TMI Blog2003 (10) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 with Smt. E.L.Gracy and 14 others as partners. By an instrument of partnership deed dated 23-5-1996, Shri K.V. Ramakrishnan and Smt. Thankafta joined as partners with effect from that date. By a deed of retirement dated 26-5-1996, 12 out of 15 original partners retired from the partnership and the original three partners along with Shri K.V. Ramakrishnan and Mrs. Thankam continued as partners of the firm. Again by an another deed dated 14-8-1996, the remaining three original partners also retired from the firm, retaining Shri Ramakrishnan and his wife, Mrs. Thankam. Thus the business of the partnership firm continued by Shri K.V. Ramakrishnan and his wife, Mrs. Thankam, as partners. Thus, the present partners of the firm are Shri K.V. Ramakrishnan and Mrs. Thankam. 3. Though the firm came into existence on 23-3-1991 the return for the first time was filed on 22-2-1996 for the assessment year 1995-96. No regular return has been filed thereafter. 4. There was a search and seizure operation under section 132 of the Income-tax Act, 1961, on 12-12-1996 at the residence of Shri Ramakrishnan, the present managing partner and in the residence of Smt. E.L. Gracy the former managing pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal held that there was no reason for making two separate assessments, but a single assessment was sufficient. The Tribunal further held that the Assessing Officer should also give an opportunity of being heard to the erstwhile partners and their submissions if any should be taken into consideration before framing the assessment order vide order dated 8-12-2000. 6. As stated above, it is the preliminary objection of the learned Sr. Departmental Representative that only a person, who filed the original return, can be treated as an assessee and not the erstwhile partners. In this case, the return was filed by the present partners, namely Shri K.V. Ramakrishnan, managing partner. The assessment was originally completed in the case of Shri Ramakrishnan, as managing partner. Therefore, the learned Sr. D.R. contended that an appeal can be filed before the Tribunal under section 253 only, by an assessee who is aggrieved by the order. 7. On the other hand, Shri Kittu, learned Advocate, appearing for the assessee submitted that the present appellants are assessees aggrieved by the assessment order. The appellants are affected adversely by the assessment order. They were partners, though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm for the amount of tax, penalty or other sum payable by the firm for such assessment years. Therefore, the learned counsel for the assessee submitted that the preliminary objection taken by the learned Sr. Departmental Representative is not sustainable in law. 10. We heard the rival submissions and gone through the materials available on record and the decisions cited. The first issue to be decided is whether the Tribunal can entertain this preliminary objection taken by the Sr. Departmental Representative. This is a question of law, A question of law can be raised even at the time of hearing and it is bound to be considered by the Tribunal or any court in that matter. This point has been decided by the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383. In this case, the Hon'ble Supreme Court held that 'there is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is authorized by the existing partners can file the return. Thus, the preliminary objection appears genuine. The inclusive meaning of the assessee - under section 2(7) - if we analyse will show this is incorrect. We have already extracted the provisions of section 2(7) at page 5 of this order. A reading of the above definition makes it clear that an 'assessee' means a person by whom any tax or any other sum of money is payable under this Act - as a consequence of any proceedings -done under this Act. Therefore, the meaning, the department wants to import into section 253 is that an assessee is a person who filed the return and 'not a person aggrieved' by the order, does not stand to reason. 14. It is to be seen that as a consequence of the search under Chapter XIV-B of the Income-tax Act, 1961, a notice of demand under section 156 was served on the appellants. Section 156 reads as under: "When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable." It is to be seen that a notice of demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o comply with the principles of natural justice in reaching his conclusions even though he is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which he may not be accepted as evidence in a court of law". Therefore, it is a preliminary duty of any authority passing a quasi-judicial order to pass order only after hearing the parties. 19. In the instant case, the assessee, the appellants are adversely affected. The decision of the Tribunal will affect them either adversely or favourably. To deny a chance to represent their case before the Tribunal will be against judicial process of law. The Tribunal will be failing its duties if it shut out its door, by denying a right of the appeal and hearing. 20. It is the case of the assessee that the appellants are aggrieved on account of the service of notice of demand under section 156 requiring them to pay a demand of Rs. 63,97,422. Nothing prevents them from filing an appeal. They are affected parties. The Department's stand that the original return was filed on behalf of the firm, not by the present appellants and as such they have no right to appeal, if accepted, it will be a grave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched, etc., we are afraid we will not and cannot help the revenue. The question is whether an affected party can file the appeal even at a prior stage, we hold that it can be done. 23. Again in the case Kikabhai Abdulali v. ITAT [1957] 32 ITR 762 (Bom.) Shri Justice Chagla, speaking for the Court held that "the right to appeal to the Appellate Tribunal from one order passed by the AAC or the right to apply for a reference of a question of law arising out of an order of the Appellate Tribunal is not confined technically to the party who is a party to the appeal but is a much wider right which may be exercised by any person who becomes liable to pay tax by any order against which the appeal is preferred". 24. In the instant case, the position of the assessee is much stronger. When the matter was before the Tribunal at the first inning, it was remanded back to the Assessing Officer with a direction to hear the affected parties, i.e. the present appellants. They were heard and they are affected by the order. Now the stand of the revenue is that since the assessee who filed the returns are not the present appellants before the Tribunal, they had no locus standi to come in appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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