2008 (2) TMI 532 - AT - Income Tax

Summary

Issues involved:
Appeal against orders passed by CIT(A) under s. 250(6) and s. 154 of the IT Act, 1961 for the asst. yr. 2004-05.

ITA No. 263/Asr/2007:
The Department's appeal raised several grounds challenging the CIT(A)'s decision regarding excise refund, income classification, addition to total income, and applicability of a Supreme Court judgment. The Department contended that the CIT(A) erred in various aspects and the order was unjust, arbitrary, and contrary to law.

ITA No. 291/Asr/2007:
The Department raised grounds against the CIT(A)'s decision on the refund of excise duty, contending that the CIT(A) erred in not accepting the contention under s. 154 of the IT Act, not recognizing the refund as income, and disregarding the judgments of higher courts.

Additional grounds in ITA No. 263/Asr/2007:
The Department raised additional legal grounds related to the opportunity of being heard not being afforded to the AO by the CIT(A), alleging violations of s. 250(2) and s. 250(1) of the IT Act, 1961.

Judgment Details:
The Tribunal admitted the additional grounds raised by the Department in ITA No. 263/Asr/2007, emphasizing the legal nature of the grounds. The Department contended that the AO was not granted a hearing by the CIT(A), supported by an affidavit and lack of notice. The assessee argued that the AO was aware of the appeal, citing the service of ITNS-37. However, the Tribunal found that no ITNS-51 was served on the AO, as required by s. 250(1) for a fair hearing.

The Tribunal held that the CIT(A) failed to afford the AO an opportunity of hearing, violating the principles of natural justice and s. 250 of the IT Act, 1961. The Tribunal rejected the assessee's argument regarding internal Departmental forms, emphasizing the importance of fair hearings and notice to all parties involved. The Tribunal concluded that the Department's grievance was justified, as no hearing opportunity was provided to the AO.

In light of the above, the Tribunal accepted the additional grounds raised by the Department and remitted the matter back to the CIT(A) for a fresh decision within two months, ensuring due opportunity for the AO. Consequently, ITA No. 263/Asr/2007 was allowed, while ITA No. 291/Asr/2007 was deemed infructuous due to the remittance of the appeal in the former case.