2003 (5) TMI 35 - HC - Income Tax

Grounds of appeal - failure of the Department to file grounds of appeal dismissal of appeal Tribunal was not right in observing that the grounds of appeal filed in September, 1998, were not acceptable because the same had not been approved by the Commissioner of Income-tax. Rule 9(1) does contain the requirement of filing of the specified documents along with the memorandum of appeal, but sub-rule (3) thereof gives ample discretion to the Tribunal to accept the memorandum of appeal even though it may not be accompanied by any of the documents referred to in sub-rule (1). These provisions are procedural in character. Therefore, the failure of the Department to file grounds of appeal on May 6, 1994, should not have been made a ground for dismissing the appeal in limine, more so because in response to the show cause notice issued by the Tribunal, the grounds of appeal duly signed by the Assistant Commissioner of Income-tax (Investigation Circle-II), Chandigarh, had been filed - We are further of the view that the explanation given by the Departmental Representative for non-filing of the grounds of appeal on May 6, 1994, was quite plausible and ought to have been accepted

Summary

Issues:
1. Dismissal of Revenue's appeal by the Income-tax Appellate Tribunal.
2. Requirement of setting forth grounds of appeal in the memorandum of appeal.
3. Acceptance of memorandum of appeal by the Tribunal without all specified documents.

Analysis:
1. The case involved an appeal under section 260A of the Income-tax Act, 1961 by the Revenue. The Tribunal dismissed the appeal in limine for noncompliance with the procedural rules, specifically rule 8 of the Appellate Tribunal Rules, 1963. The Tribunal observed gross negligence on the part of the Department in not filing the grounds of appeal along with the memorandum of appeal, leading to the dismissal. However, the High Court found the reasons for dismissal legally unsustainable, as the Department later filed the grounds of appeal in response to a show cause notice. The High Court held that the failure to file the grounds of appeal initially did not justify the dismissal of the appeal in limine.

2. The High Court analyzed the statutory provisions, including section 253(2) of the Act and rules 8 and 9 of the 1963 Rules. It noted that while rule 8 requires setting forth grounds of appeal in the memorandum of appeal, section 253(2) does not mandate approval of grounds by the Commissioner. The Court emphasized that procedural provisions like rule 9(1) and sub-rule (3) are discretionary in nature, allowing the Tribunal to accept a memorandum of appeal without all specified documents. Therefore, the High Court concluded that the Tribunal erred in deeming the grounds of appeal filed in September 1998 unacceptable due to lack of approval by the Commissioner.

3. The High Court further examined the explanation provided by the Departmental Representative for the delayed filing of grounds of appeal. The representative cited the inexperience of the then Assistant Commissioner of Income-tax as a reason for the lapse. The Court found this explanation plausible and criticized the Tribunal for considering it as gross negligence. Consequently, the High Court allowed the appeal, set aside the Tribunal's order, and remanded the case for a decision on the merits, emphasizing that the dismissal of the appeal solely based on the initial failure to file grounds of appeal was unjustified.

This detailed analysis highlights the legal intricacies surrounding the dismissal of the Revenue's appeal and the procedural requirements governing the filing of appeals before the Income-tax Appellate Tribunal, as interpreted by the High Court in this judgment.