Opportunity to be heard required before treating a person as a non-resident's agent; case remitted for fresh adjudication.

Section 163(2) requires that a person shall not be treated as agent of a non-resident unless afforded an opportunity of being heard on that liability; revenue proceeded to treat the assessee as agent without providing a proper hearing. The matter is remitted to the Assessing Officer for fresh consideration with directions to give the assessee three effective opportunities to be heard and to proceed in accordance with law; appeal recorded as allowed for statistical purposes.

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Issues: Whether the assessee could be treated as agent of a non-resident under section 163 of the Income-tax Act, 1961 without being given an opportunity of being heard by the Assessing Officer.

Analysis: Section 163(2) of the Income-tax Act, 1961 provides that no person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such. The revenue authorities issued a show cause notice and proceeded to treat the assessee as agent but did not afford proper opportunity to the assessee to contest its liability as agent. The matter requires fresh consideration by the Assessing Officer with statutory opportunities to the assessee to establish that it is not an agent for tax liability under Chapter XV.

Conclusion: The matter is restored to the Assessing Officer with a direction to provide the assessee three effective opportunities to be heard and to proceed afresh in accordance with law; appeal treated as allowed for statistical purposes in favour of the assessee.

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