2017 (7) TMI 1441 - HC - Income Tax

Tribunal dismissing the appeal as unadmitted - Dismissal of appeal for appellant s default etc. - Scope of Rule 24 after amendment - Whether ITAT seriously erred in passing the impugned order rejecting the application for recalling the said order and to hear and decide the appeal on merits filed under Rule 24 of Income Tax (Appellate Tribunal) Rules, 1963 by wrongly applying provisions of Section 254(2) of Income Tax Act, 1961? - HELD THAT - Taking into consideration the language of the Rule 24 after amendment, it is clear that tribunal could not have dismissed the appeal for default and ought to have decided the same on merits. We are of the opinion that tribunal is misconceived on the issue raised by the appellant as the application was filed for recalling the order and not for rectification. In that view of the matter, the first issue we have decided in favour of the assessee. The tribunal ought to have reconsidered Rule 24 after amendment and having failed to do so, both the orders are quashed and set aside. The tribunal will decide the merit afresh.

Summary

Issues:
Delay in filing application for recalling order of Tribunal dismissing appeal as unadmitted.

Analysis:
The appellant challenged the Tribunal's decision to dismiss the appeal due to a delay in filing the application for recalling the order. The High Court framed substantial questions of law regarding the legality of the Tribunal's actions. The appellant's counsel highlighted the provisions of Rule 24 before and after the amendment, emphasizing that the Tribunal should have decided the appeal on merits instead of dismissing it for default. Referring to a previous court decision, the appellant argued that the appeal was maintainable under the Income Tax Act, and the Tribunal erred in not hearing it on merits. On the other hand, the respondent supported the Tribunal's decision, stating that the appellant had multiple opportunities to comply with the order. The respondent also argued that the review application, filed after four years, was rightly rejected by the Tribunal.

The High Court found that the Tribunal misunderstood the appellant's application, which was for recalling the order, not rectification. The Court ruled in favor of the appellant on this issue, stating that the Tribunal should have reconsidered Rule 24 after the amendment. Consequently, the High Court quashed both orders and directed the Tribunal to decide the appeal on its merits. Ultimately, the High Court answered the issues in favor of the assessee, allowing the appeal.

This comprehensive analysis of the judgment addresses the issues involved, the arguments presented by both parties, and the High Court's decision and reasoning, ensuring a detailed understanding of the legal aspects and implications of the case.