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2019 (4) TMI 625 - HC - Income TaxPower of Tribunal to dismiss the Appeals for want of prosecution - ex parte order in appeal - HELD THAT - Tribunal could not have dismissed the appeal for want of prosecution. Even if the assessee could not appear, the Tribunal could have decided the appeal only on merits, ex parte, after hearing the Revenue Side but, the dismissal of the appeal for want of prosecution is not only illegal but also entails further litigation and proceedings by compelling the Assessee to move for setting aside the ex parte order, which Tribunal is supposed to do but in the present case even that application too came to be dismissed by the learned Tribunal. The Proviso to Rule 24 clearly mandates that the Tribunal shall set aside such ex parte order and restore the appeal for deciding the same on merits. Tribunal seems to have been contended by dismissing the appeal for want of prosecution only and not touching the merits of the case at all and then further erred in dismissing the Miscellaneous Petition filed for recalling the ex parte order dismissing the appeal for want of prosecution. We reiterate that the fact finding Tribunals should not shirk their responsibility to decide the cases on merits because the view and reasons given by such Tribunals are important for the Constitutional Higher Courts to look into while deciding the substantial questions of law under Section 260-A of the Act arising from Tribunal's orders. Obviously, such cryptic orders, not touching the merits of the case, would not give any rise to any substantial question of law for consideration by the High Courts under Section 260-A of the Act. The Assessee's valuable rights of getting the issues decided on merits by the final fact finding body viz., the Tribunal cannot be given a short shrift in the aforesaid manner. A legal and binding responsibility, therefore, lies upon the Tribunal to decide the appeal on merits irrespective of the appearance of the Assessee or his counsel before it or not. Considering the enabling powers in the words 'as it thinks fit' employed in Section 254 of the Act read with Rule 24 and in view of S. CHENNIAPPA MUDALIAR 1969 (2) TMI 10 - SUPREME COURT we set aside the impugned order of the learned Tribunal and direct the Tribunal to decide the appeal on merits afresh in accordance with law. - Decided in favour of the Assessee Copy of this judgment may be sent to the President of the Income Tax Appellate Tribunal as well as the Law Secretary in the Ministry of Law and Justice so that the same may be brought to the notice of all the Members of Income Tax Appellate Tribunal and the new appointees in Income Tax Appellate Tribunal at the time of their recruitment itself. The President of Income Tax Appellate Tribunal may also get it circulated to all the existing Members of the Income Tax Appellate Tribunal, so that such orders resulting in serious miscarriage of justice should not be repeated by any Member of the Tribunal.
Issues Involved:
1. Legality of dismissing an appeal for want of prosecution by the Income Tax Appellate Tribunal (ITAT). 2. Interpretation and application of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963. 3. Compliance with Supreme Court precedents regarding the dismissal of appeals by ITAT. 4. Responsibility of ITAT to decide appeals on merits. Issue-wise Detailed Analysis: 1. Legality of Dismissing an Appeal for Want of Prosecution by ITAT: The Assessee filed a Tax Case (Appeal) under Section 260-A of the Income Tax Act, challenging the ITAT's order dated 18th August 2016, which dismissed the appeal for the Assessment Year 2010-2011 due to non-appearance. The substantial question of law framed was whether the ITAT was right in dismissing the appeal on the ground of non-appearance without disposing of it on merits as prescribed under Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963. 2. Interpretation and Application of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963: Rule 24 allows the Tribunal to dispose of the appeal on merits after hearing the respondent if the appellant does not appear. It also provides that if the appellant later satisfies the Tribunal of a sufficient cause for non-appearance, the Tribunal shall set aside the ex parte order and restore the appeal. The court emphasized that the Tribunal should decide appeals on merits, even if the appellant is absent, and not dismiss them for want of prosecution. 3. Compliance with Supreme Court Precedents Regarding the Dismissal of Appeals by ITAT: The judgment referenced the Supreme Court's decision in Balaji Steel Re-Rolling Mills v. Commissioner of Central Excise and Customs, which held that fact-finding appellate tribunals should decide appeals on merits and have no power to dismiss appeals for want of prosecution. The court also cited the precedent in The Commissioner of Income-Tax, Madras vs. S. Chenniappa Mudaliar, which emphasized that the Tribunal must decide appeals on merits and not dismiss them due to the appellant's absence. 4. Responsibility of ITAT to Decide Appeals on Merits: The court reiterated that the ITAT is obligated to dispose of appeals on merits, ensuring that the appellant's absence does not lead to dismissal without consideration of the case's merits. The court expressed surprise that despite established case law and amendments to Rule 24, the Tribunal continued to dismiss appeals for want of prosecution. The court stressed that the Tribunal's responsibility is to decide appeals on merits, irrespective of the appellant's presence. Conclusion: The court concluded that the ITAT's dismissal of the appeal for want of prosecution was illegal and set aside the impugned order. The Tribunal was directed to decide the appeal on merits afresh. The court highlighted the importance of the Tribunal's role in providing detailed reasons for their decisions, which are crucial for higher courts to consider substantial questions of law under Section 260-A of the Act. The appeal was allowed, and the substantial question of law was answered in favor of the Assessee and against the Revenue. The court also directed that a copy of the judgment be sent to the President of the ITAT and the Law Secretary to ensure awareness and prevent recurrence of such dismissals.
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