Income-tax Tribunal's Dismissal Violated Natural Justice | Tribunal to Restore Appeal

The High Court held that the Income-tax Appellate Tribunal's dismissal of the appeal without affording a proper opportunity for hearing violated the principles of natural justice. The Court emphasized that the Tribunal's power to rehear an appeal is inherent and not a review of its earlier decision. Consequently, the High Court quashed the orders, directing the Tribunal to restore the appeal and ensure the petitioner a reasonable opportunity to be heard. Fresh assessment orders on the partners' share income were to be passed accordingly. The original petitions were disposed of in these terms, with copies of the judgment to be issued to the parties.

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Issues involved: Dismissal of appeal by Income-tax Appellate Tribunal without affording proper opportunity for hearing; Jurisdiction of the Tribunal to rehear the appeal.

In the case, the petitioner, a partnership firm engaged in the business of purchase and sale of arrack and Indian-made foreign liquor, filed an appeal before the Commissioner of Income-tax (Appeals) against an assessment order for the year 1983-84. The Tribunal dismissed the appeal ex parte after the petitioner's advocate's junior's request for adjournment was rejected. The Tribunal's decision adversely affected the firm and its partners, breaching the principle of "audi alteram partem." The High Court held that the Tribunal's action was in violation of natural justice principles as the firm was not given an effective opportunity to present its case.

Regarding the jurisdiction of the Tribunal to rehear the appeal, the High Court referred to a previous case where it was established that setting aside an ex parte order to provide an opportunity for the aggrieved party to be heard is not the same as a review. The Court emphasized that the power to rehear an appeal is inherent in the Tribunal and not a review of its earlier decision. Therefore, the High Court quashed the orders and directed the Tribunal to restore the appeal and dispose of it afresh, ensuring the appellant a reasonable opportunity to be heard. Depending on the result of the appeal, fresh assessment orders were to be passed on the share income of the partners of the firm by the respective Income-tax Officers.

The High Court concluded by disposing of the original petitions in the mentioned terms and directed the issuance of a copy of the judgment to the parties.

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