COMMISSIONER OF INCOME TAX Vs. PREM KUMAR BHAGAT

JUDGEMENT

(1.) 'Whether passing of an order under s. 163(2) of the IT Act, 1961 (for brevity 'the Act') declaring a person as an agent of his NRI assessee brother is mandatory' is the question which permeate through this reference made at the instance of the Revenue by the Income -tax Appellate Tribunal (for brevity 'the Tribunal') under s. 256(1) of the Act. The Revenue respect of asst. yr. 1973 -74 which are as under :

(2.) FACTS are not in dispute and are being noticed insofar as relevant for the controversy raised. The assessee filed return for the asst. yr. 1973 -74 declaring total income of Rs. 6,417 as an agent of his NRI brother Shri Prem Kumar Bhagat. this order under s. 146 of the Act but he came before the Appellate Assistant Commissioner (for brevity 'the AAC') direction that the ITO should first of all record a finding whether Shri Prem Kumar Bhagat is an NRI. Thereafter he was to consider whether Shri Sudershan Kumar has got no objection to be appointed as an agent of his brother Shri Prem Kumar Bhagat and then to frame the assessment order after giving due opportunity to Sudershan Kumar of being heard.

(3.) THE ITO issued notice under s. 143(2) but the assessee did not reply to the notice. Consequently the ITO proceeded to frame the best judgment assessment under s. 144 of the Act which was completed at a net income of Rs. 67,420 vide (2) was issued and again the assessee failed to turn up despite service. The ITO framed the assessment ex parte and the assessee raising the contentions that the ITO was not justified in appointing Sudershan Kumar as an agent of Shri Prem Bhagat -NRI without granting opportunity of hearing under s. 163 of the Act. The AAC rejected the contention and confirmed.