2014 (1) TMI 135 - HC - Income Tax

Order passed violating principles of natural justice - Held that - It was for the Departmental Representative to have requested the Tribunal to grant some further time - The Departmental Representative did not seek any further time to file counter affidavit or to produce the record to controvert the averments made in the affidavit filed by the assessee regarding non service of the notice - The date of hearing was fixed after seven months from date of notice, also casts suspicion on the issue and service of the notice itself - The order passed by the Tribunal does not suffer from any legal infirmity - Decided against Revenue.

Summary

Issues:
1. Quashing of assessment order by the Income Tax Appellate Tribunal.
2. Adequacy of time and opportunity provided to the Department to rebut the assessee's claim regarding service of notice under Section 143(2) of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed against the Income Tax Appellate Tribunal's order quashing the assessment order. The respondent-assessee, an individual, filed the return of income for the assessment year 1997-98, declaring a total income of Rs. 40,890. A notice under Section 143(2) was issued on 31.8.1998 and served on 11.9.1998. The authorized representative appeared, and the total income was assessed at Rs. 24,43,530. The assessee contended that the notice was not served, leading to the appeal. The Commissioner of Income Tax(Appeals) partly allowed the appeal, reducing the assessed income. The Income Tax Appellate Tribunal allowed the appeal, citing the uncontroverted affidavit by the assessee regarding non-service of notice within the stipulated time.

2. The Department argued that the Tribunal should have allowed time to file a counter affidavit and produce records. However, the Tribunal found the Department did not request additional time and proceeded based on the uncontroverted affidavit. The Court noted discrepancies in the notice issuance and hearing dates, casting doubt on the notice's service. Consequently, the Court upheld the Tribunal's decision, stating the Department had the opportunity to seek more time but failed to do so. The appeal was dismissed, affirming the Tribunal's order.

This judgment highlights the importance of timely and proper service of notices in income tax assessments. The Court emphasized that parties must actively participate in legal proceedings and avail opportunities to present their case effectively. The decision underscores the significance of procedural compliance and the burden of proof in tax matters, ultimately upholding the Tribunal's ruling based on the unchallenged affidavit regarding non-service of notice.