High Court Of Rajasthan
CIT vs. Suresh Chandra Gupta
Asst. Year 1971-72
J.S. Verma, C.J. & I.S. Israni, J.
D.B. IT Ref. No. 22 of 1977
18th September, 1987
R.N. Surolia, for the Revenue : N.M. Ranka, for the Assessee
BY THE COURT:
This reference under s. 256(1) of the IT Act, 1961, is at the instance of the Revenue to answer the following question of law, namely : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment made by the ITO in the status of an individual was bad in law ?”
For the asst. yr. 1971-72, the assessee filed returns in the status of an HUF. The ITO found that in the earlier years the assessee had been assessed in the status of an individual. Accordingly, the ITO completed the assessment of the assessee in the status of an individual. Admittedly, at no point of time before completing the assessment, the ITO gave any notice or even an indication to the assessee that his claim for assessment in the status of an HUF was not likely to be accepted or that he was required to show that he was entitled to an assessment under the status of an HUF and not as an individual. The AAC affirmed the ITO’s view on appeal. The Tribunal, however, accepted the further appeal of the assessee. It has held that the return being filed in the status of an HUF, the assessment could not be completed in the status of an individual without giving notice of any such intention to the assessee before completing the assessment. This reference at the instance of the Revenue arises out of that order.
In our opinion, there is no infirmity in the view taken by the Tribunal. It is a basic requirement of law that a person, who is likely to be adversely affected by an order, should have an opportunity to show cause why such adverse order should not be made. The assessment of the assessee in the status of an individual when the return was filed in the status of an HUF is admittedly adverse to the interests of the assessee. Non-compliance of this basic requirement is, therefore, fatal. Learned counsel for the Revenue was unable to point out any provision of law which permits such a course being taken or which enables the making of such an order without any notice to the assessee.
Consequently, the reference is answered against the Revenue and in favour of the assessee by holding that the view taken by the Tribunal was justified.
[Citation : 173 ITR 407]