Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Piyush Kaushik, Adv.
  • Mr. Kunal Sharma, Ms. Zehra Khan and Mr. Shubhendu Bhattacharyya, Advs.
Judges
  • Justice Sanjeev Narula
Acts
  • Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963
  • Section 254(2) of the Income Tax Act,
  • Rule 24 of the ITAT Rules,
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Piyush Kaushik, Adv.
  • Mr. Kunal Sharma, Ms. Zehra Khan and Mr. Shubhendu Bhattacharyya, Advs.
Judges
  • Justice Sanjeev Narula
Acts
  • Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963
  • Section 254(2) of the Income Tax Act,
  • Rule 24 of the ITAT Rules,
See more information ...
Smart Summary

Judgment Summary — Writ Petition arising out of ITA No. 3844/DEL/2013

Bench: Hon'ble Mr. Justice Rajiv Sahai Endlaw and Hon'ble Mr. Justice Sanjeev Narula. Date: 19 February 2021.

Factual and Procedural Background

The petitioner appealed to the Income Tax Appellate Tribunal (ITAT), New Delhi, in ITA No. 3844/DEL/2013 for Assessment Year 2008-09. The Assessing Officer had made additions of Rs. 9,78,25,000/- to the petitioner's declared total income of Rs. 17,72,070/-, and the Commissioner of Income Tax (Appeals) had dismissed the petitioner's appeal. The petitioner filed the appeal to the ITAT on 17 June 2013.

The petitioner failed to appear when the appeal was listed on 9th and 10th December 2015. The ITAT, by its order dated 10th December 2015, dismissed the appeal for non-prosecution, recording that earlier adjournments had been sought and concluding that the petitioner did not appear interested in pursuing the appeal. In doing so, the ITAT referred inter alia to Commissioner of Income Tax (Central) v. B. N. Bhattacharjee [1979] 118 ITR 461.

In or about March 2017, the petitioner filed an application seeking recall/restoration of the ITAT order dated 10th December 2015. The ITAT dismissed that application by order dated 7th February 2018, holding that after amendment to Section 254(2) of the Income Tax Act (effective 1st June 2016) a miscellaneous application had to be filed within six months and that the petitioner's application was time-barred. The petitioner then filed M.A. No. 118/DEL/18 on 26th February 2018 seeking recall of the 7th February 2018 order; the ITAT dismissed that second application by its order dated 23rd December 2020 as not maintainable and holding that the speaking order dated 7th February 2018 could not be reviewed.

As a result, the appeal before the ITAT remained undecided on merits. The petitioner approached this Court by writ petition impugning (a) the ITAT order dated 23rd December 2020 dismissing M.A. No. 118/DEL/18, and (b) the ITAT order dated 10th December 2015 dismissing ITA No. 3844/DEL/2013 for non-prosecution, and sought adjudication of the underlying appeal on merits.

Legal Issues Presented

  1. Whether the ITAT's dismissal of the petitioner's appeal for non-prosecution without adjudication on merits violated Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 and was therefore void.
  2. Whether the ITAT erred in dismissing the petitioner's restoration application by applying the amended limitation under Section 254(2) of the Income Tax Act (w.e.f. 1st June 2016) to an application filed in or about March 2017.
  3. Whether the observations in Commissioner of Income Tax (Central) v. B. N. Bhattacharjee [1979] 118 ITR 461, relied upon by the ITAT, were applicable in the presence of Rule 24 of the ITAT Rules.
  4. Whether an application under the proviso to Rule 24 (to set aside an ex parte order) is subject to any limitation period.

Arguments of the Parties

Appellant's (Petitioner's) Arguments

  • The petitioner sought restoration of the appeal, asserting that between 8th December 2015 and 10th December 2015 he was ill and therefore could not appear when the appeal was listed on 10th December 2015 (reason for non-appearance recorded in the restoration application).
  • The petitioner invoked Rule 24 of the ITAT Rules and sought that the ITAT set aside the ex parte dismissal and restore the appeal for hearing on merits.

