This appeal by assessee relates to assessment year 1979-80. assessment order dated 16-12-1981 is very short. It is merely stated that case was posted for hearing on 24-10-1981 and 16-12-1981, but there was no response from assessee and, hence, assessment was being made ex parte under section 144 of Income-tax Act, 1961 (' Act '). 2. assessee appealed to Commissioner (Appeals). assessee contested making of assessment under section 144. assessee also contested computation of total income at Rs. 2,15,000. Commissioner (Appeals) has given categorical finding that there is every reason to believe that notice under section 143(2) of Act was not served on assessee and there was no evidence of service of such statutory notice fixing alleged hearing on 24-10-1981 or 16-12-1981. He, therefore, stated that assessment deserved to be set aside, with direction to reframe same after allowing reasonable opportunity of being heard. As far as quantum is concerned, he also gave certain specific finding regarding disallowance of Rs. 10,000 made by ITO which was reduced to Rs. 3,000 by him and also regarding assessability of gross income as shown by assessee, which, assessee had contended, did not represent taxable income. According to Commissioner, Compensation amount received by assessee was rightly considered to be taxable income. 3. On aspect of registration, which was sought, Commissioner stated that he disapproved of action of ITO, treating assessee as unregistered firm since procedure in law had not been followed, and he, accordingly, set aside finding of status of unregistered firm also. 4. Finally, he observed in para 7 as follows: " For above reasons, I set aside impugned order with direction to Income-tax Officer to reframe same de novo according to law and after giving reasonable opportunity of being heard." [Emphasis supplied] 5. Before us, first contention of learned counsel was that since before finalising assessment under section 144, no notice under section 143(2) had been served, opportunity of being heard was not afforded to assessee. Since assessee did not have opportunity of being heard, he submitted, there was clear violation of principles of natural justice. When principles of natural justice were violated, he went on to submit, assessment made would be void and when assessment made was void, according to him, Commissioner (Appeals) should have straightaway annulled same and question of his setting aside assessment and directing fresh assessment being made in accordance with law would not arise. In support of this contention, he relied on decision of Gauhati High Court in Jai Prakash Singh v. CIT [1978] 111 ITR 507. That was case where assessment was made without serving notice under section 143(2) on 9 out of 10 legal representatives and he submitted, High Court had clearly held that assessment should be annulled and appellate authorities could not nullify provisions of limitation by passing order, setting aside assessment and directing completion of assessment by issue of notice to remaining legal representatives. learned counsel also placed before us elaborate written submissions. In said submissions, various judicial pronouncements have been referred to and in particular decision of Supreme Court in Maneka Gandhi v. Union of India AIR 1978 SC 597, and it was contended that where principles of natural justice are not followed and adverse decision is made, defect in procedure adopted would be so fatal that decision would be void. For all these reasons, he contended that only proper order to be passed would have been one annulling assessment. 6. On point of registration, he submitted that treatment by ITO of assessee as unregistered firm was clearly illegal since declaration in Form No. 12 was filed and assessee was entitled to grant of continuation of registration. According to him, Commissioner erred in directing ITO to start proceedings under section 186(2) of Act. 7. learned departmental representative, on other hand, submitted that case fell squarely within ratio of judgment of Allahabad High Court in Sant Baba Mohan Singh v. CIT [1973] 90 ITR 197, where also notice under section 23(2) of Indian Income-tax Act, 1922 (' 1922 Act '), was not issued before assessment was made under section 23(3) and High Court issued before assessment was made under section 23(3) and High Court had held that power to annul assessment is power to be exercised when assessment proceeding is nullity in sense that ITO had no jurisdiction ab initio to take proceedings and omission of ITO to issue notice under section 23(2) did not affect ab initio jurisdiction enjoyed by ITO in respect of proceeding and after rectifying omission by issuing notice, he could proceed to complete assessment, and, therefore, direction of Commissioner to make fresh assessment after issue of notice was in order. 