2018 (9) TMI 1561 - HC - Income Tax

Rectification of mistake - violation of principles of natural justice - Held that - Appellant had no opportunity to put forward its case or version on merits, we are of the considered view that in the facts and circumstances peculiar to this case, the order under appeal deserves to be quashed and set aside. That is quashed and set aside only on the short ground that the impugned order violates the principles of natural justice. Once the representative for the assessee withdrew his power of attorney, a notice was issued to the parties to appear, but without ascertaining whether that notice was duly served on the assessee, there is a proof of such service and the assessee has avoided intentionally and deliberately to attend the case or hearing, the Tribunal should not have proceeded further. Such an approach results in miscarriage of justice as well.

Summary

Issues:
Appeal against order passed by Income Tax Appellate Tribunal - Violation of principles of natural justice - Application for rectification - Recall of order - Quashing and setting aside of impugned order - Fresh hearing before Pune Bench of Income Tax Appellate Tribunal.

Analysis:
The appeal before the High Court arose from an order passed by the Income Tax Appellate Tribunal, Mumbai. The Tribunal noted that the counsel for the assessee had withdrawn the power of attorney, leading to the issuance of a notice for hearing. Despite the notice being served, the assessee did not appear, nor did they move any application for adjournment. The Tribunal proceeded to decide the appeal in the absence of the assessee, which led to the current appeal. Both parties informed the Court that the assessee had applied for rectification of the mistake and recall of the order due to it being passed in their absence. The rectification application was pending and undecided at the time of the appeal.

The Court considered the circumstances of the case and found that the impugned order violated the principles of natural justice. It observed that the appellant had not been given an opportunity to present their case or version on merits. The Court, therefore, decided to quash and set aside the impugned order on the grounds of the violation of natural justice. It emphasized that the Tribunal should not have proceeded further without ensuring proper service of the notice and without ascertaining the intentional absence of the assessee, as it could result in a miscarriage of justice.

Consequently, the High Court ordered that the appeal and cross objection be heard afresh by the Pune Bench of the Income Tax Appellate Tribunal. The fresh hearing was directed to be conducted without influence from the earlier order that was set aside. The Court allowed the appeal, with no order as to costs, and directed that the Income Tax Appellate Tribunal need not pass any orders on the application for rectification, as it was disposed of.