2018 (7) TMI 1564 - HC - Income Tax

Consolidating of appeals - validity of ITAT order - Held that - The record nowhere discloses nor does the Revenue dispute that the ITAT did give any notice to the Petitioner/assessee before issuing the consolidation order. Apparently all these appeals preferred by the appellant were being listed and heard repeatedly by different Benches. Assessee s counsel submits that the ground of adjournment was that the appeals would be consolidated. Given these circumstances, the Tribunal ought to have at least followed the proper procedure, laid down in Dr. Prannoy Roy (2018 (5) TMI 593 - DELHI HIGH COURT) and even enunciated by its previous order in Olympia Paper & Stationery Stores (1997 (3) TMI 157 - ITAT MADRAS-A). Firstly, it should have given adequate notice to the Appellant on the issue of consolidation and secondly, if the Revenue s request is found feasible and reasonable, indicate brief reason as to why the consolidation was essential. The failure of the ITAT to confirm to salient features vitiates its order. In these circumstances, the impugned order dated 11th June 2018 and the subsequent order of 9th July 2018 consolidating all appeals are hereby quashed. In case the Revenue wishes to consolidate all these appeals, it shall move a proper comprehensive application before the ITAT, serving a copy in advance to the assessee

Issues:
1. Consolidation of appeals before the Income Tax Appellate Tribunal without proper notice to the petitioner.
2. Allegation of cryptic and unreasoned order by the ITAT.
3. Failure to follow proper procedure as per established principles in previous judgments.
4. Justification for consolidation based on similar factual disputes.
5. Quashing of the consolidation orders and directions for future proceedings.

Analysis:

1. The petitioner challenged the order of the Income Tax Appellate Tribunal (ITAT) consolidating 13 appeals without providing any notice. The petitioner contended that the applications for consolidation did not provide reasons for the sudden decision to consolidate long-pending appeals adjourned at the revenue's request. The petitioner argued that the consolidation process was flawed and contrary to established principles, citing precedents like Olympia Paper & Stationery Stores v. Assistant Commissioner of Income Tax and Dr. Prannoy Roy v. The Deputy Commissioner of Income Tax & Ors. The petitioner sought to quash the consolidation orders due to the lack of reasoning and application of mind.

2. The counsel for the Revenue defended the consolidation, stating that it was necessary to consolidate the appeals due to similar factual disputes in the interest of justice. The rationale for consolidation was based on the request from the Revenue, as communicated by the Commissioner of Income Tax on specific dates. However, the record did not show any notice given to the petitioner/assessee before issuing the consolidation order, raising procedural concerns.

3. The petitioner's counsel highlighted the failure of the ITAT to follow proper procedure, including providing adequate notice to the appellant regarding consolidation and giving brief reasons for the essentiality of consolidation as per established precedents. The repeated listing and adjournment of appeals without proper communication regarding consolidation undermined the validity of the ITAT's orders.

4. The High Court quashed the impugned orders of consolidation dated 11th June 2018 and 9th July 2018, directing the Revenue to file a comprehensive application for consolidation before the ITAT. The court emphasized the importance of serving a copy of the application to the assessee in advance, ensuring notice to the assessee, and passing a reasoned order after considering submissions from both parties in future consolidation proceedings.

5. The petition filed by the petitioner was allowed, and the matter was disposed of with the court's observations and directions for the proper procedure to be followed in case of future consolidation of appeals before the ITAT.

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