1976 (8) TMI 75 - AT - Income Tax

Summary

Issues:
Ex-parte assessment cancellation by Appellate Assistant Commissioner, justification for denying further hearing opportunity, compliance with Income Tax Officer's notices, application under section 146, rejection of application by Income Tax Officer, reasonable opportunity for compliance with notices.

Ex-parte Assessment Cancellation:
The departmental appeal challenged the cancellation of an ex-parte assessment by the Appellate Assistant Commissioner for the assessment year 1971-72. The Income Tax Officer completed the assessment under section 144 of the Income Tax Act, 1961, which was later challenged by the assessee, leading to the cancellation of the assessment by the Appellate Assistant Commissioner.

Justification for Denying Further Hearing Opportunity:
The Revenue contended that the Appellate Assistant Commissioner erred in canceling the ex-parte assessment, arguing that the assessee did not comply with notices under sections 139(2) and 142(1). The departmental representative referred to a Supreme Court ruling to support the contention that the assessee was not justified in requesting a further opportunity for a hearing.

Compliance with Income Tax Officer's Notices:
The assessee had filed a return as early as 31st March 1972, claiming the status of a Hindu undivided family (HUF). The Income Tax Officer issued notices under sections 143(2) and 142(1) regarding the status claimed by the assessee, requesting evidence and other particulars. Despite responses from the assessee, the Income Tax Officer proceeded with an ex-parte assessment, leading to subsequent appeals and applications.

Application under Section 146 and Rejection by Income Tax Officer:
The assessee filed an application under section 146, citing the main source of income as share income from a firm and the unavailability of necessary evidence with the department. However, the Income Tax Officer rejected the application, stating that the assessee had not filed the return of income after the assessment under section 144 and had not complied with previous communication.

Reasonable Opportunity for Compliance with Notices:
The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner, stating that the assessee was not afforded a reasonable opportunity to comply with the Income Tax Officer's notices. The Tribunal found that the assessee was prevented by sufficient cause from complying with the terms of the notices, leading to the dismissal of the Revenue's appeal.

In conclusion, the judgment revolved around the cancellation of an ex-parte assessment, the justification for denying further hearing opportunities, compliance with notices issued by the Income Tax Officer, the rejection of an application under section 146, and the assessment of whether the assessee had a reasonable opportunity to comply with the notices. The Tribunal ultimately upheld the decision of the Appellate Assistant Commissioner, dismissing the Revenue's appeal.