Successor officer proceedings require notice of jurisdiction change before continuation; denial of hearing invalidates penalty orders.

Penalty proceedings continued by a successor income-tax authority were held unsustainable where the assessee was not informed of the change in jurisdiction and was not given an opportunity to seek a hearing before continuation under section 129. The proviso to section 129 permits a successor to proceed from the stage reached by the predecessor, but preserves the assessee's statutory right to demand a hearing. Because the record did not show prior intimation of the transfer of proceedings, that safeguard was denied and the penalty orders were vitiated.

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Issues: Whether penalties under section 271(1)(a) and section 273(c) could be sustained when the show-cause proceedings were completed by a successor Income-tax Officer without prior intimation of the change in jurisdiction and without affording the assessee an opportunity of being heard under section 129.

Analysis: The substantive explanation for the defaults was not accepted, but the decisive question was whether the successor officer could continue the penalty proceedings without complying with the proviso to section 129. That provision permits a successor to proceed from the stage left by the predecessor, but preserves the assessee's right to demand a hearing before continuation. The exercise of that right necessarily depends on intimation of the change in jurisdiction. Since the record did not show that the assessee was informed of the transfer of the proceedings to the successor officer, the statutory safeguard was held to have been denied.

Conclusion: The penalties were not sustainable and the appeals were allowed in favour of the assessee.

Final Conclusion: Non-compliance with the hearing safeguard attached to continuation of proceedings by a successor income-tax authority vitiated the penalty orders.

Ratio Decidendi: When proceedings are continued by a successor income-tax authority, the assessee must be informed of the change in jurisdiction so as to enable the statutory right to seek a hearing before continuation under section 129; failure to do so invalidates the resultant order.

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