Assessing Officer's statutory right to hearing u/s250(2) invalidates order when not heard; matter remitted for de novo adjudication

Whether an order under s.250 is valid where the Assessing Officer (AO) was not afforded a hearing: s.250(2) expressly grants the right to be heard to the AO "either in person or by a representative"; that right was not observed. Consequently, the tribunal remitted the matter to the file of CIT(A) for de novo adjudication after giving the AO a reasonable opportunity of hearing, without deciding the substantive question of liability to deduct TDS on payments to the foreign-domiciled entity.

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Issues: (i) Whether the appellate order passed by the Commissioner (Appeals) without affording the Assessing Officer an opportunity of hearing under section 250(2) is vitiated and whether the matter should be remitted for de novo adjudication after hearing the Assessing Officer.

Analysis: Section 250(2) grants the right to be heard at the hearing of the appeal to both the appellant and the Assessing Officer. The statutory scheme for appeals under section 248 concerns determination of tax deductible under section 195 and related obligations; where the Commissioner (Appeals) proceeds without providing the Assessing Officer the hearing guaranteed by section 250(2), the procedural right conferred on the Assessing Officer is not complied with. Given the absence of such opportunity in the present proceedings, and because the question of tax withholding liability arising from foreign remittances falls within the purview of the Assessing Officer's jurisdictional functions, the appropriate remedy is to remit the matter for fresh adjudication so that the Assessing Officer may be afforded a reasonable opportunity to be heard and the appeal decided afresh on merits.

Conclusion: The appeal is allowed to the extent that the matter is remitted to the Commissioner (Appeals) for de novo adjudication after giving a reasonable opportunity of hearing to the Assessing Officer; this result is in favour of the assessee.

Ratio Decidendi: Where section 250(2) confers a right to be heard to the Assessing Officer at the appellate hearing, failure to afford that right vitiates the appellate proceedings and requires remand for fresh adjudication after hearing the Assessing Officer.

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