factual analysis, leading to the rejection of the Department's reference application.
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