1. The Judgment of the Court was delivered by Paripoornan, J.- These are connected cases. At the instance of the Revenue the Income Tax Appellate Tribunal (in short, the Tribunal) has referred the following two questions of law for the decision of this Court in the above cases:

"1. Whether, on the facts and in the circumstances of the case and on an interpretation of S.129 of the Income Tax Act the Tribunal is right in interfering with the penalty order by confirming the order of the Appellate Assistant Commissioner

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee cannot be deemed to have declined to avail of the opportunity by demanding to have rehearing or reopening of the case, not could be deemed to have waived it"

2. The same assessee is the respondent in all the four referred cases. Common questions arise for consideration in the connected cases. They relate to the assessment years 1973-74, 1974-75 and 1975-76. The respondent is an assessee to income tax. For the years 1973-74 and 1974-75, the Income Tax Officer initiated proceedings under S.271(1)(c) of the Income Tax Act, 1961 for alleged concealment of the particulars of the income. For the assessment year 1975-76 the Income Tax Officer initiated proceedings under S.271(1)(a) of the for late filing of the return and under S.271(1)(c) of the for concealment of the particulars of income. That is why for the three assessment years there were four proceedings and four appeals. Two appeals relate to the assessment year 1975-76. For all the years penalties were levied by the Income Tax Officer. Under S.271(1)(c) of the and for the year 1975-76 penalty under S.271(1)(a) of, the was also levied. In the appeals filed by the assessee, the Appellate Assistant Commissioner (in short, AAC) held that the Income Tax Officer, who levied the penalty in all the four cases is different from the Income Tax Officer, who had completed the assessment and initiated the penalty proceedings and the officer who levied the penalty did so without giving an opportunity to the assessee of being heard or even without issuing a notice to the assessee. The AAC held that when a successor officer takes up the penalty proceeding for disposal, it is only fair and proper that he gives an opportunity to the assessee of being heard and if he fails to do so and levies the penalties without giving an opportunity to the assessee the penalty orders will be bad in law. He relied on the decision of the Calcutta High Court in C.I.T. v. Smt. Chitra Mukerjee (127 ITR 252) [LQ/CalHC/1980/250] . All the four appeals filed by the assessee were allowed and the penalties levied were cancelled. The revenue carried the matter by way of appeals before the Tribunal. All the four appeals were considered together and a common order was passed by the Tribunal, dated 7th July 1983. After adverting to the rival pleas put forward before it and after adverting to S.129 and S.271(1)(a), 271(1)(c) and 274(1) of the Income Tax Act and the decisions of the Andhra Pradesh High Court in Anantha Naganna Chetty v. C.I.T. (78 ITR 743) [LQ/TelHC/1969/115] and of the Calcutta High Court in Smt. Chitra Mukerjee case (127 ITR 252) [LQ/CalHC/1980/250] . The Tribunal held that whenever any income tax authority is succeeded by another, the successor may continue the proceedings from the stage from which the proceedings was left by his predecessor, and in such a case, the assessee has a right to demand that before the proceeding is so continued, the previous proceedings or any part thereof should be reopened. The Tribunal further held that it is implicit in the section that the succeeding authority should intimate the assessee his intention to continue the proceeding from the stage at which it was left by his predecessor. In the absence of any opportunity provided for the exercise of his right or without the knowledge that such opportunity exists, the assessee cannot be deemed to have declined to avail of the opportunity by demanding a rehearing of reopening of the case; nor could he be deemed to have availed it. On the basis of the above view of the law, the Tribunal held that the successor Income Tax Officer in the instant case has no authority to pass an order under S.271(1)(a) and (c) of the Income Tax Act, without giving the assessee a fresh opportunity of being heard and the AAC was justified in cancelling the penalties, following the decision of Smt. Chitra Mukerjee case (127 ITR 252) [LQ/CalHC/1980/250] . The orders passed by the AAC were confirmed by the Tribunal. It is thereafter, at the instance of the Revenue, the two questions of law, formulated hereinabove, have been referred for the decision of this Court.

