JUDGMENT
1. This reference under Section 256(1) of the Income-tax Act, 1961, is at the instance of the Revenue to answer the following question of law, namely :–
” Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment made by the Income-tax Officer in the status of an individual was bad in law ? ”
2. For the assessment year 1971-72, the assessee filed returns in the status of a Hindu undivided family. The Income-tax Officer found that in the earlier years the assessee had been assessed in the status of an individual. Accordingly, the Income-tax Officer completed the assessment of the assessee in the status of an individual. Admittedly, at no point of time before completing the assessment, the Income-tax Officer gave any notice or even an indication to the assessee that his claim for assessment in the
status of a Hindu undivided family was not likely to be accepted or that he was required to show that he was entitled to an assessment under the status of a Hindu undivided family and not as an individual. The Appellate Assistant Commissioner affirmed the Income-tax Officer’s view on appeal. The Tribunal, however, accepted the further appeal of the assessee. It has held that the return being filed in the status of a Hindu undivided family, the assessment could not be completed in the status of an individual without giving notice of any such intention to the assessee before completing the assessment. This reference at the instance of the Revenue arises out of that order.
3. In our opinion, there is no infirmity in the view taken by the Tribunal. It is a basic requirement of law that a person, who is likely to be adversely affected by an order, should have an opportunity to show cause why such adverse order should not be made. The assessment of the assessee in the status of an individual when the return was filed in the status of a Hindu undivided family is admittedly adverse to the interests of the assessee. Non-compliance of this basic requirement is, therefore, fatal. Learned counsel for the Revenue was unable to point out any provision of law which permits such a course being taken or which enables the making of such an order without any notice to the assessee.
4. Consequently, the reference is answered against the Revenue and in favour of the assessee by holding that the view taken by the Tribunal was justified.