IT: Appellate Tribunal has no power to dismiss appeal in limine for absence of appellant in proceedings
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[2013] 38 taxmann.com 229 (Allahabad)
HIGH COURT OF ALLAHABAD
Mayur Sheet Grah (P.) Ltd.
v.
Commissioner of Income-tax*
SUNIL AMBWANI AND SURYA PRAKASH KESARWANI, JJ.
IT APPEAL NOS. 164 AND 165 OF 2013†
JULY 30, 2013
Section 254 of the Income-tax Act, 1961, read with rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963 - Appellate Tribunal - Power of [Power of dismissal of appeal in limine] - Whether Tribunal has no power to dismiss appeal for want of prosecution in limine and without going into merit of case, where appellant does not participate in proceedings - Held, yes [Para 9][In favour of assessee]
Tapish Rastogi and Vinod Kumar Rastogi for the Appellant.Ashok Kumar for the Respondent.
ORDER
1. We have heard Shri Vinod Kumar Rastogi for the appellant-company. Shri Ashok Kumar appears for the department.
2. In these Income Tax Appeals under Section 260-A of Income Tax Act, 1961 arising out of an order dated 30.8.2012 passed by Income Tax Appellate Tribunal, Agra dismissing ITA Nos.92 & 93/Agra/2012 for assessment years 2007-08 and 2008-09 in limine on the ground that the appellant did not appear, the question raised is, 'whether the Income Tax Appellate Tribunal, exercising powers of second appeal under Section 254 of the Act, can dismiss the appeal in limine without going into the merits of the case.'
3. Both the appeals were preferred and were admitted on following two substantial questions of law:—
| "1. | Whether under the facts and circumstances of the case the Hon'ble Income Tax Appellate Tribunal was justified in dismissing the appeal in limine, without going into the merits of the case? | |
| 2. | Whether the Income Tax Appellate Tribunal was justified in exercising the power given under Section 254 of the I.T. Act, 1961, in dismissing the appeal in limine, without appreciating the scope of the aforesaid provisions that the same should be disposed off on merits." |
4. Section 254 of the Income Tax Act provides:—
"254. Orders of Appellate Tribunal.— (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub- section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the (Assessing) Officer:
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub- section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard:
Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees."
5. The provisions of the Income Tax Act, 1922, providing for an appeal, and Rule 24 of the Appellate Tribunal Rules, 1946, came up for consideration of the Supreme Court in CIT v. S. Chenniappa Mudaliar [1969] 74 ITR 41 in which the Supreme Court held as follows:—
"Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under s. 33(4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot short circuit the same by dismissing it for default of appearance.
Now although Rule 24 provides for dismissal of an appeal for the failure of appellant to appear, the Rules at the material time did not contain any provision for restoration of the appeal. Owing to this difficulty some of the High Courts had tried to find an inherent power in the Tribunal to set aside the order of dismissal [vide Shri Bhagwan Radha Kishen v. Commissioner of Income tax,U.P. (3) and Mangat Ram Kuthiala & Ors. v.Commissioner of Income tax, Punjab(4)]. There is a conflict of opinion among the High Courts whether there is any inherent power to restore an appeal dismissed for default under the Civil Procedure Code. (Mulla, Civil. Procedure Code, Vol. II, p. 1583, 1584). It is unnecessary to resolve that conflict in the present case. It is true that the Tribunal's powers in dealing with appeals are of the widest amplitude and have, in some cases, been held similar to and identical with the power of an appellate court under the Civil Procedure Code. Assuming that for the aforesaid reasons the Appellate Tribunal is competent to set aside an order dismissing an appeal for default in exercise of its inherent power there are serious difficulties in upholding the validity of Rule 24. It clearly comes into conflict with sub.-section (4) of s. 33 and in the event of repugnancy between the substantive provisions of the Act and a rule it is the rule which must give way to the provisions of the Act. We would accordingly affirm the decision of the Special Beach of the High Court and hold that the answer to the question which was referred was rightly given in the affirmative."
6. Rule 24 of the Appellate Tribunal Rules, 1963 as substituted by IT (Appellate Tribunal) (Amendment) Rules, 1987 w.e.f. 1.8.1987 reads as follows :
"24. Hearing of appeal ex parte for default by the appellant.— Where, on the day fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorised representative when the appeal is called on for hearing, the Tribunal may dispose of the appeal on merits after hearing the respondent:
Provided that where an appeal has been disposed of as provided above and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance, when the appeal was called on for hearing, the Tribunal shall make an order setting aside the ex parte order and restoring the appeal."
7. In the present case the assessee did not appear and participate in the proceedings of assessment. The Assessing Officer, in compulsory scrutiny after issuing notice under Section 143 (2) on return filed declaring total income of Rs.1,72,350/- in the assessment year 2008-09, proceeded to make best judgment assessment under Section 144 of the Act and assessed total taxable income of the assessee at Rs.37,09,310/-. The assessee filed appeal but did not appear before the Commissioner of Income Tax (Appeals). He did not appear in the Tribunal also to pursue his appeals on which the Tribunal dismissed the appeals for want of prosecution, in limine.
8. It is submitted by Shri Vinod Kumar Rastogi appearing for the appellant, that the assessee could not appear as he was dispossessed by some persons having criminal background supported by local influential politicians from his business premise. He had made complaints to the district administration and police on which no action was taken. The cold storage business was almost closed as he was under threat by the local unwanted elements, who were interfering in his business, and that for these reasons the assessee could not collect relevant material and accounts being inside his business premises and hence failed to cooperate with the assessing authorities.
9. We do not propose to enter into the merits of the grounds of petitioner's absence form the proceedings as we find that both the questions raised in the appeal are covered by the opinion expressed by the Supreme Court in S. Chenniappa Mudaliar, case (Supra). The Supreme Court ruled that the Income Tax Appellate Tribunal is not competent to dismiss the appeal for want of prosecution. The judgment was given explaining the provisions of Section 33 (4) of the Income Tax Act, 1922. Section 254 of the Act read with Rule 24 of the IT (Appellate Tribunal) Rules, 1963 do not provide for any such powers to the Tribunal to dismiss appeal in limine. In our view there is no difference in the Tribunal's powers under the old and the new Act.
10. Both the questions raised in this appeal are thus decided against the revenue and in favour of the assessee. The income tax appeals are allowed. The order of the Income Tax Appellate Tribunal dated 30.8.2012 is set aside. The matter is remanded to be decided on merits.
11. In order to avoid any complaint regarding service of notice on the appellant-assessee, we direct that the assessee will file certified copy of the order in both the appeals in the Income Tax Appellate Tribunal within one month and will also provide his current address for service of notice in the office of the Tribunal.
Regards
Prarthana Jalan
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