Respondent's Arguments

  • The respondent's counsel contended that the ITAT's dismissal for non-prosecution and its refusal to restore the appeal was at most an irregularity (i.e., not a ground for quashing the ITAT order).
  • The ITAT had relied on B. N. Bhattacharjee for the proposition that an appeal requires active pursuit and that mere filing is insufficient; the respondent relied upon that authority as supporting the ITAT's action.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Commissioner of Income Tax (Central) v. B. N. Bhattacharjee [1979] 118 ITR 461 Authority relied upon by the ITAT for the proposition that an appeal does not mean mere filing of the memo of appeal but requires effectively pursuing the appeal. The Court observed that at the time of B. N. Bhattacharjee, Rule 24 (as now in the ITAT Rules) did not exist and that the observation relied upon by the Tribunal was not in the context in which it was applied by the ITAT. The Court therefore held that the Tribunal had misapplied that authority.
Golden Times Services (P) Ltd. v. Deputy Commissioner of Income Tax (2020) 422 ITR 102 (Division Bench) Held that Rule 24 requires the ITAT to dispose of appeals on merits and that ITAT cannot dismiss an appeal solely for non-appearance; adjudication on merits is essential for a High Court to hear an appeal; the proviso to Rule 24 permits an applicant to apply to set aside an ex parte order and restore the appeal. The Court relied on this decision to conclude that the ITAT was required to adjudicate the appeal on merits notwithstanding non-appearance and that dismissal for non-prosecution was violative of Rule 24 and void. The present case was decided in accordance with these principles.

Court's Reasoning and Analysis

The Court proceeded by examining whether the ITAT's dismissal for non-prosecution complied with Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 and related authorities.

First, the Court observed that there was no adjudication on merits by the ITAT in its order dated 10th December 2015. Relying on the Division Bench decision in Golden Times Services (P) Ltd. v. Deputy Commissioner of Income Tax (2020) 422 ITR 102, the Court noted that Rule 24 requires the ITAT to dispose of appeals on merits after hearing the respondent and that the ITAT cannot dismiss an appeal solely on account of non-appearance of the appellant. The Court further noted that the proviso to Rule 24 enables an appellant who was not present when the appeal was disposed of to apply to the ITAT for setting aside an ex parte order and restoring the appeal for hearing.

The Court held that the ITAT's dismissal for non-prosecution, without deciding the appeal on merits, was violative of Rule 24 and therefore void. The Court rejected the respondent's contention that the ITAT's conduct amounted merely to an irregularity, concluding instead that the ITAT had committed illegality by not adjudicating on merits.

The Court then considered the ITAT's treatment of the petitioner's restoration application filed in or about March 2017. The ITAT had dismissed that application by invoking the amendment to Section 254(2) of the Income Tax Act (effective 1st June 2016) which reduced the period for filing certain miscellaneous applications to six months. The Court held that the petitioner's March 2017 application was within three years and that the ITAT erred in dismissing it by applying the amended six-month limitation. The Court also expressed doubt whether an application under the proviso to Rule 24 would at all lie under Section 254(2) but did not adjudicate finally on that question as it was unnecessary for deciding this case.

The Court inquired into the relevance of B. N. Bhattacharjee and was informed that Rule 24 did not exist at the time of that decision. On perusal, the Court found that the observation in B. N. Bhattacharjee relied upon by the ITAT was not in the context in which the ITAT applied it. Consequently, the Court concluded that the Tribunal had misapplied that precedent.

Holding and Implications

Holding: The writ petition is allowed. The ITAT order dated 10th December 2015 dismissing ITA No. 3844/DEL/2013 for non-prosecution is quashed, and ITA No. 3844/DEL/2013 is ordered to be restored to its original position as immediately before 10th December 2015.

