- (1.) THE assessment year is 1966-67. The assessee-firm derived income from supply of electricity to the town of Jagadhri, known as Yamunanagar. The ITO assessed the compensation received in the different years. The ITO granted continuation of registration and in doing so, he failed to notice that the share allocation amongst the partners was made in contravention of the clauses of the partnership deed, for, even losses were allocated amongst the minors as per the profit and loss appropriation account.
(2.) SINCE both the actions of the ITO were erroneous and prejudicial to the interests of the Revenue, a notice under Section 263 of the I. T. Act, 1961 (hereinafter referred to as "the Act"), was issued to the assessee by the Addl. Commissioner in order to assess the entire compensation in one year, as also to cancel registration. After giving the assessee an opportunity of being heard, the Addl. Commissioner by his order under Section 263 of the Act dated October 13, 1972, set aside the assessment made by the ITO and directed him to do it afresh. By a separate order under Section 263 of the Act on the same day, continuation of registration allowed to the assessee-firm was also cancelled.
(3.) AGAINST the order of the Addl. Commissioner the assessee preferred an appeal to the Appellate Tribunal. The Appellate Tribunal set aside both orders of the Addl. Commissioner. While passing the said order, the Tribunal observed that the order of the Addl. Commissioner was vitiated for violation of the principles of natural justice. The Tribunal found that the assessee's written application made on October 13, 1972, for adjournment had been rejected by the Addl. Commissioner. However, according to the Revenue, this finding of the Tribunal is not correct as the principles of natural justice have not been violated.;