2020 (9) TMI 1311 - HC - Income Tax

Dismissal of an appeal by ITAT for default or for non-prosecution - HELD THAT - A reading of Ext.P4 would clearly show that the Appellate Tribunal has not considered Ext.P3 appeal on merits and the only reason for dismissing it is stated to be for non-prosecution. The appellant filed Ext.P5 Miscellaneous Petition seeking to set aside the ex parte order for restoring the appeal back to file. But the same was also dismissed by the Tribunal as per Ext.P6 order, for the reason that the same is filed beyond time. In the light of the binding judgment of the Apex Court 2014 (11) TMI 531 - SUPREME COURT and the provisions contained in Section 254 of the Income Tax Act, 1961 and Rule 24 of the Income Tax (Appellate Tribunal)Rules, 1963, the writ appeal and the writ petition are allowed. We hold that Ext.P4 order passed by the Appellate Tribunal is not issued in accordance with law, and the same is set aside. Since Ext.P4 order is not an order passed on merits, there is no requirement of the appellant approaching the Tribunal for setting aside the ex parte order and restoration of the appeal, as per the Proviso to Rule 24. Ext.P6 order which is consequential, is also set aside. The Tribunal is directed to reconsider the appeal Ext.P3 on merits and dispose of the same in the manner stipulated by the Statute. The parties shall bear their respective costs. We take note of the fact that the order of the First Appellate Authority was passed on 31.01.2014 and that of the Tribunal was passed on 26.06.2014, and the appellant chose to prefer an application to set aside the ex parte order only after five years, on 22.11.2019. Even though the appeal and the writ petition filed by the appellant is allowed, we are of the opinion that there is inordinate delay in challenging the order of the Appellate Tribunal, which all the same is to be treated as non es t. The appeal and the writ petition is hence allowed, subject to the appellant paying a sum of ₹ 5,000/- (Rupees Five Thousand only) towards costs to the Kerala State Mediation and Conciliation Centre and producing a copy of the receipt within a period of one month before the Tribunal.

Summary

Issues involved:
The issues involved in this case include the legality of the dismissal of an appeal by the Income-tax Appellate Tribunal for non-prosecution, the interpretation of relevant provisions of the Income Tax Act, 1961, and the rules governing the Appellate Tribunal's powers.

Dismissal of appeal for non-prosecution:
The appellant, a Co-operative Society, challenged the dismissal of its appeal by the Income-tax Appellate Tribunal for non-prosecution. The appellant argued that the Tribunal should have decided the appeal on merits even in the absence of the appellant or its counsel during the hearing. The appellant relied on a Supreme Court decision which held that the Tribunal cannot dismiss an appeal for default or non-appearance. The Court noted that the Tribunal did not consider the appeal on merits and merely dismissed it for non-prosecution. The Court held that the Tribunal's order was not in accordance with the law and set it aside. The Tribunal was directed to reconsider the appeal on merits as per the provisions of the Income Tax Act, 1961 and the Appellate Tribunal Rules, 1963.

Provisions of the Income Tax Act and Tribunal Rules:
The Supreme Court's decision highlighted that the Tribunal must decide appeals on merits and cannot dismiss them for default. The Court noted that while Section 254 of the Income Tax Act, 1961, is similar to the relevant provision in the Income Tax Act, 1922, the corresponding Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, allows for the disposal of appeals on merits even in the absence of the appellant. The Court emphasized that the Tribunal's duty is to give a proper decision on questions of fact and law, and not to dismiss appeals for procedural reasons. The Court found that the Tribunal's actions in this case did not align with the statutory requirements.

Delay in challenging the Tribunal's order:
The Court acknowledged that there was a significant delay of five years in challenging the Tribunal's order. Despite allowing the appeal and the writ petition, the Court considered the delay to be inordinate. The Court imposed a cost of &8377; 5,000 on the appellant, to be paid to the Kerala State Mediation and Conciliation Centre, and required the appellant to produce a receipt within one month before the Tribunal. The Court deemed the delay as non est but allowed the appeal and the writ petition.