Consequences and directions:

  • The ITAT is requested to take up ITA No. 3844/DEL/2013 for hearing on merits on 15th March 2021 or on any other date convenient to the ITAT.
  • The Court concluded that the ITAT's dismissal for non-prosecution without adjudication on merits was void for contravening Rule 24 of the ITAT Rules and that the ITAT erred in dismissing the petitioner's restoration application by improperly applying the amended limitation under Section 254(2).
  • The opinion addresses the immediate relief to the petitioner (restoration and direction for hearing). The judgment does not purport to lay down any broader change in law beyond application of the existing Rule 24 and the authorities relied upon.

Disposition: Petition allowed and disposed of. RAJIV SAHAI ENDLAW, J; SANJEEV NARULA, J. 19 February 2021.

Show full summary ...
To access the original judgment, please Sign In or Subscribe.

    Pradeep Kumar Jindal v. Principal Commissioner Of Income Tax - 7 .

    HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW HON'BLE MR. JUSTICE SANJEEV NARULA [VIA VIDEO CONFERENCING] RAJIV SAHAI ENDLAW, J.

    1. The petition impugns, (a) the order dated 23rd December, 2020 of the Income Tax Appellate Tribunal (ITAT), New Delhi, of dismissal of M.A. No. 118/DEL/18 filed by the writ petitioner in ITA No. 3844/DEL/2013 for Assessment Year 2008-09; as well as, (b) the order dated 10th December, 2015 of dismissal of ITA No. 3844/DEL/2013; and, seeks adjudication on merits of ITA No. 3844/DEL/2013.

    2. We have heard the counsel for the petitioner and the counsel for the respondent appearing on advance notice.

    3. Considering the nature of the controversy, the need to call for a counter affidavit is not felt.

    4. The petitioner preferred ITA No. 3844/DEL/2013 aforesaid before the ITAT, for Assessment Year 2008-09. However the petitioner failed to W.P.(C) 2229/2021 Page 2 of 6 appear, when the said appeal was listed on 9th December, 2015 and the ITAT, vide impugned order dated 10th December, 2015, recording that on earlier occasion also when the appeal was listed, adjournment was sought on behalf of the petitioner and that the petitioner did not appear to be interested in pursuing the appeal, and referring inter alia to Commissioner of Income Tax (Central) Vs. B. N. Bhattacharjee [1979] 118 ITR 461, holding that the appeal does not mean mere filing of memo of the appeal but effectively pursuing the same, dismissed the appeal for non- prosecution.

    5. The petitioner, in or about March, 2017, filed an application for recall of the order dated 10th December, 2015 of dismissal for non- prosecution of ITA No. 3844/DEL/2013 aforesaid. The said application was dismissed by the ITAT vide order dated 7th February, 2018, recording/reasoning, (i) that the petitioner had filed its return declaring total income of Rs.17,72,070/-; (ii) that the Assessing Officer made addition to the extent of Rs.9,78,25,000/-; (iii) that the appeal preferred by the petitioner was dismissed by the Commissioner of Income Tax (Appeals); (iv) that the petitioner preferred appeal to the ITAT on 17th June, 2013 but which was dismissed in limine vide order dated 10th December, 2015; (v) it was the case of the petitioner in the subject application, that the petitioner, between 8th December, 2015 and 10th December, 2015 was ill and hence could not appear when the appeal was listed on 10th December, 2015; (vi) that the petitioner, in effect was seeking rectification of the order dated 10th December, 2015; (vii) that under Section 254(2) of the Income Tax Act, the petitioner has time period of four years to apply for restoration of the appeal, on providing sufficient reasons for non-appearance; (viii) W.P.(C) 2229/2021 Page 3 of 6 however Section 254(2) had been amended with effect from 1st June, 2016 and after amendment, any miscellaneous application had to be filed within six months from the date of the order; (ix) though as on the date of the order dated 10th December, 2015, the petitioner had time period of four years to file an application under Section 254(2) of the Income Tax Act, for restoration of the appeal, however vide amendment w.e.f 1st June, 2016, the said period of four years was reduced to six months; and, (x) thus application for restoration of the appeal dismissed on 10th December, 2015 had to be filed within six months and the application was barred by time. Resultantly, the said application was dismissed.

