2018 (11) TMI 1325 - AT - Income Tax

Restoration of appeal - Application u/s 254 - Appeal rejected as non prosecuted - Misc. application filed beyond the time limit prescribed under section 254(2) - Held that - By considering the application filed by the assessee and also considering the argument of the ld. counsel for the assessee, we are of the opinion that there is a sufficient cause for not to appear in this appeal when it was posed. We also find that the Misc. Application filed by the assessee is after 98 days of passing of the exparte order, is a reasonable period, in which the assessee approach the Tribunal. In our opinion, this being an exparte order, assessee should be given opportunity and the order has to be passed on the merits of the case. In this case, no merits have been considered, simply dismissed the appeal. In our opinion, not only in the interest of justice and also on the grounds of principles of natural justice, these appeals deserve to be recalled. ITAT did not decide the appeal on merits as it is mandated to but rather rejected for non-prosecution. In the present case also, the appeals filed by the assessee s are dismissed for non-prosecution. The Misc. Applications filed by the assessee are only recalling of the exparte order, it is neither for rectification nor for any amendment. Therefore, under these facts and circumstances of the case, we find that the judgment of the Hon ble Delhi High Court in the case of Om Prakash Sangwan 2018 (5) TMI 1789 - DELHI HIGH COURT is squarely applies to the facts of the present case. Misc. Applications filed by the assessee are allowed.

Summary

Issues Involved:
Recall of exparte order due to non-appearance of counsel.

Analysis:
The assessees filed Misc. Applications seeking recall of the combined exparte order passed by the Tribunal due to non-appearance of their counsel during the hearing. The counsel for the assessee had requested an adjournment on the hearing date due to work pressure in the Income Tax Department, leading to the exparte order. The assessees argued that the exparte order should be recalled as there was a change in counsel, and the new counsel was ready to appear before the Tribunal. The assessees relied on the decision of the Delhi High Court in a similar case to support their argument that the exparte order should be recalled.

Analysis:
The Departmental Representative opposed the recall of the order, leading to a hearing where both parties presented their arguments. The Tribunal considered the arguments and material on record, noting that the assessees had filed the Misc. Application beyond the time limit prescribed under the Act. However, the Tribunal found that there was a valid reason for the non-appearance of the counsel and that the assessees deserved an opportunity for their case to be heard on merits. The Tribunal referenced the Delhi High Court judgment to support its decision that the ITAT should decide appeals on their merits and not merely reject them for non-prosecution.

Analysis:
The Tribunal highlighted that the ITAT's failure to decide on the merits of the case exceeded its jurisdiction, emphasizing the importance of principles of natural justice. The Tribunal also noted that the ITAT should not reject appeals for non-prosecution without considering the merits. Therefore, the Tribunal allowed the Misc. Applications filed by the assessees and recalled the exparte order dated 21/03/2017, directing the appeals to be posted for regular hearing. The decision was based on the principles outlined in the Delhi High Court judgment, emphasizing the need for appeals to be considered on their merits and decided in accordance with the law after hearing both parties.