2015 (9) TMI 503 - HC - Income Tax

Dismissal of appeal for non-prosecution by ITAT - proceedings before the Tribunal came to be conducted ex parte in view of the fact that the petitioner had not informed the Tribunal about the change of its address - Held that - On the day fixed for hearing or 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 on for hearing, the Tribunal may dispose of the appeal on merits after hearing the respondent, as well as in the light of the decision of the Supreme Court in the case of CIT v. S. Chenniappa Mudaliar (1969 (2) TMI 10 - SUPREME Court), has held that rule 24 of the Rules makes it abundantly clear that the Tribunal cannot dismiss the appeal without adverting to the merits. Therefore, though the petitioner assessee who was the appellant before the Tribunal has failed to appear before it during the course of hearing of the appeal, in the light of the provisions of rule 24 of the Rules, the Tribunal could not have dismissed the appeal for non-prosecution but ought to have disposed of the appeal on merits after hearing the respondent. The impugned order being contrary to the provisions of rule 24 of the Rules as well as the above referred decision of this court in the case of Sanket Estate & Finance (P.) Ltd. v. Commissioner of Income tax (2012 (12) TMI 991 - GUJARAT HIGH COURT) cannot be sustained. The impugned order passed by the Tribunal for assessment year 1991-92 is hereby quashed and set aside and the appeal is restored to the file of the Tribunal which shall decide the same afresh on merits - Decided in favour of assessee.

Issues:
1. Dismissal of appeal by Income Tax Appellate Tribunal for non-prosecution due to change in petitioner's address.
2. Petitioner's challenge against the Tribunal's order.
3. Consideration of delay in challenging the order.
4. Application of rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963.
5. Restoration of appeal to the Tribunal for fresh decision on merits.

Analysis:
1. The petitioner filed an appeal against the order imposing a penalty, but the Tribunal dismissed the appeal for non-prosecution due to the petitioner's failure to inform about the change in address. The Tribunal's action was challenged through a petition under Article 226 of the Constitution of India.

2. The petitioner argued that the Tribunal cannot dismiss the appeal without considering the merits, citing relevant legal precedents. The respondent contended that the delay in challenging the order was considerable and the petitioner's failure to update the address led to the dismissal.

3. The court noted the delay in approaching the court against the Tribunal's order and acknowledged the petitioner's responsibility for not updating the address promptly. The respondent's request for costs was deemed reasonable in this context.

4. The court referred to rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, which mandates that the Tribunal must hear the appeal on merits even if the appellant is absent. The court held that the Tribunal's dismissal for non-prosecution was contrary to this rule and legal precedent.

5. Consequently, the court allowed the petition, quashed the Tribunal's order, and restored the appeal to the Tribunal for a fresh decision on merits. Costs of Rs. 10,000 were imposed on the petitioner to be paid to the respondent within a week. The court clarified that it did not review the merits of the order passed by the Commissioner of Income Tax (Appeals).

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