2014 (12) TMI 390 - HC - Income Tax

Ex-parte order decided by Tribunal - Order of the Tribunal to be set aside under Rule 25 of Tribunal Rules or not Held that - Rule 25 of the Rules empowers the Tribunal to proceed to hear the appeal even if the respondent before it fails to appear - Tribunal has extracted the letter addressed by the petitioner and mentioned the steps taken thereon - Though it is stated that the date of hearing was adjourned from 04-07-2001 to 29-08-2001 it is not clear as to whether the petitioner was put on notice about the date of hearing - the request for adjournment was made through a letter - whatever be the justification the petitioner was awaiting the intimation of the next date of hearing - a case is made out for invoking the discretion of the Tribunal under proviso to Rule 25 of the Rules - valuable right was accrued to the petitioner on account of the order passed by the Commissioner assessee deserves to be given an opportunity of placing their version before the Tribunal thus the order of the Tribunal is set aside and the matter is remitted back to the Tribunal for fresh disposal Decided in favour of assessee.

Summary

Issues:
- Failure to allow deduction under Section 24 (1) (x) of the Income Tax Act, 1961
- Tribunal's decision to hear appeals ex parte due to absence of petitioner
- Application under Rule 25 of the Income Tax Appellate Tribunal Rules, 1963 to set aside ex parte order

Analysis:
The petitioner had claimed deductions under Section 24 (1) (x) of the Income Tax Act for certain assessment years, which were initially disallowed by the assessing officer. However, relief was granted by the Commissioner of Income Tax (Appeals) in an order dated 13-06-1996. Subsequently, the department filed appeals against this decision. The Tribunal initially adjourned the appeals to 29-08-2001 upon the petitioner's request but proceeded to hear the appeals ex parte on 30-08-2001 due to the petitioner's absence, setting aside the Commissioner's orders in favor of the petitioner.

The petitioner then filed miscellaneous petitions under Rule 25 of the Income Tax Appellate Tribunal Rules, 1963, seeking to set aside the ex parte order of 30-08-2001. The Tribunal dismissed these petitions on 17-04-2002, leading to the filing of writ petitions challenging this decision. The High Court considered the provisions of Rule 25, which allow the Tribunal to proceed with the appeal even in the absence of a respondent but also provide for setting aside such orders if certain conditions are met.

The Court noted that the Tribunal did not clearly inform the petitioner of the new hearing date after the adjournment request, leading to the ex parte decision. Given the circumstances, the Court found that the petitioner should have the opportunity to present their case before the Tribunal and invoked the discretion under the proviso to Rule 25. Consequently, the writ petitions were allowed, setting aside the Tribunal's order of 17-04-2002 and directing the Tribunal to hear the appeals afresh, ensuring the petitioner's representation. The Court emphasized that the petitioner must be present for the hearing, or the Tribunal may reject any further applications under Rule 25.

In conclusion, the High Court's judgment focused on upholding the petitioner's right to a fair hearing and ensuring that the Tribunal follows due process in considering the appeals related to the deduction claims under the Income Tax Act.