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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P. SATHASIVAM
Venkat Naicken Trust - Appellant
Versus
Income Tax Officer - Respondents
Writ Petition Nos. 4220 and 4221 of 1989 and Writ Miscellaneous petition No. 6203 of 1989
Decided On : 15 July 1998
INCOME TAX - Assessment - Service of notice - Burden of proof - Commissioner's order quashed and matter remitted for fresh disposal.
Fact of the Case:
The petitioners, a trust and its representative, challenged the Commissioner's order upholding the assessment orders for various years without giving them an adequate opportunity to be heard. The Commissioner had accepted their case for certain years but rejected it for others, without discussing the issue of service of notice.
Finding of the Court:
The court held that the Commissioner's order was not clear and that the department had failed to place any material to substantiate their plea that the assessee was served with proper notices. The court also noted that the Commissioner had shifted the burden of proof on the assessee with regard to service of notice.
Issues: 1. Whether the Commissioner erred in rejecting the assessee's claim for the assessment years 1964-65, 1971-72, 1972-73, 1973-74, 1975-76, and 1976-77, despite accepting their case for other years. 2. Whether the Commissioner erred in shifting the burden of proof on the assessee with regard to service of notice.
Ratio Decidendi: The court held that the Commissioner's order was not sustainable as the department had failed to place any material to substantiate their plea that the assessee was served with proper notices. The court also held that the Commissioner had erred in shifting the burden of proof on the assessee with regard to service of notice.
Final Decision: The court quashed the Commissioner's order and remitted the matter to him for fresh disposal, directing him to afford a reasonable opportunity to the petitioners and pass orders in accordance with law.
1. Aggrieved against the order of the Commissioner in his proceedings C. No. 1121 (107-117)/111 of 1987 dated 18-3-1988, the petitioners have approached this Court to quash the said order in relation to the assessment years 1964-65, 1971-72, 1973-74, 1975-76 and 1976-77 completed by the first respondent and direct him to set aside the orders passed by the first respondent on various grounds in Writ Petition No. 4221 of 1989.
2. In Writ Petition No. 4220 of 1989, the petitioners have prayed for a writ of prohibition prohibiting the first respondent from taking any proceedings against the petitioner in respect of arrears under the income-tax Act, 1961 ('the Act') or the Wealth-tax Act, 1957 of Venkata Naicken Trust, Randalls Road, Madras-7, in respect of assessment alleged to have been completed ore the Venkata Naicken Trust by the first respondent.
3. The first petitioner is a trust and the second petitioner is one Gouthaman, great grandson of Late Mandy Venkata Naicker who created the Trust known as Venkata Nicken Trust. It is stated that by notices dated 23-8-1981 and 1-2-1988 containing demands of taxes and penalties levied on the Venkata Naicken Trust were served on the second petitioner. Thereafter, he met the first respondent and informed him that there is no income from Venkata Naicken Trust and he was not liable to pay any portion of the amount. Since the first respondent did not, accept the plea made by the second petitioner, he preferred a revision petition to the Commissioner, Tamilnadu III Madras. In his order dated 18-3-1988, the second respondent after accepting the petitioners' case has held that the penalty proceedings in relation to the assessment years 1954-55 to 1963-64, 1965-66 to 1970-71 could not be enforced and, accordingly, he cancelled the penalties levied for the aforesaid years. However, for the assessment years 1964-65, 1971-72, 1972-73, 1973-74, 1975-76 and 1976-77, he observed that it was not possible to state that those assessments had been properly made or that demands have been raised without giving the assessee an opportunity of being heard. In such circumstance the petitioners have filed Writ Petition No. 4221 of 1989 and as a consequential relief they also prayed for writ of prohibition against the respondents in Writ Petition No. 4220 of 1991.
4. In the light of the above factual position, I have heard Mrs. Hema, the learned counsel appearing for the petitioners and Mr. S. V. Subramaniam, the learned senior counsel for respondents.
5. After taking me through the earlier orders passed by the ITO, revision made by the petitioners as well as the order of the Commissioner dated 18-3-1988, the learned counsel appearing for the petitioners contented that having accepted the case of the petitioners for the assessment years 1954-55 to 1963-64, 1965-66 to 1970-71, committed an error in rejecting the similar claim made for the assessment years 1964-65; 1971-72, 1972-73, 1973-74, 1975-76 and 1976-77. She has also contended that the Commissioner has committed error in shifting the burden on the assessees with regard to service of notice. The learned senior counsel appearing for the revenue, after taking me through the order of the Commissioner has contended that there is no order imposing penalty against the petitioners. However, in the light of the statement of facts made by the Commissioner he has fairly admitted that the order of the Commissioner dated 18-3-1988 is not clear and more particularly in the absence of the recorded from their office.
6. I have carefully considered the rival submissions.
7. There is no dispute that, now we are concerned with the order passed by the Commissioner with regard to the assessment years 1964-65, 1971-72, 1972-73, 1973-74, 1975-76 and 1976-77. It is the definite case of the assessee that the orders relating to the abovesaid period were passed without giving an adequate opportunity to them. The Commissioner on the basis of the orders of the Tribunal rightly c
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