Law:

Section:

Section 256, read with section 254 of the Income-tax Act, 1961 - Reference - Question of law - Assessment year 1976-77 - Penalty proceedings against assessee were initiated and penalty was imposed by successor ITO under section 271(1)(a) - AAC set aside ITO's order on ground that successor ITO had not given assessee an opportunity of hearing and remanded case to ITO directing him to pass a fresh order - On further appeal, however, Tribunal quashed penalty order holding it to be void - Whether any referable question of law arose from Tribunal's order - Held, yes FACTS Penalty proceedings were initiated against the assessee under section 271(1)(a). An order imposing the penalty was passed by the successor ITO. In an appeal by the assessee, the AAC held that the levy of penalty could not be sustained since the successor ITO who levied the penalty did not give an opportunity to the assessee to be heard. The AAC remanded the case directing the ITO to pass a fresh order after affording an opportunity to the assessee of being heard. On an appeal by the assessee, the Tribunal held that the penalty order was void and quashed the same. On an application by the revenue under section 256(2): HELD The questions: (1) whether the Tribunal was justified in law in interfering with the order passed by the AAC, for all or any of the reasons stated by it, and (2) whether the order of remand passed by the AAC was, in any way, infirm or liable to be interfered with by the Tribunal, were referable questions of law. P.K.R. Menon and N.R.K. Nair for the Petitioner. JUDGMENT Paripoornan, J.-The revenue is the petitioner herein. The respondent is an assessee to income-tax. We are concerned with the assessment year 1976-77. The assessment was completed on 21-3-1979. Penalty proceedings were initiated under section 271(1)(a) of the Income-tax Act ('the Act') by notice dated 21-3-1979, which was served on the assessee on 27-3-1979. The respondent/ assessee filed a reply thereto on 29-3-1979. An order imposing the penalty was passed on 18-3-1981 by the successor ITO, in exercise of his powers under section 271(1)(a). Therespondent/assessee took up the matter in appeal. The AAC, by order…

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