TMI Blog1982 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... s and directed the ITO to pass fresh assessment orders after looking into all the borrowals made by the assessee. Against the said order of the Commissioner, the assessee filed appeals before the Income-tax Appellate Tribunal contending that he was served with the notice of the suo motu revisional proceedings initiated by the Commissioner only on March 1, 1975, fixing the date of hearing on February 27, 1975, that the Commissioner had passed the order on March 1, 1975, without giving an opportunity to the assessee of being heard and that, therefore, the order passed by the Commissioner was void ab initio and non est in law. The contention of the Revenue before the Tribunal was that though the non-compliance with the principles of natural justice can make the order passed by the Commissioner as erroneous or illegal, it cannot be said that the order of the Commissioner is ab initio void. It was further contended that in view of the procedural irregularity, the order may be set aside with a direction to the Commissioner to give fresh opportunity to the assessee before passing the order under s. 263 of the Act. The Tribunal, after considering the rival contentions referred to above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the principles of natural justice, it should have merely declared the order as null and void, without giving a direction to the Commissioner to pass fresh revisional order after giving a reasonable opportunity to the assessee. Thus, the main question involved in this case is, whether, on the fact, and in the circumstances of the case, the Tribunal has jurisdiction or justification to give a direction to the Commissioner to pass a fresh order under s. 263 of the Act, after giving a reasonable opportunity to the assessee of being heard. This question, however, has been split up into two in the statement of the case. The first question raises the issue as to whether the Tribunal is right in treating the order passed without giving an opportunity to the assessee under s. 263 of the Act by the Commissioner as a procedural irregularity, in which case alone the Tribunal will have the power to give a direction to the Commissioner to pass a fresh order and not an order which is ab initio void and non est in law. The second question relates to the power of the Tribunal to give such a direction as it has given, while setting aside the order of the Commissioner on the ground that he had v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order which was the subject-matter of the appeal was a nullity, the order in the appeal also would be a nullity and, therefore, the order which was a nullity could not be said to have become valid merely because an ineffective appeal had been filed against it. The Bench has also referred to the following observation of Rajagopala Aiyangar J., in the judgment which was under appeal before it, with approval (p. 503 of AIR 1957) (Mad): " If the order of the Collector was one passed with jurisdiction, then there might be some basis for the argument that it got merged in the appellate order. But if that order was a nullity in that procedure dictated by natural justice was not followed, there was no order which could be the subject of and confirmation by the appellate authority" In Anisminic Ltd. v. Foreign Compensation Commission [1969] 1 All ER 208, the question arose as to what was the appropriate form of relief that could be granted in a case where an order passed by an inferior Tribunal was found to be vitiated by the principles of natural justice. After referring to the relevant earlier decisions on the point, the House of Lords held that although the Tribunal had juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner, before passing an order under s. 263, has to comply with the principles of natural justice embedded therein. Sub-sections (1), (2) and (3) of s. 263 of the Act, which are relevant, are extracted below: "263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer, is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. (2) No order shall be made under sub-section (1) (a) to revise an order of reassessment made under section 147, or (b) after the expiry of two years from the date of the order sought to be revised. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 535, exactly under similar circumstance, the Supreme Court held that the Tribunal had power to give a direction to the Commissioner to make fresh assessment after giving a reasonable opportunity to the assessee to put forward his case against the proposed revision. In that case, the Commissioner had invoked his power under s. 33B of the Indian I.T. Act, 1922, which corresponds to s. 263 of the 1961 Act. The, Commissioner issued notice dated August 2, 1962, to show cause why the assessments passed by the ITO should not he cancelled under s. 33B of the Indian I.T. Act, 1922 as being erroneous and also prejudicial to the interest of the Revenue. The notice was served on the assessee on August 3, 1962 and the hearing was fixed by the Commissioner for August 6, 1962. On the ground that none appeared and that there was no application for adjournment, the Commissioner passed an order on that date under s. 33B of the 1922 Act. By his order, the Commissioner cancelled the assessments made by the ITO on various grounds with which we are not concerned. The order of the Commissioner passed under s. 33B of the 1922 Act was challenged. The Tribunal held that though the Commissioner had jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter giving a reasonable opportunity to the assessee. As already stated, not giving due opportunity to an affected party before an order is passed against him by a statutory authority can be taken to violate the principles of natural justice. But when the principles of natural justice have been set down as a statutory procedure, then the violation can be-taken to be only a procedural violation and it cannot any more be said to be violation of the principles of natural justice. It may be that the statutory procedure may not cover all aspects of the principles of natural justice and if there is violation of those principles which have not been set down in the statute, then it is possible to say that there is violation of the principles of natural justice. But in respect of those aspects of principles of natural justice which have been embedded in the statute as a statutory procedure, if order is passed by an authority in violation of that statutory procedure, one can complain of only violation of statutory procedure and not violation of the principles of natural justice. As already stated, in this case, the complaint of the assessee is that the Commissioner did not follow the proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 981] 131 ITR 45 1, the Supreme Court has reiterated the abovesaid view in a more positive manner. That was a case arising under s. 25A of the Indian I.T. Act, 1922, where the ITO was bound to hold an enquiry into the claim of partition in an HUF, if it was made by or on behalf of any member of the HUF which was being assessed till then as such and record a finding thereon. Without holding an enquiry, as contemplated by s. 25A(1) of the 1922 Act and without considering the assessee's claim of partition, the assessment had been made. That assessment was ultimately set aside by the Tribunal in appeal on the ground that the order was passed in violation of the procedure prescribed for that purpose, but no direction was given to the ITO to consider the question of partition, after giving an opportunity to the assessee. That order was challenged by the Revenue before the Supreme Court. The Supreme Court held that the proper order to pass in such a case would be to set aside the assessment and to direct the ITO to make a fresh assessment in accordance with the procedure prescribed by law and it would not be correct merely to cancel the order of assessment. The relevant observation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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