2020 (10) TMI 26 - AT - Income Tax

Restoration of revenue appeal - Miscellaneous Application (MA) by the Revenue in respect of the Order u/s. 254(1) by the Tribunal dated 23/08/2019, dismissing its appeal in limine as not pressed/withdrawn in view of section 268A - Denial of natural justice - non-provision of any opportunity, or in any case proper opportunity, of being heard - HELD THAT - Clause 10(c) states of a case where a revenue audit objection is accepted by the Department. It is this clause which the authorization memo refers to. Circular 3/2018 was later modified by circular 17/2019, dated 08/8/2019, enhancing the monetary limit for appeals before the Tribunal to ₹ 50 lacs. The other terms and conditions of the earlier circular continued to be in force. The filing of the instant appeals, in view of the applicability of cl.10(c) of circular 3/2018, as clarified by the authorization memo, was thus a circumstance attending the filing of the appeals in the instant case. The Tribunal was therefore obliged to have regard thereto. It was open for the Tribunal to, where in doubt, or in order to satisfy itself, or as a matter of abundant caution, require the Revenue to place on record the copy of the revenue audit objection, or make such other inquiry or verification in the matter as deemed fit and proper, i.e., to ascertain if the appeals were indeed excepted or not. We have already stated of the absence of the due process of hearing while disposing these appeals by the Tribunal, so that there was no question of either any objection being raised by the Revenue, or calling for any substantiation therefrom by the Tribunal. Our clear view, dismissal of the Revenue s appeals by the Tribunal, in view of the authorization memo dated 30.10.2018 on record, clearly stating of the appeal being filed, despite its low tax effect, is, in view of cl.10(c) of the Board circular 3/2018 dated 11.07.2018, a clear case of a mistake manifest on record. We have already clarified that the authorization memo, an official document, can still be subject to verification by the Tribunal so as to satisfy itself, which itself implies having regard thereto, which the law obliges it to. Revenue s instant applications are, therefore, admissible, and cannot be ousted at the threshold on the ground that no objection raised by the ld. DR at the time of hearing. (also see para 4.1) 3.2 No other argument or plea was raised during hearing. As would be apparent, none of the decisions cited, in view of the specific findings by the Tribunal, are applicable or indeed relevant in the instant case. MA decided in principle, in the favour of the Revenue, decide like-wise, and direct restoration of the Revenue s captioned appeal for being heard and decided on merits.

Issues Involved:
1. Dismissal of Revenue's appeal as not pressed/withdrawn.
2. Applicability of Board Circular No. 3/2018, specifically para 10(c).
3. Provision of proper opportunity for hearing.
4. Consideration of material on record.
5. Legal validity of Tribunal's order dismissing appeals en masse.
6. Restoration of appeals for hearing on merits.

Detailed Analysis:

1. Dismissal of Revenue's appeal as not pressed/withdrawn:
The Revenue filed a Miscellaneous Application (MA) challenging the Tribunal's order dated 23/08/2019, which dismissed its appeal as not pressed or withdrawn under section 268A of the Income-tax Act, 1961. The Revenue argued that its appeal was excepted under para 10(c) of Board Circular No. 3/2018, as indicated in the Authorization Memo dated 15/05/2019.

2. Applicability of Board Circular No. 3/2018, specifically para 10(c):
The Tribunal noted that the Revenue's appeal was filed despite being a low tax-effect matter because it was covered under para 10(c) of Circular No. 3/2018, which pertains to cases where a revenue audit objection is accepted by the Department. The Authorization Memo dated 30/10/2018 explicitly mentioned this exception, justifying the filing of the appeal despite the low tax-effect.

3. Provision of proper opportunity for hearing:
The Tribunal acknowledged that the appeals were dismissed en masse without affording the Revenue a proper opportunity to raise objections. The hearing process was expedited, and notices were not adequately sent to the parties, violating the principles of natural justice. The Tribunal emphasized that a fair hearing demands adequate notice, typically four weeks, which was not provided in this case.

4. Consideration of material on record:
The Tribunal noted that the Authorization Memo, which formed part of the Tribunal's record, clearly stated the basis for filing the appeal under para 10(c) of Circular No. 3/2018. The Tribunal was obliged to consider this material on record and verify the applicability of the exception before dismissing the appeal.

5. Legal validity of Tribunal's order dismissing appeals en masse:
The Tribunal's order dismissing 84 appeals by the Revenue and 12 cross-objections (COs) by the assessees was found to be legally infirm due to the lack of proper hearing and consideration of the material on record. The Tribunal provided liberty to the parties to move for restoration of appeals or COs if they were wrongly dismissed under section 268A.

6. Restoration of appeals for hearing on merits:
The Tribunal concluded that the Revenue's applications were admissible and directed the restoration of the Revenue's appeal for being heard and decided on merits. The Tribunal emphasized that the dismissal of the appeals was a mistake manifest on record, and the Revenue's applications could not be ousted at the threshold on the ground that no objection was raised at the time of hearing.

Conclusion:
In summary, the Tribunal allowed the Revenue's Miscellaneous Application, recognizing the procedural lapses and the need for a proper hearing. The Tribunal directed the restoration of the Revenue's appeal for a merits-based hearing, ensuring compliance with the principles of natural justice and the relevant Board circulars. The order was pronounced on September 28, 2020.

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