Judgment :- N.V. BALASUBRAMANIAN, J. The petitioner is a partnership firm constituted under a deed of partnership dated January 30, 1987, and the firm consisted of several persons including persons outside the family and when some difference of opinion arose, according to the petitioner, a memo of understanding was reached and under the said memo, the firm suspended its business on October 31, 1987, and handed over the movable assets and liabilities as per the schedule recorded in the books which were taken over by one Karthikeyan, son of Krishnan, one of the partners, on November 1, 1987. The said Karthikeyan was permitted to continue the trading business in the name and style of the petitioner firm The writ petition relates to the assessment year 1990-91. The Assistant Commissioner of Income-tax (Assessing Officer) for the assessment year 1988-89 took the view that the memo of understanding entered into between the petitioner and the said karthikeyan indicated that the business was not abandoned, nor the firm dissolved and the arrangement was revocable and in that view of the matter, he invoked the provisions of section 61 of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), and held that the income arising out of the business run by the said Karthikeyan accrued to the petitioner firm. The Assessing Officer proceeded on the basis that the firm was not dissolved and the firm had the right to resume the business. The petitioner challenged the order for the assessment year 1988-89 before the Commissioner of Income-tax (Appeals) and it must be stated here that the assessment year 1988-89 is the first year of dispute. The Commissioner of Income-tax (Appeals) held that there was no power to revoke the transfer to support the inclusion of income in the hands of the petitioner firm and he therefore directed the Assessing Officer to exclude the amount included in the assessable income of the petitioner firm relating to the assessment year 1988-89. In this connection, it is relevant to notice that there were five different firms in which most of the family members and also strangers were partners and similar transactions also took place in the other firms as well and similar tax treatment also took place with reference to the said five firms. In this connection, it is relevant to notice that there were five different firms in which most of the family members and also strangers were partners and similar transactions also took place in the other firms as well and similar tax treatment also took place with reference to the said five firms. For the assessment year 1990-91, the present assessment year, the Assessing Officer followed his earlier order made for the assessment year 1988-89 and in the order of assessment, he mentioned that C. Krishnan took over the assets and liabilities, but it was only K. Karthikeyan, son of C. Krishnan, who took over the assets and liabilities as there was no memo of understanding entered into with C. Krishnan. The Assessing Officer also made a remark that the business was not closed and it was revocable and invoking the provisions of section 61 of the Act, he included the income in the hands of the petitioner firmThe petitioner, aggrieved by the order of assessment, preferred an appeal before the Commissioner of Income-tax (Appeals) stating that the provisions of section 61 of the Act have no application. The Commissioner of Income-tax (Appeals) following his earlier order rendered in the petitioner's own case for the assessment year 1988-89, came to the conclusion that the provisions of section 61 of the Act have no application and directed the Assessing Officer to exclude the assessable income of the petitioner firm relating to the assessment year 1990-91. Dissatisfied with the order of the Commissioner of Income-tax (Appeals), the Department preferred an appeal before the Income-tax Appellate Tribunal, Chennai (hereinafter to be referred to as "the Appellate Tribunal"), and the main ground of challenge was that the provisions of section 61 of the Act would apply and the view of the Commissioner of Income-tax (Appeals) that the provisions of section 61 have no application was not sustainable in law. It is stated that the matter came up before the Appellate Tribunal on June 17, 1998, for hearing and it was the first hearing of the appeal and on that day, the Members constituting the Bench of the Appellate Tribunal were of the opinion that the provisions of section 61 of the Act have no application and cannot be invoked on the facts and circumstances of the case. However, the Members of the Tribunal felt that the transactions entered into by the petitioner firm with the said Karthikeyan appear to be sham transactions. It is seen from the petition filed by the petitioner before the Appellate Tribunal on June 22, 1998, that the representative appearing for the petitioner made a request before the Tribunal seeking adjournment of the matter to produce records and documents in support of the petitioner's case on the new ground raised before the Tribunal regarding the