3. We heard counsel for the Revenue, Mr. P. K. R. Menon and also counsel for the respondent assessee Mr. N. Sukumaran. Admittedly, in these cases in pursuance to the notices issued by the Income Tax Officer under S.271 read with S.274 of the, the assessee filed his objections. Subsequently, there was a change in the incumbent of the office. The successor Income Tax Officer, without any further notice to the assessee, or hearing him, levied penalties under S.271(1)(c) for all the three years and also under S.271(1)(a) for the year 1975-76. The short question that arises for consideration, is whether, in a case where the assessee has already filed his objections to the notices, proposing to levy penalties, the change in the incumbent of the office necessitates a fresh notice to be given to the assessee or an opportunity for hearing. The Andhra Pradesh High Court in Anantha Naganna Chetty case (78 ITR 743) [LQ/TelHC/1969/115] has held that it is necessary for the succeeding Income Tax Officer to intimate the assessee of his intention to continue the proceeding from the stage at which it was left by his predecessor; and in the absence of such intimation, the assessee cannot exercise the right conferred on him under S.129 of the Income Tax Act. In other words, a change in the incumbent of the office necessitates that the succeeding authority should intimate to the assessee his intention to continue the proceeding from the stage at which it was left by his predecessor. The absence of the knowledge of the assessee, that the assessing authority has been succeeded by another and that the successor proposes to pass the penalty order is a vital factor to be borne in mind. The above decision has been followed in Commissioner of Wealth Tax v. Smt. Azizunnissa Begum (119 ITR 376). The decision of the Calcutta High Court in Smt. Chitra Mukerjee case (127 ITR 252) [LQ/CalHC/1980/250] is also in accord with the said view.

4. Counsel or the Revenue placed reliance on the following decisions and contended that the statement of the law enunciated in Anantha Naganna Chetty case (78 ITR 743) [LQ/TelHC/1969/115] (Andhra Pradesh) and followed in Smt. Azizunnissa Begum case (119 ITR 376) and in Smt. Chitra Mukerjee Case (127 ITR 252) [LQ/CalHC/1980/250] (Calcutta) has been very widely stated and all that is necessary in compliance with S.271 read with S.274 of the is that the assessee should be heard, or should be given a reasonable opportunity of being heard before the penalty is imposed. The fact that the assessee was given an opportunity to file his representations and he did so in the instant case, is sufficient compliance with the provisions of S.271 read with S.274 of the Income Tax Act. Counsel for the Revenue argued that this is not a case where the predecessor Income Tax Officer took any oral evidence or that by the change of the incumbent in the office the assessee prayed for a rehearing of the matter and in the absence of such eventualities the Tribunal Was in error in holding that the failure of the succeeding Income Tax Officer to afford an opportunity to the assessee of being heard before the actual imposition of penalty, will render the proceedings illegal. Reliance was placed on the following decisions: Kanailal Gatani v. Commissioner of Income Tax (48 ITR 262 [LQ/CalHC/1962/128] (Calcutta)), Prabhudas Jagjivandas v. Income Tax Officer (55 ITR 1 [LQ/GujHC/1964/29] at pp. 16 and 17 (Guj.)), A. C. Metal Works v. Commissioner of Income Tax (66 ITR 14 [LQ/RajHC/1967/35] (Raj.)) and Commissioner of Wealth Tax v. Umrao Lal (136 ITR 49 [LQ/AllHC/1982/131] (All.)). Counsel for the assessee, supporting the decision of the AAC and the Tribunal, placed strong reliance on the decisions in Anantha Naganna Chetty case (78 ITR 743) [LQ/TelHC/1969/115] , Smt. Azizunnissa Begum case (119 ITR 376), Smt. Chitra Mukerjee case (127 ITR 252) [LQ/CalHC/1980/250] and Ram Saran Das Kapur v. Commissioner of Income Tax (77 ITR 298) (Punjab and Haryana).

