2020 (3) TMI 1326 - HC - Income Tax

Dismissal of appeals by ITAT for non-persecution - whether the Income Tax Appellate Tribunal has the power to dismiss the appeal for want of prosecution or not? - HELD THAT - Article 265 of the Constitution mandates that no tax can be collected except by authority of law. Appellate proceedings are also laws in strict sense of the term, which are required to be followed before tax can legally be collected. Similarly, the provisions of law are required to be followed even if the tax payer does not participate in the proceedings. No assessing authority can refuse to assess the tax fairly and legally, merely because the tax payer is not participating in the proceeding. Hence, dismissal of appeals by ITAT for non-persecution is wholly illegal and unjustified. If we see this issue through the prism of the Principles of natural justice, an appellate authority is required to afford an opportunity to be heard to the appellant. It has been held in plethora of cases that right to natural justice is a personal right, either a person can waive it or a person may not avail it. Merely because a person is not availing his right of natural justice, it cannot be a ground of refusal to perform statutory duty of deciding appeal by the Tribunal. We are of the considered opinion that the Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing. In view of the above analysis, the Rules and the provisions of the Act would pave way for the Tribunal to reconsider its decision.

Summary

Issues:
1. Dismissal of appeal by the Income Tax Appellate Tribunal for want of prosecution.
2. Power of the Tribunal to dismiss appeal for default or want of prosecution.
3. Interpretation of Section 254(1) of the Income Tax Act, 1961 and Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963.
4. Comparison with past judgments on similar issues.
5. Application of principles of natural justice in appellate proceedings.

Analysis:

1. The petitioner, engaged in arranging trucks for material transportation, challenged the addition of undisclosed income and TDS in the assessment for the year 2009-10. The Commissioner of Income Tax (Appeals) partly allowed the appeal. The petitioner then approached the Income Tax Appellate Tribunal, which dismissed the appeal for want of prosecution as the petitioner and representatives were absent during the hearing.

2. The main issue was whether the Tribunal had the power to dismiss the appeal for want of prosecution. The petitioner argued that Section 254(1) of the Income Tax Act mandates the Tribunal to pass orders after giving both parties an opportunity to be heard, without the power to dismiss for default.

3. The petitioner contended that Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 does not grant the Tribunal the authority to dismiss appeals for want of prosecution. The rule allows disposal of appeals on merits even if the appellant is absent, with provisions for setting aside ex-parte orders upon sufficient cause shown.

4. Citing past judgments like The Commissioner of Income-Tax, Madras vs. S. Chenniappa Mudaliar, the court highlighted that appellate tribunals must decide appeals on merits, not dismiss them for non-appearance. Similar principles were affirmed in cases like Balaji Steels Re-rolling Mills v. CCE and others, emphasizing the need for proper decision-making in tax appeals.

5. The court applied principles of natural justice, stating that the right to be heard is fundamental, and an appellate authority must provide this opportunity. Refusal to decide an appeal due to non-appearance violates statutory duties. The judgment directed the Tribunal to restore the appeal and decide it on merit, ensuring both parties are heard.

This detailed analysis of the judgment showcases the legal intricacies involved in the dismissal of appeals for want of prosecution by the Income Tax Appellate Tribunal, emphasizing the importance of due process and proper decision-making in tax matters.