TaxTMI 
TaxTMI 
1982 (6) TMI 184
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....o the tune of Rs. 68,000. The assessee had entered into a settlement with the department and the amount found unexplained was treated as income and spread over the asst. yrs. 1973-74 to 1976-77. The ITO initiated penalty proceedings. 3. It would appear that after the issue of show cause notice immediately after the assessments were over on 19th May, 1979, penalty proceedings were kept pending for some reason or other. The assessee had given a reply on 27th Nov., 1979 regarding the various points raised in the penalty proceedings. Later on, on 4th August, 1980 she had made further written submissions. It also appears that the Chartered Accountant representing the assessee appeared before the ITO on 4th August, 1980. On the relevant date, Sh....
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....type of cases where the assessee rests contents with filing written reply, it is not necessary for the succeeding officer to hear the assessee again. This proposition is supported by a number of High Court decisions. They are reported as (1961) 42 ITR 129 (Pat), (1967) 63 ITR 130 (Mys), (1967) 63 ITR 14 (Guj), (1964) 53 ITR 57 (Mys) and (1953) 48 ITR 262 (Cal). There is only one decision which has taken a discordant note, i.e. the A.P. High Court relied on by the AAC. Shri Sathe submitted that in view of the facts that majority of the High Courts held that no such fresh opportunity need be given, the A.P. High Court's decision need not be followed. 8. He then submitted giving a hearing is part of the procedural sections. An interpretation ....
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....owers for setting aside a penalty order, Shri Sathe submitted that such powers are inherent in an appellate authority. He also referred to the decision of the Supreme Court in the case of Guduthur Bros. (1960) 40 ITR 298 (SC) which was also a case wherein penalty proceedings, orders were set aside. 12. Shri Jayaraman appearing for the assessee submitted that as a matter of fact on 7th August 1980 the assessee was personally represented before the ITO through the Chartered Accountant. The assessee had filed a letter dt. 4th August 1980 as well as affidavit. So that was a case where the assessee was personally present. It was not a case where the assessee was rest content by merely sending a letter explaining his case. He then submitted that....
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....ch is different. The Supreme Court's decision in Kapurchand Shrimal also dealt with an assessment proceeding. He further submitted that there was no case for invoking the inherent powers where the powers are specifically spelt out. He further submitted in the alternative that looking into the manner in which the ITO has passed the order, he had not applied his mind at all to it and therefore, the order was correctly cancelled. 14. We have considered the submissions. We are of opinion that the AAC is justified in cancelling the penalties. Taking up the first issue, i.e., whether the ITO should give a fresh hearing whenever there is a change, we are of opinion that on the facts of the case, a fresh hearing is necessary. It is an admitted pos....
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....ow an interpretation as given by the A.P. High Court would make the machinery sections unworkable. All that is required is that a hearing must be given. It may be that in cases where a transfer of an incumbent has taken place in a short time before limitation expires difficulty might be found by the department. This case certainly is not one such a case. We cannot decide the issue by keeping in mind cases of that type where the limitation comes within a short period in the change of the incumbent. We do not find any difficulty in giving an interpretation as the A.P. High Court has given, it cannot create any jeopardy for the department. 16. We are unable to accept his alternative submissions. We cannot say that the appeal proceedings are c....