8. We have considered rival submissions. principles of natural justice are based on two main limbs: (1) right of fair hearing, also known as audi alteram partem, and (2) rule against bias. In present case, we are not concerned with second aspect. On scope and nature of hearing to be given, in majority judgment of Supreme Court in Swadeshi Cotton Mills v. Union of India AIR 1981 SC 818, there are following observations in para 76: " audi alteram partem rule, as already pointed out, is very flexible, malleable and adaptable concept of natural justice. To adjust and harmonise need for speed and obligation to act fairly, it can be modified and measure of its application cut short in reasonable proportion to exigencies of situation. Thus, in ultimate analysis, question (as to what extent and in what measure) this rule of fair hearing will apply at pre-decisional stage will depend upon degree of urgency, if any, evident from facts and circumstances of particular case." So, to what extent and in what measure rule of fair hearing will apply at pre-decisional stage, will eventually be dependent upon degree of urgency evident from facts and circumstances of particular case. In certain instances, it would also be possible, since concept of natural justice is flexible, to take certain action provisionally and give hearing ' remedial in aim ' to person aggrieved to enable him to present his case and controvert that of deciding authority, as in case of impounding passports, as seen from decision relied on by learned counsel in Maneka Gandhi's case. In case of Swadeshi Cotton Mills, where this decision was also referred to by Supreme Court, Court had occasion to consider what was effect of non-observance of fundamental principle of fair play of giving hearing before taking decision. observations and decision of Court in this regard in Swadeshi Cotton Mills' case, are as under: " 92. further question to be considered is: What is effect of non- observance of this fundamental principle of fairplay? Does non-observance of audi alteram partem rule, which in quest of justice under rule of law, has been considered universally and most spontaneously acceptable principle, render administrative decision having civil consequences, void or voidable? In England, outfall from watershed decision, R. v. Baldwin, 1964 AC 40 brought with it rush of conflicting opinion on this point. majority of House of Lords in Ridge v. Baldwin held that non-observance of this principle, had rendered dismissal of Chief Constable void. rationale of majority view is that where there is duty to act fairly just like duty to act reasonably, it has to be enforced as implied statutory requirement, so that failure to observe it means that administrative act or decision was outside statutory power, unjustified by law, and therefore ultra vires and void (See Wade's Administrative Law, ibid., page 448). In India, this Court has consistently taken view that quasi-judicial or administrative decision rendered in violation of audi alteram partem rule, wherever it can be read as implied requirement of law, is null and void [e.g., Maneka Gandhi's case [AIR 1978 SC 597] (ibid.) and S. L. Kapoor v. Jagmohan [AIR 1981 SC 136] (ibid.)]. In facts and circumstances of instant case, there has been non- compliance with such implied requirement of audi alteram partem rule of natural justice at pre-decisional stage. impugned order, therefore, could be struck down as invalid on that score alone. But we refrain from doing so, because learned Solicitor-General in all fairness, has both orally and in his written submissions dated August 28, 1979, committed himself to position that under section 18-F, Central Government in exercise of its curial functions, is bound to give affected owner of undertaking takenover, ' full and effective hearing on all aspects touching validity and/or correctness of order and/or action of takeover ', within reasonable time after takeover. learned Solicitor has assured Court that such hearing will be afforded to appellant company if it approaches Central Government for cancellation of impugned order. It is pointed out that this was conceded position in High Court that aggrieved owner of undertaking had right to such hearing. 93. In view of this commitment/or concession fairly made by learned Solicitor-General, we refrain from quashing impugned order, and allowing Civil Appeal 1629 of 1979 send case back to Central Government with t h e direction that it shall, within reasonable time, preferably within three months from today, give full, fair and effective hearing to aggrieved owner of undertaking, i.e., company, on all aspects of matter, including those touching validity and/or correctness of impugned order and/or action of takeover and then after review of all relevant materials and circumstances including those obtaining on date of impugned order, shall take such fresh decision, and/or such remedial action as may be necessary, just, proper and in accordance with law." Eventually, therefore, whether decision should be set aside and further opportunity of full and fair hearing should be given or not, or decision should be annulled straightaway and law be left to take its course, is dependent on facts of case. It is not that in each and every case, annulment is only proper order to be passed. 