5. It will be useful to extract S.271(1)(a) and (c) and S.274 and 129 of the Income Tax Act.

"271 Failure to furnish returns, comply with notices, concealment of Income, etc. (1) If the Income Tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person -

(a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-S.(1) of S.139 or by notice given under sub-S.(2) of S.139 or S.148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-S.(1) of S.139 or by such notice, as the case may be, or............

(c) has concealed the particulars of his income or furnished inaccurate particulars of such income........"

"274. Procedure. (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard......"

"129. Change of incumbent of an Office. Whenever in respect of any proceeding under this Act an Income Tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the Income Tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor:

Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard."

6. The fundamental question that arises for consideration is what is meant by the expression that the assessee has been "heard" or has been given "a reasonable opportunity of being heard" Is an "oral hearing" contemplated in all cases The question is whether the assessee should be given an opportunity of being heard "orally" in all cases, or is it sufficient if the assessee is given an opportunity to file his objections So far as this case is concerned, the succeeding Income Tax Officer did not intimate at all to the assessee in terms of S.129 read with S.274 of the and so the more fundamental question as to whether the opportunity contemplated under S.274(1) of the necessarily means an "opportunity of being heard orally" does not really arise. We may indicate that judicial opinion is not uniform on this aspect of the matter. De Smith in Judicial Review of Administrative Action, 4th Edn., at page 201 has stated thus:

"It must be pointed out, however, that when the words hearing or opportunity to be heard are used in legislation, they nearly always denote a hearing at which oral submissions and evidence may be tendered..........................

In the absence of clear statutory guidance "on the matter, one who is entitled to the protection of the audi alteram partem rule is now prima facie entitled to put his case orally; but in a number of contexts the courts have held natural justice to have been satisfied by an opportunity to make written representations to the deciding body, and there are still many situations where a person will be able to present his case adequately in this way."

One of us had occasion to deal with the matter in detail in Indian Transformers Ltd. v. Assistant Collector 1983 KLT 861. Apart from the decisions referred to therein we may also refer to a decision of the Supreme Court in M/s Travancore Rayons Ltd. v. The Union of India AIR 1971 SC 862 [LQ/SC/1969/452] (at page 864, Para.7). It is trite law that before a person is condemned or an adverse order is passed against him, he should be given an opportunity to be heard. It is in conformity with the principles of natural justice. It is "fairness in action". But the content of "natural justice" or "fairness" may be indicated in specific words in particular statutes. In cases where the statute requires that the party "should be heard" or afforded an opportunity of being heard", will it be sufficient in all cases and in all situations, only to afford an opportunity to file objections or representations against the proposed action We should say that it may not be so. Circumstances wherein a "personal hearing" will be required, are very many. Some illustrative cases have been detailed in Indian Transformers Ltd. case 1983 KLT 861. The Supreme Court has indicated other circumstances in which oral hearing may be necessary Mis Travancore Rayons Ltd. case AIR 1971 SC 862 [LQ/SC/1969/452] at page 864. Considering the importance or gravity of the matter, there may be many cases or circumstances, wherein an oral hearing will be necessary in order to comply with the principles of natural justice or to comply strictly with the requirements of the statutory language, that the assessee should be given a "reasonable opportunity of being heard". - Meaning thereby "an opportunity to be heard orally". The view expressed by Professor De Smith, quoted supra, has great relevance in this context. See also "The Concept of Natural Justice" Comment (M. P. Jain) (1972) 14 Journal of the Indian Law Institute, Page 602.

