2021 (9) TMI 309 - HC - Wealth-tax

Violation of principles of natural justice - appeal was accepted ex-parte, without granting reasonable opportunity of hearing - exclusion of the value of the factory land and buildings within the scope of the exception carved out in the definition of net wealth in Section 2(ea) of the Act - said asset was a commercial asset occupied and used for commercial purposes - HELD THAT - It is true that, unless and until the counsel or the authorized representative has been duly authorized to appear in the matter, the Courts and Tribunals will not entertain the said person to represent, as the assessee can always take a stand that the person who had appeared had not been authorized to appear. In the instant case, facts had to be adjudicated - if the assessee had an opportunity to place their submissions before the Tribunal, the order would have been more elaborate and a speaking order and it would satisfy the principles of natural justice and the principle of audi alteram partem . This opportunity could have been granted to the assessee when they filed the Miscellaneous Petition, which was filed within the reasonable time. The reason assigned by the assessee in the Miscellaneous Petition as to why they sought for adjournment, appears to be a reasonable explanation, more particularly, when the Revenue did not controvert the facts stated in the Miscellaneous Petition nor it was found to be a false statement. Therefore, an opportunity could have been granted to the assessee to place the factual position before the Tribunal for a more effective adjudication and decision on merits. Appeal allowed.

Summary

Issues Involved:
- Ex parte proceeding by the Tribunal due to lack of authorization for representation
- Rejection of plea for exclusion of factory land and buildings from net wealth calculation
- Violation of principles of natural justice by the Tribunal

Ex Parte Proceeding:
The appeal challenged the Tribunal's ex parte order due to the absence of proper authorization for representation. The Tribunal proceeded ex parte as the counsel failed to file vakalat or Power of Attorney. The assessee argued that the Chartered Accountant's illness led to the lack of representation, justifying the adjournment request. The Tribunal dismissed the Miscellaneous Petition, stating no error in its decision. The High Court emphasized the importance of affording the assessee an opportunity to present their case, citing Rule 25 of the Appellate Tribunal Rules, 1963. The Court noted that the Tribunal's order lacked depth due to the absence of the assessee's submissions, highlighting the violation of natural justice principles.

Rejection of Plea for Exclusion:
The Tribunal rejected the plea to exclude the value of factory land and buildings from net wealth calculation under Section 2(ea) of the Act. The assessee argued that the asset was a commercial asset used for commercial purposes, warranting exclusion. The High Court observed that a more detailed order could have been issued if the assessee had the opportunity to present their case. The Court indicated that granting such an opportunity would ensure a fair and thorough adjudication. The High Court decided to set aside the Tribunal's order and remand the matter for fresh consideration, leaving the legal issues open for the Tribunal to decide.

Violation of Natural Justice:
The High Court analyzed the Tribunal's decision to proceed ex parte and the rejection of the plea for excluding factory land and buildings. The Court found that the Tribunal's failure to consider the assessee's submissions violated the principles of natural justice. By not allowing the assessee to present their case, the Tribunal's decision lacked depth and thoroughness. The High Court emphasized the importance of granting the assessee an opportunity to be heard for a fair adjudication. Consequently, the Court set aside the Tribunal's orders and remanded the matter for fresh consideration, ensuring the principles of natural justice were upheld.