TMI Blog1998 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order dated 12-7-1991 whereby the assessment has been annulled. The department is aggrieved against the said order hence present appeal. 3. The main controversy centres around the addition of Rs. 4.00 lakhs made by the Assessing Officer holding that the prize winning ticket has been procured by the assessee out of the concealed income. A few facts may be indicated. The assessee disclosed a sum of Rs. 5.00 lakh as winning from Nagaland State Lottery in the 17th Draw held on 2-1-1986. The Assessee claimed that he had the First Prize Winning ticket bearing No. DU - 207139. The Assessing Officer recorded the statement of the assessee on 15-1-1988 wherein it was stated that lottery ticket was purchased from a hawker at Ludhiana. The Assessing Officer made enquiries and found that M/s. Marwaha Agencies, R-831, New Rajindra Nagar, New Delhi are the organisers of Govt. Lottery of Nagaland which sponsored the Deluxe Everest Weekly Lottery for prizes over Rs. 39.00 lakhs out of which First Prize of Rs. 5.00 lakhs was claimed as winning by the assessee. The Assessing Officer traced the string of successive intermediate parties through whom the First Prize winning ticket passed after it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important aspect relating to the addition of Rs. 4.00 lakhs while confirming the addition vide order dated 28-2-1989, the Tribunal vide its order dated 27-11-1990 set aside the order of the CIT(A) with these observations:- "We, therefore, do not touch upon smaller issues involved in this appeal and set aside her entire order with the directions that the above observations made by us should be taken note of and the issue of illegality of the assessment on account of violation or gross violation of the principles of natural justice be decided along with other matters afresh." While giving effect to the abovementioned order of the Tribunal, the learned CIT(A) has held that since the Assessing Officer had failed to allow opportunity to the assessee with regard to the statements recorded at the back of the assessee as well as the documents and evidence brought on record, the entire assessment is ab initio void. The learned CIT(A) accordingly annulled the entire assessment and did not go into the merits of various other additions made in the assessment. 5. The learned DR, assailing the impugned order of the CIT(A), argued that the directions of the ITAT contained in its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich calls for consideration in the present appeal is whether denial of proper opportunity to the assessee with regard to any facet of the assessment would vitiate the entire assessment and make it ab initio void. In the instant case before us, the Assessing Officer while making the assessment has made additions on various grounds and it is only with regard to one single and isolated ground concerning the addition of Rs. 4.00 lakhs that denial of opportunity of hearing on the documents and records collected at the back of the assessee as well as the statements of witnesses recorded without the presence of the assessee, has been claimed by the assessee. The assessment made is admittedly within the jurisdiction and legal competency of the Assessing Officer. However, the Assessing Officer while completing the assessment failed to comply with the provisions of section 142(3) of the Income-tax Act, 1961 in respect of addition of Rs. 4.00 lakhs since an opportunity of being heard in respect of material gathered by the Assessing Officer on the basis of an enquiry has not been given to the assessee. Section 142(3) essentially embodies the rule of audi alteram partem as a part of the procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the back of the assessee deserves to be set aside for fresh adjudication and such as an order cannot be struck down as ab initio void. 8. We may now notice the decisions cited by the learned counsel. The first decision relied upon by the learned counsel is V. Raju's case. On going through this decision we find that the ratio of this decision runs contrary to the submissions of the learned counsel and lends direct support to the departments case. The facts of this case in brief are that the CIT passed orders under section 263 without giving a reasonable opportunity to the assessee of being heard. The Madras High Court held that the order of the Commissioner suffers from a procedural irregularity and that the order cannot be treated as ab initio void and non est in the eyes of law. The High Court further held that the Tribunal is justified in setting aside the order with the direction that a fresh order be passed by the Commissioner after giving a reasonable opportunity to the assessee of being heard. The Court observed at Page 218 as under:- "Thus, the statute itself has made a provision for an effective opportunity of being heard to the assessee before the Commissioner pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact has been upheld and thereby the assessments have been annulled. The High Court observed at Page 818 as under:- "The AAC, after examining the whole material on the record and adjudging the merits of the case, recorded a categorical finding that Shri Sham Lal was never the partner in the firm and that Shri Bheem Singh and Dwarka Dass had implicated him and had shown him as a partner in order to reduce their tax liability during the settlement. The AAC, therefore, came to the conclusion on merits that Shri Sham Lal could not be treated as a partner in the firm. This finding of fact was affirmed by the Tribunal." Thus the basic issue of legality of the entire assessment on the ground of denial of opportunity to the assessee was not the point in issue in Sham Lal's case the assessments were annulled since there was no material on record to come to the conclusion that the assessee was a partner in the firm. This case, therefore, does not support the arguments of the learned counsel. 10. The learned counsel has next relied upon the decision of Madras High Court in Maxim A. Lobo's case. In this case, the order for purchase of immovable property under section 269UD was quashed si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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