9. In case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC), though claim for partition under section 25A of 1922 Act had been made in time, ITO proceeded to complete assessment without making enquiry enjoined by aforesaid provision. observations of Supreme Court and conclusions of their Lordships as to effect of non-observance of this statutory requirement in Kapurchand Shrimal's case are as under: " From fair reading of section 25A of Act it appears that ITO is bound to hold inquiry into claim of partition if it is made by or on behalf of any member of HUF which is being assessed hitherto as such and record finding thereon. If no such finding is recorded, sub-section (3) of section 25A of Act becomes clearly attracted. When claim is made in time and assessment is made on HUF without holding inquiry as contemplated by section 25A(1), assessment is liable to be set aside in appeal as it is in clear violation of procedure prescribed for that purpose. Tribunal was, therefore, right in holding that assessments in question were liable to be set aside as there was no compliance with section 25A(1) of Act. it is, however, difficult to agree with submission made on behalf of assessee that duty of Tribunal ends with making declaration that assessments are illegal and it has no duty to issue any further direction. It is well known that appellate authority has jurisdiction as well as duty to correct all errors in proceedings under appeal and to issue, if necessary, appropriate directions to authority against whose decision appeal is preferred to dispose of whole or any part of matter afresh unless forbidden from doing so by statute. statute does not say that such direction cannot be issued by appellate authority in case of this nature. In interpreting section 25A(1), we cannot also be oblivious to cases where there is possibility of claims of partition being made almost at end of period within which assessments can be completed making it impossible for ITO to hold inquiry as required by section 25A(1) of Act by following procedure prescribed therefor. We, however, do not propose to express any opinion on consequence that may ensue in case where claim of partition is made at very late stage where it may not be reasonably possible at all to complete inquiry before last date before which assessment must be completed. In instant case, however, since it is not established that claim was belated one proper order to be passed is to set aside assessments and to direct ITO to make fresh assessments in accordance with procedure prescribed by law. Tribunal, therefore, erred in merely cancelling assessment orders and in not issuing further directions as stated above." [Emphasis supplied] Therefore, if necessary, it can be said to be duty of appellate authorities to issue appropriate directions to assessing officer, against whose decision appeal is preferred to dispose of matter in particular manner. 10. We have to consider action of Commissioner (Appeals), in present case, in aforesaid background. assessee did not have opportunity of being heard before assessee was saddled with assessment. This is violative of principles of natural justice. But, since assessment. This is violative of principles of natural justice. But, since ITO had already valid jurisdiction to make assessment provided requirement of reasonable opportunity of being heard was complied with, Commissioner (Appeals) set aside assessment directing ITO to give fresh hearing by issue of notice under section 143(2). action taken by Commissioner is not opposed to principles in cases decided by Supreme Court to which we have referred, viz., Kapurchand Shrimal's case and Swadeshi Cotton Mills' case. action taken by Commissioner is also in conformity with ratio of decision of Allahabad High Court in Sant Baba Mohan Singh's case. In light of these findings, we are unable to agree with learned counsel for assessee that there was any error in manner in which Commissioner (Appeals) exercised his discretion as far as setting aside assessment is concerned and directing fresh assessment in accordance with law after giving due opportunity of being heard. 11. learned counsel had placed before us further submissions, viz., to effect that if setting aside was considered to be in order, then it should be construed that assessment in its entirety was set aside and it should be open to assessee to urge all matters de novo before ITO. In present case, since assessment was made without affording any opportunity to assessee of being heard, we agree with learned counsel that Commissioner was not justified in giving his findings on one or two aspects. proper course was to set aside assessment in its entirety and we, accordingly, hold that specific findings on particular issues given by Commissioner (Appeals) would also stand set aside and order of Commissioner (Appeals) would be construed as one setting aside assessment in its entirety, directing fresh assessment in accordance with law after giving notice under section 143(2) and reasonable opportunity of being heard. 12. On point of registration, we are unable to read into order of Commissioner (Appeals) finding that ITO should start proceedings under section 186(2). All that Commissioner has stated is that he should process application, declaration, etc., on record in accordance with law. That ITO will now do and dispose of assessee's request for grant of registration also in accordance with law when making fresh assessment. 13. result is, appeal is treated as allowed in part. *** K.K. PATEL AND N. A. KHAN & CO. v. INCOME TAX OFFICER