2011 (2) TMI 961 - AT - Income Tax

Power of rectification u/s 254(2) - Tribunal dismissed miscellaneous appeals for want of prosecution - appellants pleaded for recall of the ex parte orders passed on different dates by the Tribunal precisely on the ground that each one of them was prevented by sufficient cause from prosecuting the appeals - Held that - In all the instant cases, all the appeals were admitted for hearing and none of the appeals was decided on merits. The grounds raised therein were never considered and decided by the Tribunal. Also, no opportunity of being heard was provided to the assessees/applicants and the appeals were dismissed for want of prosecution. Hence there is a mistake apparent from the record and the Tribunal should set aside the orders and restore the appeals for hearing. It is clear that whatever may be punishment given to the striking Lawyers, the litigants should not suffer because of such strike, the ex parte order should be recalled. However, we are of the view that strike by the Advocates should be condemned in strong words. It is the duty of Advocates and Chartered Accountants not to boycott the Income-tax Appellate Tribunal and ask the Tribunal to desist from discharging judicial functions. At any rate, no Advocate can ask the Court to avoid a case on the ground that he does not want to appear in that Court Tribunal while exercising the power of rectification u/s 254(2) can recall its order in entirety if it is satisfied that prejudice has resulted to the party, which is attributable to the Tribunal s mistake, error or omission and which error is manifest error and it has nothing to do with the doctrine or concept of inherent power. In all cases where the Court is satisfied that the ex parte order (passed due to the absence of the Advocate pursuant to any strike call) could be set aside on terms, the Court can as well permit the party to realize the cost from the Advocate concerned without driving such party to initiate another legal action against the Advocate. Thus all the Miscellaneous Applications are allowed.

Issues Involved:
1. Setting aside ex parte orders.
2. Recall of appeals for hearing on merits.
3. Application of Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963.
4. Professional conduct and duties of advocates.
5. Legal implications of strikes by advocates.
6. Tribunal's inherent power to recall orders.
7. Award of costs and exemplary costs.

Detailed Analysis:

1. Setting aside ex parte orders:
The Tribunal dismissed the appeals for want of prosecution due to the non-appearance of the assessees or their representatives. The assessees filed Miscellaneous Applications seeking to set aside these ex parte orders, arguing that their non-appearance was due to a strike by advocates and chartered accountants, which prevented them from attending the hearings.

2. Recall of appeals for hearing on merits:
The assessees argued that they were prevented by "sufficient cause" from attending the hearings, as their counsels were on strike. They contended that the Tribunal has inherent judicial power to set aside ex parte orders and provide a fresh opportunity for hearing on merits.

3. Application of Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963:
Rule 24 allows the Tribunal to dispose of an appeal on merits if the appellant does not appear. The proviso to Rule 24 states that if an appeal is disposed of in this manner and the appellant later provides sufficient cause for non-appearance, the ex parte order shall be set aside. The Tribunal noted that the appeals were dismissed for non-prosecution and not on merits, thus Rule 24 did not apply directly. However, the Tribunal acknowledged its inherent power to recall orders under section 254(2) of the Income-tax Act, 1961, to rectify mistakes apparent from the record.

4. Professional conduct and duties of advocates:
The Tribunal discussed the professional conduct and duties of advocates, emphasizing that advocates should not boycott courts and must maintain a respectful attitude towards the judiciary. The Tribunal cited various judicial pronouncements condemning strikes by lawyers as professional misconduct and highlighted the duty of advocates to attend court proceedings and represent their clients diligently.

5. Legal implications of strikes by advocates:
The Tribunal referred to the decision of the Hon'ble Supreme Court in Ramon Services (P.) Ltd. v. Subhash Kapoor, which condemned strikes by lawyers but also allowed for setting aside ex parte orders on terms. The Tribunal emphasized that litigants should not suffer due to strikes by their counsels and that the ex parte orders should be recalled.

6. Tribunal's inherent power to recall orders:
The Tribunal cited several judicial decisions supporting the view that it has inherent power to recall its orders under section 254(2) of the Income-tax Act, 1961, to rectify mistakes. The Tribunal noted that failure to consider grounds raised in the memorandum of appeal constitutes a mistake apparent from the record, justifying the recall of ex parte orders.

7. Award of costs and exemplary costs:
The Tribunal decided to set aside the ex parte orders and restore the appeals for hearing on merits, subject to the condition that the assessees pay a cost of Rs. 1,500 in each case. The Tribunal rejected the revenue's plea for exemplary costs, stating that it was not a rarest of the rare case warranting such costs. The Tribunal also observed that the assessees could recover the cost from their respective counsels if advised.

Conclusion:
The Tribunal allowed the Miscellaneous Applications, set aside the ex parte orders, and restored the appeals for hearing on merits, subject to the payment of costs by the assessees. The Tribunal emphasized the professional duties of advocates and condemned strikes, while ensuring that litigants do not suffer due to the actions of their counsels.

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