Case: Commnr. Of Sales Tax, M.P.  Vs. M/S. Subhash &amp; Company

1922. All that Sections 11(4) and 11A(1) prescribe is that before taking proceedings against an assessee under those provisions, he should be given a reasonable opportunity of being heard. In fact, those sections do not speak of any notice. But Rule 32 prescribes the manner in which the reasonable opportunity contemplated by those provisions should be afforded to the assessee. The period of 30 days prescribed in Rule 32 is not mandatory. The rule itself says that ordinarily note less than 30 days notice should be given. Therefore, the only question to be decided is whether the defects noticed in those notices had prejudiced the appellants. It may be noted that when the assessees received the notices in question, they appeared before the assessing authority, but they did not object to the validity of those notices. They asked for time for submitting their explanation. The time asked for was given. Therefore, the fact that only nine days were given to them for submitting explanation could not have in any manner prejudiced them. So far as the mistake in the notice as regards the assessment year is concerned, the assessees kept silent about that circumstance till 1958. It was only when they were sure that the period of limitation prescribed by Section 11A had expired, they brought, that fact to the notice of the assessing authority. It is clear that the appellants were merely trying to take advantage of the mistakes that had crept into the notices. They cannot be permitted to do so. We fail to see why those notices are not valid in respect of the periods commencing from February 1, 1953 till 31.10.55. We are unable to agree with Mr. Gokhales contention that each one of those notices should be read separately and that we should not consider them together. If those notices are read together as we think they should be, then it is clear that those notices given the appellants the reasonable opportunity contemplated by Sections 11(4) (a) and 11-A(1). In Chatturam vs. Commr. of Income Tax Bihar, (1947 (15) ITR 302) = (AIR 1947 FC 32), the Federal Court held that any irregularity in issuing a notice under S. 22 of the Income Tax Act, 1922 does not vitiate the proceeding: that the income tax assessment proceedings commence with the issue of the notice but the issue or receipt of the notice is, however, not the foundation of the jurisdiction of the income tax officer to make the assessment or of the liability of the assessee to pay the tax. The liability to pay the tax is founded on Sections 3 and 4 of the Income Tax Act which are the charging sections, Section 22 and others are the machinery sections to determine the amount of tax. The ratio of that decision applies to the facts of the present case. In our opinion, the notices issued in the year 1955 are valid notices so far as they relate to the period commencing from February 1, 1953 to October 31. 1955". 21. Whenever an order is struck down as invalid being violation of principles of natural justice, there is no final decision of the case and, therefore, proceedings are left open. All that is done is that the order assailed by virtue of its inherent defect is vacated but the proceedings are not terminated. (See Guduthur Bros vs. Income Tax Officer, Special Circle, Bangalore (1960 (40) ITR 298 SC) and Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and others vs. Pratap Rai (1978 (114) ITR 231 SC). In Commissioner of Sales Tax, U.P. vs. R.P. Dixit Saghidar (2001 (9) SCC 324 ), it was held as follows: "We are unable to subscribe to the view of the High Court. The aforementioned passage quoted from the Tribunals order shows that the Tribunal was of the view that once the order is quashed by the Assistant Commissioner, he could not in law remand the case for a decision afresh. As has been noted, before the Assistant Commissioner the counsel for the respondent had contended that the exparte order should have been set aside because no notice had been received. When principles of natural justice are stated to have been violated it is open to the appellate authority, in appropriate cases, to set aside the order and require the Assessing Officer to decide the cases de novo. This is precisely what was directed by the Assistant Commissioner and the Tribunal. In our opinion, was clearly in error in taking a contrary view." The view is clearly applicable to the facts of the present case. 22. The emerging principles are:- (i) Non-issue of notice or mistake in the issue of notice or defective service of notice does not affect the jurisdiction of the assessing officer, if otherwise reasonable opportunity of being heard has been given:(ii) Issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard.(iii) If prejudice has been caused by non-issue or invalid services of notice the proceeding would be vitiated. But irregular service of notice would not render the proceedings invalid: more so, if assessee by his conduct has rendered service impracticable or impossible.(iv) In a given case when the principles of natural justice are stated to have been violated it is open to the appellate authority in appropriate cases to set aside the order and require the Assessing Official to decide the case de novo. 23. In the instant case, the learned Single Judge and the Division Bench have not considered the question of prejudice, grant of reasonable opportunity in the aforesaid perspective. 24. In view of what has been stated in R.P. Dixits case (supra), learned Single Judge was justified in directing de novo assessment by an order of remand. The direction was appropriate as the only ground on which the interference was made related to the violation of principles of natural justice by alleged improper service of notice. The Division Bench was not justified in upsetting the direction.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]22. The emerging principlesNon-issue of notice or mistake in the issue of notice or defective service of notice does not affect the jurisdiction of the assessing officer, if otherwise reasonable opportunity of being heard has been given:(ii) Issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard.(iii) If prejudice has been caused by non-issue or invalid services of notice the proceeding would be vitiated. But irregular service of notice would not render the proceedings invalid: more so, if assessee by his conduct has rendered service impracticable or impossible.(iv) In a given case when the principles of natural justice are stated to have been violated it is open to the appellate authority in appropriate cases to set aside the order and require the Assessing Official to decide the case de novo.In the instant case, the learned Single Judge and the Division Bench have not considered the question of prejudice, grant of reasonable opportunity in the aforesaidJudge was justified in directing de novo assessment by an order of remand. The direction was appropriate as the only ground on which the interference was made related to the violation of principles of natural justice by alleged improper service of notice. The Division Bench was not justified in upsetting the direction.