- (1.) HOARD learned counsel for the parties.
(2.) THIS is an application under Section 256(2) of the Income-tax Act, 1961. It relates to the assessment for the assessment year 1987-88. In the assessment made on March 20, 1990, certain additions were made in the income of the assessee without affording an opportunity of hearing to the asses-see. On appeal, the Appellate Assistant Commissioner set aside the said additions made without affording an opportunity of hearing to the asses-see and remanded the case back to the Income-tax Officer for deciding the case of additions so set aside after affording an opportunity of hearing to the assessee. Aggrieved by that order the assessee preferred an appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal held that the additions made without affording an opportunity of hearing, being in contravention of the specific requirement of the provisions of the statute that before making any addition in the income returned by the assessee, the assessee has to be given an opportunity of hearing, renders the order void ab initio and nullity which could not be cured and has only to be quashed and could not be made the subject-matter of remand. Therefore, it allowed the appeal of the assessee, the additions made by the Income-tax Officer were set at naught. Aggrieved by that order of the Income-tax Appellate Tribunal in Appeal No. 1132/JP of 1991, the Commissioner of Income-tax, Jodhpur, made an application under Section 256(1) of the Income-tax Act for referring the following questions of law said to be arising out of the Tribunal's order : "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in law in holding that the order passed by the Assessing Officer was illegal and ab initio void for the reason that the principles of natural justice were violated by not affording an opportunity ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in law in holding that not giving the assessee an opportunity was an incurable mistake of law and, therefore, the Commissioner of Income-tax (Appeals) was not justified in setting aside the assessment order for making; afresh after allowing the assessee an opportunity ? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in deleting the addition of Rs. 11,283 made by the Assessing Officer on account of rental income from property in the benami name of Shri Afroz, the minor son of the assessee ?" The said reference application R. A. No. 126/JDH of 1998 has been rejected in respect of questions Nos. 1 and 2 on the ground that the Tribunal has decided the appeal after taking into consideration provisions of law in the light of decisions of the Supreme Court and therefore need not be referred and question No. 3 which was in respect of deletion of the addition of Rs. 11,283 the Tribunal refused to refer the said question on the ground that the finding that the property belongs to the minor son of the assessee and was not held benami was a question of fact and does not give rise to the question of law. We have heard learned counsel for the parties and for the reasons to be stated hereinafter we are of the opinion that the order of the Tribunal rejecting Reference Application No. 126/JDH of 1998 holding that questions Nos. 1 and 2 are not questions of law is erroneous. On the first premises the question raised is about the scope and ambit of the authority of the appellate authority to make an appropriate order and to direct rehearing of the case in case it finds an order not sustainable because of want of opportunity given to the affected party, is not a question of fact but is a question of applying the legal principles about exercise of jurisdiction of the appellate authority in the matter of directing a remand or quashing" an order. The Tribunal also says in its order that the Tribunal decided the issue in favour of the assessee by holding that the order of the Assessing Officer was ab initio void. In our considered opinion, the decision of the Tribunal was based on the legal provisions and on the basis of the decisions of the apex court. The very fact that the decision depends on considering the statutory provisions and interpretation thereof suggests that the question sought to be raised and referred to this court for its opinion is a question of law and not a question of fact. The mere fact that the Tribunal has thought it fit to rely on one Supreme Court decision by itself does not make a case finally decided by the Supreme Court inasmuch as it is not even the finding of the Tribunal that the issue stands concluded by the decision of the Supreme Court.
(3.) IN this connection, it will be apposite to note that learned counsel for the Revenue relied on the decision of the Supreme Court in Kapurchand Shrimal v. CIT (1981] 131 ITR 451, wherein the Supreme Court has held that where a claim of partition in the Hindu undivided family is made in time and the assessment is made on the Hindu undivided family without holding an enquiry as contemplated by Section 25A(1), the assessment is liable to be set aside in appeal as it is in clear violation of the procedure prescribed for that purpose. The Supreme Court further went on to state that when the Tribunal holds that such an assessment is liable to be set aside, the duty of the Tribunal does not end with making a declaration that the assessment is illegal. The proper order to be passed in such a case would be to set aside the assessment and to direct the INcome-tax Officer to make a fresh assessment in accordance with the procedure prescribed by law. On the other hand, Shri Rajendra Mehta, learned counsel for the Revenue placed reliance on another decision of the Supreme Court in R. B. Shreeram Durgaprasad and Fatechand Nursing Das v. Settlement Commission (I. T. and W. T.) [1989) 176 ITR 169, wherein the Supreme Court quashed the order passed by the Settlement Commission as a nullity which has been made without affording an opportunity of hearing to the assessee. A Division Bench of this court in Prem Agencies v. CIT [1988] 173 ITR 110, has opined that where the appeal by the Revenue to the Tribunal was merely for quashing the order of remand passed by the Appellate Assistant Commissioner, the scope of the appeal was consideration of the correctness of the order of remand. In such event the Tribunal was not justified in proceeding to decide the question of registration on the merits without the same having been decided first by the Appellate Assistant Commissioner. Learned counsel for the assessee has sought to distinguish this case on the facts to urge that it has no application to the present case. These propositions in our opinion amply demonstrate the nature of the question arising out of the order of the Tribunal as a question of law which the Tribunal was bound to refer to this court for its decision. ;