2019 (5) TMI 766 - HC - Income Tax

Appeal dismissed for non-prosecution by Tribunal - remedy against such order - writ before HC or appeal u/s 260A or rectification before Tribunal - HELD THAT - As seen from the impugned order that the same was passed for non-prosecution. The appeal was dismissed on the very first date of hearing for non-prosecution. But a passing observation was also made as though nothing has been brought on record to rebut the findings of the CIT (A). But, passing reference made as indicated above, cannot be treated as the dismissal of an appeal on merits. Therefore, the petitioner cannot be asked to file an appeal u/s 260A . The provisions of proviso to Rule 24 of the Rules, 1963 cannot also be invoked in this case. In fact, the substantial provision, viz., Section 254 (1) mandates the Appellate Tribunal to pass orders on an appeal after giving both the parties to the appeal an opportunity of bearing heard. The impugned order does not disclose that the same was passed on merits after giving both the parties the opportunity of being heard. Sub-section (2) of Section 254 enabling the Tribunal to rectify any mistake or to amend any order, is not an answer to the failure to comply with sub-section (1) of Section 254. In fact, if the substantial provision contained in the statute mandates the disposal of an appeal on merits, the Rules cannot empower a mere dismissal for non-prosecution, without going into the merits of the dispute. Therefore, cases of this type do not fall either u/s 254 (2) or under the proviso to Rule 24 of the Rules, 1963. Hence, the Writ Petition has to be held to be maintainable. It is seen from the impugned order that the appeal has been dismissed for non-prosecution on the very first date. Though we cannot say that the Tribunal did not have the power to do so, this is not the way to answer substantial issues - Writ Petition is allowed

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal for non-prosecution in a Writ Petition.

Analysis:
The petitioner challenged the order of the Income Tax Appellate Tribunal dismissing the appeal for non-prosecution through a Writ Petition. The respondent contended that if the order is on merits, the petitioner should file a regular appeal under Section 260A of the Income Tax Act, 1961; otherwise, an application under the proviso to Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 should be filed, deeming a writ petition as not maintainable. The High Court considered the submissions and observed that the impugned order was passed for non-prosecution on the first hearing date, with a passing reference to the lack of rebuttal against the Commissioner of Income Tax (Appeals) findings. It was clarified that this passing reference did not amount to a dismissal on merits, making Section 260A appeal unnecessary. The Court noted that the impugned order did not comply with Section 254(1) of the Act, 1961, which mandates giving both parties an opportunity to be heard before passing orders. Therefore, the provisions of Section 254(2) of the Act, 1961 or the proviso to Rule 24 of the Rules, 1963 were not applicable in this case, rendering the Writ Petition maintainable.

The Court further emphasized that the Rules cannot empower dismissal for non-prosecution without addressing the merits of the dispute when the statute mandates disposal on merits. Consequently, the Writ Petition was deemed maintainable. Subsequently, the Court deliberated on the sustenance of the impugned order, noting that while the Tribunal had the power to dismiss for non-prosecution, it was not the appropriate method to address substantial issues. Therefore, the Court allowed the Writ Petition, set aside the impugned order, and remanded the matter to the Tribunal for fresh disposal on merits, without any cost implications. The judgment concluded by closing any pending Miscellaneous Petitions related to the writ petition.