genuineness of the transactions which was not a dispute raised either before the Assessing Officer or before the Commissioner of Income-tax (Appeals) and which also was not raised by the Department pleaded that time must be granted to produce the relevant records and documents in support of the submissions made by the petitioner before the Tribunal. It is not clear what happened on the first day of hearing before the Tribunal and the Tribunal has not recorded anything in the order as to whether any such request was made and if so made, how it was disposed of. The petitioner as stated earlier has filed the petition on the next day, viz., June 18, 1998, requesting the Appellate Tribunal to grant an opportunity to the petitioner to produce the records and documents in support of its submissions. The said petition reached the Appellate Tribunal on June 22, 1998. On June 23, 1998, the Tribunal allowed the appeal preferred by the Department on a new ground which was not considered by the Assessing Officer nor by the Commissioner of Income-tax (Appeals), nor raised in the grounds of appeal before the Tribunal. The Tribunal in the appellate order made the observation which reads as under, "...no iota of evidence has been brought to show as to why assets and liabilities of the firm had been transferred to Karthikeyan son of one of the former partners of the assessee-firm, K. Krishnan." It is not clear who raised the query as to why the assets and liabilities of the firm had been transferred and in spite of the inquiry, no documents were produced. According to the Appellate Tribunal, the business of the firm continued till the firm was dissolved or the business of the firm was transferred to a third party for consideration and the Tribunal came to the conclusion that the transactions entered into by the assessee-firm with Karthikeyan, in the absence of any evidence filed before it, appeared to be sham transactions. After recording the above finding, the Appellate Tribunal remitted the matter to the Assessing Officer to assess the income of the firm in the hands of the partnership firm till the firm was dissolved in the assessment year or in the subsequent assessment years, and accordingly, set aside the order of the Commissioner of Income-tax (Appeals). The petitioner has challenged the order of the Appellate Tribunal in this writ petition and several grounds have been raised by the petitioner. It is not necessary to consider the question on the merits of the case. However, the point raised by the writ petitioner that the order of the Appellate Tribunal is not sustainable due to violation of principles of natural justice is well-founded. I have seen from the orders of the Assessing Officer and the Commissioner of Income-tax (Appeals) and it is clear that the Assessing Officer has proceeded on the basis that the memo of understanding was a genuine one and that is the reason for the Assessing Officer invoking the provisions of section 61 of the Act in his orders of assessment made for the assessment year 1990-91 and for the prior assessment years as well. In my view, the Assessing Officer could have invoked the provisions of section 61 of the Act only when he was of the opinion that the transactions were genuine transactions and the Department also proceeded on the same basis as is clear from the grounds of appeal raised before the Appellate Tribunal wherein the Department questioned the order of the Commissioner of Income-tax (Appeals) regarding the applicability of section 61 of the Act to the facts of the case. However, when the matter came up for hearing before the Appellate Tribunal, a new ground was raised that the transactions were not genuine. It is not clear whether such a ground was raised by the Department before the Appellate Tribunal or it was suo motu raised by the Tribunal. However, when the matter came up for hearing before the Appellate Tribunal, a new ground was raised that the transactions were not genuine. It is not clear whether such a ground was raised by the Department before the Appellate Tribunal or it was suo motu raised by the Tribunal. Whatever it may be, even assuming that the entire assessment proceedings were before the Appellate Tribunal, and it had jurisdiction to deal with the entire matter of assessment, yet when the matter came up for first hearing on June 17, 1998, and when a new case was projected that the transactions recorded in the memo of understanding were not genuine transactions, the petitioner should have been given an opportunity to meet the case of the bogus nature of the transactions. It is relevant to notice that the place of the petitioner's business is at Erode and the case was argued at Chennai and it cannot be expected from the learned representative representing the petitioner firm to meet the case raised for the first time in the floors of the Appellate Tribunal then and there by producing supporting documents to substantiate the case of the petitioner that the transactions were genuine. The petitioner therefore filed the petition on the next (lay of