7. Kanga and Palkhivala in the "The Law and Practice of Income Tax", 8th Edition Vol. 1, at page 1567, have summarised the scope and effect of the decisions referred to in Para.4 supra, in dealing with the requirements of S.274 of the, thus:

"Where an A.O. is succeeded by another, the succeeding Officer can pass an order of penalty without giving the assessee an opportunity of being heard, if the case was fully heard by his predecessor and the assessee does not demand reopening of the penalty proceedings under S.129; but not if the case was not fully heard or if the assessee had rested his case on a personal hearing or if the assessee is not aware that the A.O. has been succeeded by another and that the successor proposes to pass the penalty order."

Commenting on S.129 of the Income Tax Act, the learned authors at page 1066 of the book have stated thus:

"This section provides that whenever during the pendency of any proceeding an income tax authority is succeeded by another, the successor may continue the proceeding from the stage at which the proceeding was left by his predecessor. In such a case the assessee has the right to demand that before the proceeding is so continued, (i) the previous proceeding or any part there of should be reoponed, e.g. a witness should be examined afresh, and (ii) the assessee should be reheard before any order of assessment is passed against him. To enable the assessee to exercise this right, it is implicit in the section that the succeeding authority should intimate to the assessee his intention to continue the proceeding from the stage at which it was left by his predecessor. The time taken in reopening the proceeding or in rehearing the assessee, is to be excluded in computing the period of limitation for the purposes of S.153 [Expln. 1 (i) to S.153], S.263(2) (Explanation to S.263), and S.275 [Expln. (i) to S.275]."

8. We are aware that the decisions referred to in Para.4 supra, have expressed in different terms regarding the scope and content of S.271 read with S.274 and S.129 of the. On a careful analysis of the relevant decisions, we are of the view that the statement of the law by Kanga and Palkhivala at pages 1066, and 1657, (extracted hereinabove) represents the correct legal position. We adopt the same as our own.

9. In this batch of cases, it cannot be denied that the succeeding assessing authority did not intimate to the assessee his intention to continue the proceeding from the stage at which it was left by his predecessor. There is no plea of proof in this case that the assessee was aware that the assessing authority has been succeeded by another and that the successor proposes to pass the penalty order. In these circumstances, we are of the view that the AAC was justified in holding that the successor assessing authority acted illegally and unreasonably in imposing the penalties without intimating to the assessee his intention to continue the proceedings from the stage at which it was left by his predecessor. There has been a breach of the valuable rights of the assessee, specified, in S.274(1) read with S.129 of the Income Tax Act. The AAC was justified in cancelling the penalties and the Tribunal was justified in confirming the said cancellation orders. We hold that the Tribunal was justified in affirming the decision of the AAC in, all the four cases.

10. We, therefore, answer the question No. 1 in the affirmative, against the revenue and in favour of the assessee. We hold that the penalty orders were justifiably cancelled by the AAC and the Tribunal was justified in affirming the orders passed by the AAC. We answer question No. 2 also in the affirmative, against the revenue and in favour of the assessee. We hold that it was the duty of the succeeding Income Tax Officer to intimate the assessee of his intention to continue the proceedings from the stage at which it was left by his predecessor. The questions referred to this Court are answered as above.

11. Counsel for the revenue submitted that the Tribunal was in error in simply affirming the orders passed by the AAC, cancelling the penalties, without giving the consequential direction, that the matter may be reconsidered by the assessing authority, after affording notice and opportunity to the assessee. No question touching the above aspect has been referred to us, but we should state that if an order passed by a statutory authority is held to be illegal, or void, for non-compliance of the principles of natural justice, the proceedings do not come to an end. They will stand restored to the stage before the order was passed. This position is well settled in law. - See Superintendent (Tech. I) Central Excise v. Pratap Rai (AIR 1978 SC 1244 [LQ/SC/1978/143] ) and Guduthur Bros v. Income Tax Officer (40 ITR 298) [LQ/SC/1960/162] . We do not think that the Tribunal committed any error in not giving the consequential direction, which is already the position in law. It needs no repetition.

A copy of this judgment under the seal of this Court and the signature of the Registrar will be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.