Procedural fairness in income-tax appeals requires adjudication of submissions and notice-bound additions before fresh decision

Additions made under assessment under section 143(3) were challenged on the ground that income was brought to tax beyond the show-cause notice and that the first appellate authority failed to consider the assessee's submissions. The appellate order also did not deal with the procedural objection or the merits of the various additions. The matter was therefore set aside for fresh adjudication after granting a reasonable opportunity of hearing.

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Issues: Whether the matter required to be set aside to the first appellate authority for fresh adjudication on account of failure to consider the assessee's submissions and the addition of income beyond the show-cause notice.

Analysis: The assessment was framed under section 143(3) of the Income-tax Act, 1961. The order revealed that additions were made not only on the items covered by the show-cause notice but also on other incidental receipts, including interest income, and the first appellate authority did not adjudicate the objection relating to procedural irregularity or the merits of the various additions. In these circumstances, the matter required reconsideration after granting the assessee a reasonable opportunity of being heard.

Conclusion: The matter was set aside to the first appellate authority for fresh adjudication.

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