1972 (8) TMI 23 - HC - Income Tax

Mysore Agricultural Income Tax Act - For the assessment year 1967-68 the respondent made an order of assessment on the petitioner on March 11 1968. While determining the taxable income for the assessment year certain depreciation allowances on the assets of the petitioner were allowed. The said order of assessment was rectified by the respondent in exercise of the powers vested under section 37 of the Act by his order dated May 28 1971 The said order has been challenged in this writ petition on several grounds. One of the grounds was that the petitioner was not afforded an opportunity of being heard before making an order of rectification. The second ground was that the view of the law taken by the respondent with regard to the allowance of initial depreciation is patently erroneous

Summary

Issues:
1. Opportunity of being heard before making an order of rectification.
2. Validity of the notice issued for rectification.
3. Burden of proof on the department to show error apparent on the face of the record.

Analysis:
The petitioner, an assessee under the Mysore Agricultural Income-tax Act, challenged the order of assessment for the year 1967-68, where depreciation allowances were allowed on the assets. The respondent rectified the assessment order under section 37 of the Act without affording the petitioner an opportunity to be heard. The petitioner contended that the view taken by the respondent regarding the allowance of initial depreciation was erroneous. The respondent claimed that a notice was issued for the petitioner to appear but did not fix a fresh date for hearing after the petitioner requested time. The court noted that the notice lacked essential particulars of the alleged error, depriving the assessee of the opportunity to present objections effectively. The court emphasized that the burden is on the department to demonstrate errors apparent on the record necessitating rectification and that the notice should provide sufficient material for the assessee to respond. As the notice issued was insufficient to enable the petitioner to make representations, the court allowed the writ petition, quashed the rectification order, and directed the respondent to issue a fresh notice, ensuring a reasonable opportunity for the petitioner to be heard before any further action under section 37.

In conclusion, the court held that the rectification order was invalid due to the lack of a proper opportunity for the petitioner to be heard and the inadequacy of the notice provided. The judgment highlights the importance of affording the assessee a fair chance to respond to proposed rectifications and ensuring that notices contain adequate particulars for effective objection. The decision underscores the burden on the department to establish errors apparent on the face of the record when seeking rectification, emphasizing procedural fairness and the right to be heard in such matters.