2016 (7) TMI 64 - HC - Income Tax

Power of ITAT to recall its order which was disposed of ex-parte - revenue raised the objections that the same shall be amount to review - Held that - Proviso to Rule 25 provides that provided that where an appeal has been disposed of as provided above and the respondent appears afterwards and satisfies the tribunal that there was sufficient cause for his non appearance when the appeal was called on for hearing, the tribunal shall make an order setting aside the ex-parte order and restore the appeal. In view of above, if sufficient cause is shown for non appearance, the tribunal is obligated to consider the same and make an order setting aside the ex-parte order, even if such an order is on merits. Mere recalling an earlier order, in exercise of the powers conferred on the tribunal under the proviso to Rule 25 of Income-Tax (Appellate Tribunal) Rules, 1963, would not amount to review of its original order. - Decided against the revenue.

Summary

Issues:
1. Correctness of the common order recalling the original order by the Income Tax Appellate Tribunal.
2. Whether the order recalling the original order amounts to a review.

Analysis:
1. The case involved four appeals filed by the department against a common order of the Commissioner of Tax Appeal. The Income Tax Appellate Tribunal, 'C' Bench, Chennai, allowed the appeals in favor of the department. Subsequently, the assessees filed petitions to recall the order, which were granted by the Tribunal. The Commissioner of Income Tax challenged this decision through instant appeals.

2. The Tribunal recalled the order based on Rule 25 of the Income-Tax (Appellate Tribunal) Rules, 1963, which allows for the disposal of an appeal on merits if the respondent does not appear. The proviso to this rule, added in 2004, grants the respondent the right to seek the recalling of an ex parte order if sufficient cause for non-appearance is shown, even if the original order was passed on merits.

3. The Court rejected the argument that recalling the order amounted to a review, emphasizing that the Tribunal has the authority to recall an order passed on merits if the respondent shows sufficient cause for non-appearance. The appellant did not challenge the Tribunal's power to recall the orders but contended that there was no reason to do so due to the assessees' negligence in not appearing during the hearing.

4. The Court held that the Tribunal's decision to recall the order was in line with the statutory provisions and did not amount to a review of the original order. Both substantial questions of law raised by the appellant were answered against the Revenue, leading to the dismissal of the Tax Case Appeals and the closure of the connected Miscellaneous Petitions. No costs were awarded in the judgment.