TMI Blog1984 (8) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, stated that the assessment deserved to be set aside, with a direction to reframe the same after allowing a reasonable opportunity of being heard. As far as the quantum is concerned, he also gave a certain specific finding regarding a disallowance of Rs. 10,000 made by the ITO which was reduced to Rs. 3,000 by him and also regarding the assessability of gross income as shown by the assessee, which, the assessee had contended, did not represent taxable income. According to the Commissioner, the Compensation amount received by the assessee was rightly considered to be taxable income. 3. On the aspect of registration, which was sought, the Commissioner stated that he disapproved of the action of the ITO, treating the assessee as unregistered firm since the procedure in law had not been followed, and he, accordingly, set aside the finding of status of unregistered firm also. 4. Finally, he observed in para 7 as follows : " For the above reasons, I set aside the impugned order with a direction to the Income-tax Officer to reframe the same de novo according to law and after giving a reasonable opportunity of being heard." [Emphasis supplied] 5. Before us, the first conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in Sant Baba Mohan Singh v. CIT [1973] 90 ITR 197, where also notice under section 23(2) of the Indian Income-tax Act, 1922 (' the 1922 Act '), was not issued before the assessment was made under section 23(3) and the High Court had held that the power to annul an assessment is a power to be exercised when assessment proceeding is a nullity in the sense that the ITO had no jurisdiction ab initio to take proceedings and the omission of the ITO to issue a notice under section 23(2) did not affect the ab initio jurisdiction enjoyed by the ITO in respect of the proceeding and after rectifying the omission by issuing the notice, he could proceed to complete the assessment, and, therefore, the direction of the Commissioner to make a fresh assessment after issue of notice was in order. 8. We have considered the rival submissions. The principles of natural justice are based on two main limbs : (1) right of fair hearing, also known as audi alteram partem, and (2) rule against bias. In the present case, we are not concerned with the second aspect. On the scope and nature of the hearing to be given, in the majority judgment of the Supreme Court in Swadeshi Cotton Mills v. Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity view is that where there is a duty to act fairly just like the duty to act reasonably, it has to be enforced as an implied statutory requirement, so that failure to observe it means that the administrative act or decision was outside the statutory power, unjustified by law, and therefore ultra vires and void (See Wade's Administrative Law, ibid., page 448). In India, this Court has consistently taken the view that a quasi-judicial or administrative decision rendered in violation of the audi alteram partem rule, wherever it can be read as an implied requirement of the law, is null and void [e.g., Maneka Gandhi's case [AIR 1978 SC 597] (ibid.) and S. L. Kapoor v. Jagmohan [AIR 1981 SC 136] (ibid.)]. In the facts and circumstances of the instant case, there has been a non-compliance with such implied requirement of the audi alteram partem rule of natural justice at the pre-decisional stage. The impugned order, therefore, could be struck down as invalid on that score alone. But we refrain from doing so, because the learned Solicitor-General in all fairness, has both orally and in his written submissions dated August 28, 1979, committed himself to the position that under section 18- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is made by or on behalf of any member of the HUF which is being assessed hitherto as such and record a finding thereon. If no such finding is recorded, sub-section (3) of section 25A of the Act becomes clearly attracted. When a claim is made in time and the assessment is made on the HUF without holding an inquiry as contemplated by section 25A(1), the assessment is liable to be set aside in appeal as it is in clear violation of the procedure prescribed for that purpose. The Tribunal was, therefore, right in holding that the assessments in question were liable to be set aside as there was no compliance with section 25A(1) of the Act. it is, however, difficult to agree with the submission made on behalf of the assessee that the duty of the Tribunal ends with making a declaration that the assessments are illegal and it has no duty to issue any further direction. It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unable to agree with the learned counsel for the assessee that there was any error in the manner in which the Commissioner (Appeals) exercised his discretion as far as setting aside the assessment is concerned and directing a fresh assessment in accordance with law after giving due opportunity of being heard. 11. The learned counsel had placed before us further submissions, viz., to the effect that if the setting aside was considered to be in order, then it should be construed that the assessment in its entirety was set aside and it should be open to the assessee to urge all matters de novo before the ITO. In the present case, since the assessment was made without affording any opportunity to the assessee of being heard, we agree with the learned counsel that the Commissioner was not justified in giving his findings on one or two aspects. The proper course was to set aside the assessment in its entirety and we, accordingly, hold that the specific findings on particular issues given by the Commissioner (Appeals) would also stand set aside and the order of the Commissioner (Appeals) would be construed as one setting aside the assessment in its entirety, directing a fresh assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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