Income-tax---

----Assessment---Penalty---Notice---Serviceof notice---Burden of proof Plea that notice had not been served---Onus on Revenue to prove proper service of notice---No proof of service of notice---No clear orders of assessment and penalty---Matter remanded---Indian Income Tax Act, 1961 S.282.

When the assessee pleads that he has not been properly served with any notice, it is for the Department to place the relevant material to substantiate their plea that the assessee was served with proper notices.

Held, that on a revision petition the Commissioner of Income -tax had rightly-cancelled the penalty proceedings initiated in respect of the assessment years 1954-55 to 1963-64 and 1965-66 to 1970-71. However, the Commissioner of Income-tax in respect of the assessment years 1964-65, 1971-72, 1972-73, 1973-74, 1975-76 and 1976-77, without any discussion and after holding that the assessee was not able to produce any evidence that there was no service of notice, refused to interfere with regard to the orders passed in those assessment years and the penalties levied. The said approach of the Commissioner of Income -tax could not be sustained. The impugned order was also not clear. The impugned order was liable to be quashed and the matter had to be decided afresh.

Mrs. Hema for K. Ramgopal for Petitioners.

S.V. Subramaniam for C.V. Rajan for Respondent.

JUDGMENT

Aggrieved against the order of the Commissioner of Income-tax in his proceedings C. No. 1121 (107-117)/111 of 1987, dated March 18, 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.

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, or the Wealth Tax Act, 1957, of Venkata Naicken Trust, Randalls Road, Madras 7, in respect of the assessment alleged to have been completed on the Venkata Naicken Trust by the first respondent.

The first petitioner is a trust and the second petitioner is one Gouthaman, great grand-son of the late Mandy Venkata Naicker, who created the trust known as Venkata Naicken Trust. It is stated that notices, dated August 23, 1981 and February 1, 1988, containing demands of taxes and penalties levied on Venkata Naicken Trust were served on the second petitioner. Thereafter, he met the first respondent and informed him that there was 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 of Income-tax, (CIT)! Tamil Nadu III, Madras. In his order, dated March 18, 1988, the second respondent after accepting the petitioner's 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 circumstances, the petitioners have filed Writ Petition T1o.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.

In the light of the above factual position, I have heard Mrs. Hema, learned counsel appearing for the petitioner, and Mr. S.V Subramaniam, learned senior counsel for the respondents.

After taking me through the earlier orders passed by the Income-tax Officer, the revision made by the petitioners as well as the order of the Commissioner of Income-tax, dated March 18, 1988, learned counsel appearing for the petitioners contended that having accepted the case of the petitioners for the assessment years 1954-55 to 1963-64, 1965-66 to 1970-71, he 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 an error in shifting the burden on the assessees with regard to service of notice. Learned senior counsel appearing for the Revenue, after taking me through the order of the Commissioner of Income-tax 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 March 18, 1988, is not clear and more particularly in the absence of the records from their office.

I have carefully considered the rival submissions.

There is no dispute that, now we are concerned with the order passed by the Commissioner of Income-tax 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 above said periods were passed without giving an adequate opportunity to them. The Commissioner of Income-tax on the basis of the orders of the Income-tax Appellate Tribunal rightly cancelled the penalty proceedings initiated in respect of the assessment years 1954-55 to 1963-64, 1965-66 to 1970-71. However, coming to the assessment years 1964-65, 1971-72, 1972-73, 1973-74, 1975-76 and 1976-77 without any discussion and after holding that the assessee has not been able to produce any evidence that there was no service of notice refused to interfere with regard to the order passed in those assessment years and the penalties levied. The said approach of the Commissioner cannot be sustained. When the assessee pleads that he has not been properly served with any notice, it is for the Department to place the relevant material to substantiate their plea that the assessee was served with proper notices. As stated earlier, the impugned order is also not clear. Even learned senior counsel appearing for the Revenue has stated that no penalty proceedings were initiated against the petitioners. In the absence of particular in the impugned order coupled with the absence of records from the Revenue. I am constrained to accept the argument of learned counsel appearing for the petitioners and consequently quash the order passed by the Commissioner of Income-tax, dated March 18, 1988, and remit the matter to him for fresh disposal.

The net result is, Writ Petition No.4221 of 1989 is allowed, the order of the second respondent-Commissioner of Income-tax dated March 18, 1988, is quashed and the matter is remitted to the said authority for fresh disposal in relation to the assessment years 1964-65, 1971-72, 1973-74, 1975-76 and 1976-77 and to pass orders in accordance with law after affording reasonable opportunity to the petitioners.

In the light of the order in the above said writ petition, till such order is passed by the Commissioner of Income-tax, it is not open to first respondent, viz the Income-tax Officer, Trust Circle-1 (2), Madras, to take any proceeding against the petitioners in respect of the arrears of income-tax or wealth tax with reference to the assessment years mentioned above. Accordingly, Writ Petition No.4220 of 1989 is allowed to the extent mentioned above. However, there will be no order to costs in both the petitions. Consequently, W.M.P. No.6203 of 1989 is closed.

M.B.A./683/FC

Order accordingly.