hearing seeking permission to pro the records and documents in support of its case and the said petition reached the Appellate Tribunal on June 22, 1998, as June 20, 1998, and June 21, 1998, happened to be holidays being Saturday and Sunday. The Appellate Tribunal passed the order on June 23, 1998, without taking note of the petition filed by the petitioner seeking an opportunity to produce the records and documents. In my view, there is a violation of principles of natural justice by the Appellate Tribunal in not giving an opportunity to the petitioner to meet the new case raised for the first time before the Appellate Tribunal that the transactions under the memo of understanding were sham transactions. In my view, there is a violation of principles of natural justice by the Appellate Tribunal in not giving an opportunity to the petitioner to meet the new case raised for the first time before the Appellate Tribunal that the transactions under the memo of understanding were sham transactions. It is seen that it is on the first day of the hearing of the appeal, for the first time, a new point was raised before the Tribunal without any written application by the Department and without any prior notice to the petitioner, and the Appellate Tribunal in such a situation, as the final fact-finding authority, should have given an opportunity to the petitioner to meet the case raised before it. The Appellate Tribunal has recorded a finding in its appellate order that the transactions entered into by the petitioner firm with Karthikeyan appeared to be not genuine transactions in the absence of any evidence filed before it. The said finding would be binding on the Assessing Officer at the time of making assessment of the petitioner firm unless it is set aside in a manner known to law and it would be impermissible for the Assessing Officer to ignore such a finding as a mere casual observation as such observation has come from the highest fact-finding authority under the provisions of the Act. Therefore, it is ex facie clear that there is a violation of principles of natural justice committed by the Appellate Tribunal in passing the appellate order. In my view, the Appellate Tribunal has no discretion whatsoever in the matter of giving a fair opportunity and it is their plain duty that they must do. The fair opportunity, in my view, consists of granting an opportunity to the petitioner to say anything with documents to establish its case that the transaction was a real and genuine transaction when a new case was sprung upon it for the first time in the first hearing before the Appellate TribunalThe further question that arises is whether the writ petition is maintainable against an order passed by the Appellate Tribunal. No doubt, there is a procedure for reference available under section 256 of the Act. No doubt, there is a procedure for reference available under section 256 of the Act. Though it may be open to the petitioner to question the findings rendered by the Appellate Tribunal on the question of genuineness of transactions in such reference proceedings, in my view, the question whether the procedure adopted by the Appellate Tribunal in allowing the appeal is correct or not cannot be gone into by this court in reference proceedings in view of the limited jurisdiction of the court under section 256 of the Act and on the scope of the question that may be referred by this court by the Appellate Tribunal. In my view, once this court has come to the conclusion that there is a blatant violation of the principles of natural justice in passing the impugned order, this court sitting under article 226 of the Constitution of India has the necessary powers and jurisdiction to interfere with the order of the Tribunal. The decision of M. Srinivasan J. (as his Lordship then was) in the case of Super Rubber Works v. Asst. Collector of Central Excise, is an authority for the proposition that where the principles of natural justice have not been followed, the order of the Appellate Tribunal would stand vitiated as the petitioner has not been given an appropriate opportunity to contest the case and this court sitting in article 226 of the Constitution of India can interfere. I am of the view that the principles laid down by M. Srinivasan J. (as his Lordship then was) in Super Rubber Works' case would squarely apply to the facts of the case. The Supreme Court in Reckitt and Colman of India Ltd. v. CCE, made the following observations which are relevant for the purpose of this case, "It will be remembered that the case of the Revenue, which the appellant had been required to meet at every stage from the show-cause notice onwards, was that the said product was a preparation based on starch. Having come to the conclusion that the said product was not a preparation based on starch, the Tribunal should have allowed the appeal. It was beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to meet. Having come to the conclusion that the said product was not a preparation based on starch, the Tribunal should have allowed the