Procedural fairness in tax appeals permits incidental powers to secure service of notice before merits can be heard.

Section 254(1) requires both parties to an appeal to be given a opportunity of hearing, and that safeguard is substantive rather than formal. Where notice to the assessee could not be served through ordinary post, the Tribunal may use incidental and ancillary powers to direct effective service through the departmental machinery so that the appeal can be heard on merits. If the Revenue does not take effective steps to secure service, the appeal cannot proceed to adjudication and may be dismissed for want of service and hearing.

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Issues: Whether the Tribunal could require the Income-tax Department to effect service of notice on the assessee when service by post had failed, and whether the Revenue's appeal was liable to be dismissed for failure to ensure service of notice and secure the assessee's hearing.

Analysis: Section 254(1) of the Income-tax Act, 1961 requires that both parties to an appeal be afforded an opportunity of being heard. That requirement is not a mere formality but a substantive safeguard. Where notice could not be served at the address furnished by the Revenue, the Tribunal was entitled to invoke its incidental and ancillary powers to secure effective service through departmental machinery, a course consistent with the doctrine of implied powers and the Tribunal's adjudicatory jurisdiction. In the circumstances, the Revenue's failure to ensure service left the appeal incapable of being heard on merits.

Conclusion: The Tribunal was justified in insisting on effective service through the department, and the appeal was liable to be dismissed because the assessee could not be served and the Revenue did not take effective steps to secure service.

Final Conclusion: The decision affirms that procedural fairness under section 254(1) is mandatory and that the Tribunal may use incidental powers to facilitate service of notice before adjudicating a Revenue appeal.

Ratio Decidendi: A tribunal vested with appellate jurisdiction has incidental and ancillary powers necessary to make its express statutory powers effective, including directions to secure service of notice so that the statutory right of hearing under section 254(1) is fulfilled.

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