2025 (3) TMI 1006 - HC - Income Tax

Tribunal not recalling the ex-parte order passed when there was a reasonable cause for non-appearance on the date of hearing of the appeal - HELD THAT - We find that the tribunal had committed a factual mistake in holding that the assessee did not appear before the CIT(A) when the fact remains that the assessee had appeared before the appellate authority and contested the proceeding on merits. We have gone through the order passed by the Appellate Authority and we find that the Appellate Authority has not discussed any facts nor dealt with the grounds which have been raised by the assessee though the grounds have been extracted in the order passed by the Appellate Authority. Thereafter Appellate Authority referred to the various decisions and ultimately the conclusion holding that the assessee had not proved the three ingredients required u/s 68 of the Act. We are of the view that there is no discussion on facts despite the assessee having appeared before the Appellate Authority. Therefore we are of the view that the assessee should not be left remediless and should be given an opportunity to put forth their case on merits. Since the assessment proceedings were based on judgment assessment we are inclined to remand the matter back to the Assessing Officer for a fresh consideration. The order passed by the learned Tribunal the order passed by the Appellate Authority and the assessment order are set aside and the assessment is restored to the file of the Assessing Officer who shall complete the assessment after affording an opportunity of personal hearing to the authorized representative of the assessee.

ISSUES PRESENTED and CONSIDERED

The appeal raised the following substantial questions of law:

Whether the impugned order dated August 23, 2024, by the Tribunal is wrongful, illegal, arbitrary, and bad in law?
Whether the Tribunal was justified in not recalling the ex-parte order when there was a reasonable cause for non-appearance on the date of hearing of the appeal?
Whether the Tribunal was justified in dismissing the miscellaneous application given the appellant's history of appearances and the Tribunal's non-functioning on several hearing dates?

ISSUE-WISE DETAILED ANALYSIS

1. Justification of the Tribunal's Order

Relevant legal framework and precedents: The appeal was filed under Section 260A of the Income Tax Act, 1961, challenging the Tribunal's decision.
Court's interpretation and reasoning: The Court noted that the Tribunal made a factual error in stating that the assessee did not appear before the CIT(A), whereas the assessee had indeed appeared and contested the proceedings on merits.
Key evidence and findings: The Tribunal's decision was based on the assumption that the assessee was absent during the proceedings, which was factually incorrect.
Application of law to facts: The Court found that the Tribunal's order was based on an incorrect understanding of the facts, leading to a wrongful dismissal of the miscellaneous application.
Treatment of competing arguments: The Court balanced the Tribunal's reasoning against the factual record of the assessee's appearances and found the Tribunal's conclusions unjustified.
Conclusions: The Tribunal's order was unjustified and based on a factual mistake.

2. Non-recall of the Ex-Parte Order

Relevant legal framework and precedents: The Tribunal had dismissed the appeal ex-parte due to non-representation, which the assessee sought to have recalled.
Court's interpretation and reasoning: The Court examined the history of the case proceedings, noting several instances where the Tribunal was not in session, contributing to the non-appearance.
Key evidence and findings: The Court found that the assessee had been diligently prosecuting the matter, with multiple appearances and adjournments due to the Tribunal's non-functioning.
Application of law to facts: The Court determined that the assessee's conduct did not warrant the denial of a discretionary remedy.
Treatment of competing arguments: The Court considered the Tribunal's rationale against the factual backdrop of the case, finding the Tribunal's decision to dismiss the application unjustified.
Conclusions: The Tribunal should have considered the reasonable cause for non-appearance and recalled the ex-parte order.

3. Dismissal of the Miscellaneous Application

Relevant legal framework and precedents: The dismissal was challenged on the grounds of procedural fairness and factual inaccuracies.
Court's interpretation and reasoning: The Court highlighted the Tribunal's factual error regarding the assessee's appearance before the CIT(A) and the procedural history indicating diligent prosecution by the assessee.
Key evidence and findings: The Court identified the Tribunal's oversight in acknowledging the assessee's appearances and the non-functioning of the Tribunal on several dates.
Application of law to facts: The Court applied principles of fairness and procedural justice, finding the dismissal of the application unjustified.
Treatment of competing arguments: The Court weighed the procedural history against the Tribunal's reasoning, concluding in favor of the assessee.
Conclusions: The dismissal of the miscellaneous application was unjustified and based on a factual mistake.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Court noted, "The chain of events clearly shows that the assessee had been diligently prosecuting the matter and cannot be held to have slept over their rights."
Core principles established: The Court emphasized the importance of accurate factual findings and procedural fairness in judicial decisions.
Final determinations on each issue: The Court set aside the Tribunal's order, the Appellate Authority's order, and the assessment order, remanding the matter back to the Assessing Officer for fresh consideration with a directive to afford the assessee an opportunity for a personal hearing.

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