9911796707
TMI Blog1969 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... he proceedings relating to assessment of concealed income, notice dated November 24, 1955, in respect of the assessment year 1946-47, was issued to Shri Ram Saran Das Kapur, applicant hereinafter called " the assessee "), under sub-section (3) of section 28 of the Act to show cause why a penalty should not be levied on the assessee for concealing the income in question. Similar notice in respect of the assessment year 1947-48 was served on the assessee on December 26, 1955. In reply to the notice, dated November 24, 1955, the assessee submitted written objections, dated April 14, 1956, in which he objected to the legality of the notice, the jurisdiction of the Income-tax Officer, the vagueness of the notice and various other matters, and in which he finally stated in the penultimate paragraph as follows : " That a personal hearing may kindly be given to, explain the case personally." A verbatim copy of the objections, dated April 14, 1956, was sent by the assessee to the Income-tax Officer, Special Ward, Amritsar (which Income-tax Officer had issued and served the notice, under section 28(3) of the Act on the assessee) in respect of the assessment year 1947-48. It is the common c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956, requested that he may be heard personally. The Income-tax Officer did hear him personally on August 27, 1957. Thereafter, the case went to the jurisdiction of the Income-tax Officer, F-Ward. Section 5(7C) lays down that where an income-tax authority ceases to exercise jurisdiction and is succeeded by another, the income-tax authority so succeeded may continue the proceeding from the stage at which the proceeding was left by his predecessor. The first proviso to this sub-section lays down that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened. We find that no such demand was made by the assessee (before the Income-tax Officer, F-Ward, Shri Gujjar Mal, who passed the penalty order on July 30, 1959) to the effect that the assessee be reheard or any part of the previous proceeding be reopened. In these circumstances, the Income-tax Officer, F-Ward, Shri Gujjar Mal, was perfectly justified in law in passing the penalty order. (iii) In support of his contention the learned counsel for the assessee relies upon the ruling of the Calcutta High Court in the case of Calcutta Tanneries (1944) Ltd. v. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer, F-Ward did not afford the assessee any opportunity of personal hearing ; (viii) that on the record of the case received by him on transfer from the Income-tax Officer, Special Ward, the assessing authority, i.e., the Income-tax Officer, F-Ward, imposed penalties on the assessee without any further proceedings or hearing. In order to appreciate and in order to satisfactorily answer the question referred to us, it is necessary to notice at this stage the relevant provisions of section 28(1)(c), section 28(3) and section 5(7C) (with its first proviso) of the Act, which are reproduced below : " 28. (1) If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person- (a) .................. (b) .................. (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it may direct that such person shall pay, by way of penalty, in the case referred to in clause (a), in addition to the amount of the income-tax and supertax, if any, payable by him, a sum not exceeding one and a half times that amount, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration has no relation to the stage at which the proceedings are transferred from the previous Income-tax Officer to the new one. Sub-section (7C) of section 5 comes into operation as soon as an income-tax authority ceases to exercise jurisdiction and is succeeded by another authority who has and exercises jurisdiction irrespective of whether the assessee had or had not fully availed of the entire opportunity provided to him under section 28(3). If all that remained to be done by the preceding officer was to write an order, and everything which such officer was expected to keep in view at the time he ceases to exercise jurisdiction is available in full to the succeeding officer, there is no bar to the latter merely writing out an order after applying his own mind to the whole of that material unless the assessee exercises his right under the first proviso to sub-section (7C) of section 5, and asks for either the whole case being re-opened or merely for being reheard before the passing of the final order. But if one of the things which were to influence the decision of the assessing authority was the effect of an oral hearing already granted to an assessee (either because such a hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing is concerned, it seems to us to be plain that such a hearing can have some meaning only if it is given by the very person who has to ultimately decide the matter. Oral hearing by one officer cannot possibly be of any advantage to his successor in deciding a case., To hold otherwise would amount to saying that the farce of a hearing is equal to a real, genuine and effective hearing. I asked Mr. Awasthy that if the case had been transferred from the Income-tax Officer, Special Ward, to the Income-tax Officer, F-ward, before the oral hearing was given to the assessee, could the successor officer decide the matter without affording the assessee an opportunity of being heard merely on the ground that the assessee had not made an application under section 5(7C) ? Mr. Awasthy frankly submitted that no prayer under section 5(7C) would have been necessary in that eventuality and the successor Income-tax Officer would have been bound to afford a personal hearing to the assessee before passing any valid orders in the matter. Counsel said that this would have been necessary because the assessee had asked for a personal hearing, and he would, in those circumstances, have had no opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other decides, then personal hearing becomes an empty formality. " With the above observations, the Supreme Court held that the procedure followed in the case of Gullapalli Nageswara Rao (of hearing by the Secretary and decision by the Chief Minister) offended against the basic principles of judicial procedure. To accede to the view canvassed before us by Mr. Awasthy would amount to holding contrary to the pronouncement of the Supreme Court in Gullapalli Nageswara Rao's case. A Division Bench of this court (Grover and Khanna JJ.) held in Amir Singh v. Government of India that where the Collector of Customs who is bound to hear a party against whom he proposes to make an order had granted personal hearing is transferred, an order passed by his successor without granting afresh personal hearing violates the principles of natural justice. If, therefore, it is once admitted, as has been rightly conceded by Mr. Awasthy, that an order passed without giving a personal hearing to an assessee who had specifically asked for one, in proceedings for the imposition of penalty under section 28(1)(c) of the Act, would not be valid, the enabling provisions of section 5(7C) of the Act does not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being heard. In my opinion, there may be a hearing without having the proceeding reopened and that hearing may be confined to the hearing of arguments only. As a result of the assessee's failure to exercise its right under the first part of the proviso the assessee has undoubtedly lost its right of having the proceeding reopened but I fail to see how it has lost its right of being heard under section 28(3) before the officer who has been vested with jurisdiction to continue the penalty proceeding. Their Lordships of the Calcutta High Court held that the combined effect of sections 23(3) and 5(7C) is to authorise the succeeding Income-tax Officer to pass an order upon the evidence produced before his predecessor-in-office, but the effect is not to authorise the former to pass an order upon arguments advanced before the latter. On the basis of the above-said finding, the Division Bench of the Calcutta High Court answered the reference in favour of the assessee and observed that the court could not but hold that the succeeding Income-tax Officer had no authority to pass an order of imposition of penalty without giving the assessee a further opportunity of advancing the arguments befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also noticed that in the Rajasthan case a written explanation had been submitted in the place of oral arguments. Likewise, it was noticed that in the Mysore case, the assessee had confined himself to an explanation in writing which alone was available for consideration to the original Income-tax Officer, and which alone was considered by the successor authority. Similar distinction was drawn on the facts of the case decided by the Mysore High Court in Hulekar & Sons v. Commissioner of Income-tax. The case before us appears to fall within the ratio of the judgment of this court in Satprakash Ram Naranjan's case and does not fall within the compass of the facts which led to the respective decisions in the Rajasthan case and the Mysore case. For the same reasons, we are unable to derive any assistance from the judgment of the Calcutta High Court, to which Mr. Awasthy has referred, in Kanailal Gatani v. Commissioner of Income-tax. No oral arguments had been advanced by the assessee before the original Income-tax Officer, and the question of the assessee being prejudiced by one officer hearing and the other deciding neither could nor did arise in that case. Mr. Nirmal Mukherjee, who ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
