2019 (7) TMI 714 - HC - Income Tax

Natural justice - Tribunal dismissed the appeal for non-prosecution - failure to attend personal hearing - assessee's case is that they have not received notice of hearing and they were not aware that the Tribunal has dismissed assessee's appeal for want of prosecution and they had no knowledge of this order and only on receipt of notice under Section 271(1)(c) they became aware of the dismissal of their appeal - Tribunal has dismissed assessee's appeal for want of prosecution on 27.12.2017 for which the assessee filed a Miscellaneous petition before the Tribunal to recall which was dismissed on the ground that it was filed beyond the time limit specified under Section 254(2) - HELD THAT - We are not to necessarily interfere with the order passed by the Tribunal dismissing the matter for want of prosecution. As observed by us earlier, the assessee was not diligent in prosecuting the matter and the reasons assigned by the assessee that they were not aware of the order passed by the Tribunal is not convincing. Nevertheless, the respondent Department would be entitled to tax the assessee only for the amount for which they are liable to be taxed and by default the excess tax cannot be recovered, which would be an action without authority of law. Therefore, we deem it appropriate to give one more opportunity to the assessee to file a reconciliation statement and for which the purpose we send back the matter to the Assessing Officer subject to certain conditions. In finally, we were of the opinion that the assessee can be put on terms by directing them to deposit a certain sum of money with the Assessing Officer for being entitled to an opportunity to go before the Assessing Officer and place the reconciliation statement. However, Mr.S.P.Chidambaram, learned counsel for the appellant, on instructions, from his client, submitted that virtually the entire amount of tax has been recovered from the assessee, partly remitted by the assessee and partly adjusted from the refund, which was ordered. In the light of the said submission, we do not impose any condition for deposit of any sum of money. Appeal filed by the assessee is allowed and the orders passed by the CIT(A) is set aside and the matter is remitted back to the Assessing Officer for fresh consideration, who shall give an opportunity to the assessee to file reconciliation statement.

Summary

Issues involved:
1. Dismissal of appeals by the Tribunal for non-appearance and want of prosecution without adjudicating on merits.
2. Allegation of denial of natural justice due to non-service of hearing notice.
3. Dismissal of appeals without adjudicating on merits as per Income Tax Appellate Tribunal Rules, 1963.

Analysis:

Issue 1: Dismissal of appeals without adjudicating on merits
The appellant filed an appeal challenging the order of the Commissioner of Income Tax (Appeals) and received relief from the CIT(A) by reconciling differences pointed out by the Assessing Officer. The CIT(A) deducted a portion of the total addition made. However, the appellant filed an appeal before the Tribunal, claiming non-receipt of hearing notice as the reason for non-appearance. The Tribunal dismissed the appeal for want of prosecution, leading to the appellant's lack of knowledge about the dismissal until later. The High Court noted that the Tribunal's dismissal for want of prosecution was not justified based on legal precedents. The Court observed that the appellant's claim of being unaware of the Tribunal's order was not convincing. Despite this, the Court decided to grant the appellant another opportunity to file a reconciliation statement before the Assessing Officer.

Issue 2: Allegation of denial of natural justice
The appellant alleged denial of natural justice due to the non-service of the hearing notice by the Tribunal. However, the Court found that the appellant had provided a different communication address at Bangalore instead of their business location in Puducherry. The appellant failed to confirm whether the order was served at the alternative address. The Court concluded that the appellant's lack of diligence in prosecuting the matter did not justify the claim of being unaware of the Tribunal's order. Despite this, the Court decided to give the appellant another chance to present a reconciliation statement to the Assessing Officer.

Issue 3: Compliance with Income Tax Appellate Tribunal Rules, 1963
The Tribunal's dismissal of the appeal without adjudicating on merits raised concerns about compliance with the Income Tax Appellate Tribunal Rules, 1963. The High Court highlighted that the Tribunal's action was not in line with legal principles established by previous judgments. The Court emphasized the importance of ensuring that the appellant is taxed only for the amount they are liable for, preventing unauthorized recovery of excess tax. Consequently, the Court remitted the matter back to the Assessing Officer for fresh consideration, directing the Assessing Officer to allow the appellant to file a reconciliation statement and make a decision based on merits.

In conclusion, the High Court allowed the appeal, set aside the orders of the CIT(A), and remitted the matter to the Assessing Officer for a fresh review, emphasizing the importance of providing the appellant with a fair opportunity to present their case and address the tax liability appropriately.