Proper service of notice is essential in penalty proceedings; unexplained findings without records led to quashing and remand.

Where an assessee specifically disputes service of notice, the Department must produce material proving due service, and a penalty-related order cannot be sustained on a bare assumption that service was effected. For the disputed assessment years, the Commissioner's order contained no clear particulars and the Revenue produced no records to establish proper service, so the order was quashed. The matter was remitted for fresh disposal after giving the petitioners a reasonable opportunity, and no coercive steps could be taken by the Income-tax Officer until fresh orders were passed.

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Issues: Whether the Commissioner could sustain the penalty-related order for the assessment years 1964-65, 1971-72, 1973-74, 1975-76 and 1976-77 without clear particulars and without material to show proper service of notice, and whether the matter should be quashed and remitted for fresh disposal.

Analysis: The challenge related only to the later assessment years, since the Commissioner had already cancelled the penalty proceedings for the earlier years. For the disputed years, the order contained no clear discussion and proceeded on the footing that the assessee had not proved absence of service. Where the assessee specifically disputes service of notice, the burden lies on the Department to produce the relevant material establishing due service. In the absence of particulars in the impugned order and in the absence of records from the Revenue, the order could not be sustained.

Conclusion: The order of the Commissioner for the disputed assessment years was quashed and the matter was remitted for fresh disposal after giving the petitioners reasonable opportunity. Consequentially, no coercive proceedings could be taken by the Income-tax Officer until the Commissioner passed fresh orders.

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