Notice Mandatory to Pass Rectification Order U/s. 154

The principle of natural justice was not followed by the Assessing Officer while rectifying the original assessment order and the said fact was admitted by the CIT(A). It is not proper to improve the Assessing Officer’s defect by the CIT(A) which is not permissible under the Income-Tax statute wherein the notice has to be given to the assessee when there is an increase in tax liability on the assessee. The reliance upon the Apex Court judgment in case of Chockalingam & Meyyappan Vs. CIT (1963) 48 ITR 34 by the Ld. AR is precisely holding that principle of natural justice has to be followed by the authorities. In case of M/s. Deepak Agro Food (Supra), the Hon’ble Apex Court dealt with Sec. 29(8)(b) of the Act which is not having similar wordings like that of Sec. 154 (3) of the Act under which it is mandatory to issue notice. As per Section 154(3) of the Act amendment/rectification which has effect of enhancement of an assessment or reducing a refund or otherwise increasing the liability of the assessee shall not be made unless the authority concerned gives notice to the assessee of its intention to do so. Therefore, it is obligatory under the statute to issue notice by the Assessing Officer to give a reasonable opportunity of being heard to the Assessee. This is clearly set out u/s 154 of the Income Tax Act and it has to be followed by the tax authorities at the initial stages. If this procedure is not followed of issuing the notice and giving reasonable opportunity of being heard, further exercise will be non est. Therefore, the assessment order itself becomes void ab initio. The order u/s 154/254 of the Act is set aside. In all the Assessment Years the issue is identical; hence all the appeals of the assessee are allowed.

FULL TEXT OF THE ITAT JUDGMENT

These appeals are filed by the assessee against the orders dated 27/10/2014 passed by CIT(A)-XI, New Delhi for various assessment years.