appeal. It was beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to meet. It is upon this ground alone that the appeal must succeed." Applying the principles laid down by the Supreme Court in the abovesaid case, it is clear that the Revenue in the instant case had never canvassed either before the Assessing Officer or before the Commissioner of Income-tax (Appeals) that the transactions recorded in the memo of understanding were sham transactions and the petitioner was also not required to meet such case before the authorities under the Act. When it was raised for the first time before the Appellate Tribunal, the Appellate Tribunal, in my view, should have given an opportunity to meet the case raised before the Tribunal. Since no opportunity was given to the petitioner and the case was decided straightaway without affording any opportunity to the petitioner which causes a serious prejudice to the petitioner, I hold that the order of the Appellate Tribunal suffers from a serious infirmity. The decision of the Supreme Court in Reckitt and Colman of India Ltd.'s case, would squarely apply to the facts of the case. In Bhagwant Kishore Sud v. ITAT, the Supreme Court no doubt has held that where an assessee can assail the correctness of an order of the Tribunal on the merits in a reference before the High Court, the High Court would be entirely justified in declining to entertain in the writ petition the questions which the assessee could have brought before the High Court through a reference application. In the said case, the Supreme Court also noticed that the assessee had sought for an adjournment before the Tribunal on the ground that its representative had suffered a heart attack and a reply was received declining the adjournment and the Supreme Court held that it was open to the assessee to assail the order of the Tribunal declining to grant adjournment in a writ petition. Applying the law laid down by the Supreme Court to the facts of the case, it is open to the petitioner to assail the order of the Tribunal where the grievance of the petitioner is that no fair opportunity was granted to the petitioner at the time of hearing of the appeal. Therefore, I am of the view that the law laid down by the Supreme Court in Bhagwant Kishore Sud's case, would apply wherein the Supreme Court has held that it is permissible for an assessee to challenge the order of the Appellate Tribunal in a writ petition when the Tribunal declined to grant adjournment in the hearing of the appealThe Calcutta High Court in the case of Bata India Ltd. v. Deputy CIT, held that in order to prevent grave and serious miscarriage of justice including one resulting from following a patently erroneous procedure or contravention of basic principles of justice and fair play, the supervisory and superintending jurisdiction conferred on courts by article 227 of the Constitution remains always available. On the facts of the case, the petitioner not only invoked the provisions of article 226 of the Constitution, but also the provisions of article 227 of the Constitution of India. Therefore, on the basis of the power available either under article 226 or under article 227 of the Constitution of India, since there is a miscarriage of justice as the case was decided without affording an opportunity to the petitioner to meet the new case raised at the first hearing of the case before the Tribunal, the order passed by the Appellate Tribunal is liable to be interfered with. Learned senior counsel appearing for the Department strongly relied upon a decision of the Supreme Court in the case of CIT v. U. P. Forest Corporation holding that the High Court ought not to have entertained a writ petition when an adequate alternative remedy was available to the assessee. There is no doubt that when an adequate alternative statutory remedy is available under the Act, this court would not normally interfere in a writ petition. There is no doubt that when an adequate alternative statutory remedy is available under the Act, this court would not normally interfere in a writ petition. However, when this court finds that there is a miscarriage of justice and the procedure adopted by the Appellate Tribunal which is the final fact-finding authority, is erroneous resulting in gross violation of principles of natural justice in passing of the order which shocks the conscience of the court, I am of the view, this court cannot remain a mute spectator. In my view, this court in such a situation can and should interfere to meet the ends of justice. I am therefore inclined to interfere with the impugned order of the Appellate Tribunal and, accordingly, the impugned order passed by the Appellate Tribunal is quashed and the matter is remitted to the Appellate Tribunal to consider the case afresh on the merits of the matter, after giving sufficient opportunity to the petitioner. The writ petition is allowed. Rule nisi is made absolute. However, in the circumstances of the case, there will be no order as to costs. Consequently, W.M.P. No. 21069 of 1998 is dismissed.