    6. The petitioner, instead of preferring remedies against the aforesaid order dated 7th February, 2018, on 26th February, 2018, filed another application being M.A. No. 118/DEL/18 aforesaid, for recall of the order dated 7th February, 2018. The said application has been dismissed vide the impugned order dated 23rd December, 2020, reasoning that the subject second application was not maintainable and the order dated 7th February, 2018, which was a speaking order, could not be reviewed as the purport of the petitioner was.

    7. The net result of the aforesaid is, that the appeal preferred by the petitioner before the ITAT, remained to be decided on merits.

    8. A Division Bench of this Court of which one of us (Justice Sanjeev Narula) was a member, in Golden Times Services (P) Ltd. Vs. Deputy Commissioner of Income Tax (2020) 422 ITR 102 has held, (i) that Rule

    24 of the Income Tax (Appellate Tribunal) Rules, 1963 requires the ITAT to dispose of the appeal on merits, after hearing the respondent and ITAT cannot dismiss an appeal solely on account of non-appearance of the W.P.(C) 2229/2021 Page 4 of 6 appellant; (ii) adjudication on merits of the case, by the ITAT, is essential for the High Court to hear an appeal; and, (iii) the proviso to Rule 24 enables the appellant, who was not present at the time when the appeal was disposed of, to apply to the ITAT for setting aside of the ex parte order and for restoring the appeal for hearing.

    9. In the present case, admittedly, there is no adjudication by the ITAT on merits. In our opinion, the order dated 10th December, 2015 of the ITAT, dismissing the appeal of the petitioner for non-prosecution and not on merits, as the ITAT was required to do notwithstanding the non-appearance of the petitioner when the appeal was called for hearing, is violative of Rule

    24 supra and thus void. Though the petitioner applied as aforesaid to the ITAT, not once but twice, for hearing of his appeal on merits but the ITAT refused to correct the illegality committed. In the circumstances, notwithstanding the delay on the part of the petitioner in impugning the order dated 10th December, 2015, the same has but to be quashed and cannot be sustained.

    10. We are unable to agree with the contention of the counsel for the respondent, that the action of the ITAT, of dismissing the appeal for non- prosecution instead of on merits and of refusal to restore the same notwithstanding applications of the petitioner, is merely an irregularity.

    11. We have enquired from the counsels, whether the Rules aforesaid provide for any limitation for applying under the proviso to Rule 24, for setting aside/recall of an ex parte order albeit on merits. The counsels are unanimous, that for making an application under the proviso to Rule 24, no limitation is provided.

    12. Even otherwise, the first application aforesaid of the petitioner, filed W.P.(C) 2229/2021 Page 5 of 6 in or about March, 2017, for restoration of the appeal dismissed for non- prosecution on 10th December, 2015, was within three years and the ITAT erred in dismissing the same invoking the amendment to Section 254(2) requiring application thereunder to be filed within six months and in not going into the sufficiency of the reasons given by the petitioner for non- appearance.

    13. Thus the need for us to go into the question of, whether amendment of Section 254(2) of the Income Tax Act w.e.f 1st June, 2016, is prospective or retrospective, does not arise inasmuch as the application filed by the petitioner in March, 2017, also invoking, Rule 24 of the ITAT Rules, was within time and could not have been dismissed applying the provisions of limitation applicable to Section 254(2) of the Act; rather, we entertain doubt whether in the face of the specific provision in the Rules, an application for setting aside of an ex-parte order would at all lie under Section 254(2) of the Act. However, the need for us to adjudicate finally on the said aspect is also not felt in the facts of the present case.

    14. We have however enquired, how B. N. Bhattacharjee supra relied upon by the ITAT, held to the contrary.

    15. We are informed that at that time, Rule 24 supra of the ITAT Rules did not exist.

    16. However a perusal of B. N. Bhattacharjee supra shows that the observation therein relied upon by the Tribunal was not in the context in which the same was applied by the ITAT.

    17. In view of the aforesaid, the petition is allowed. The ITA No. 3844/DEL/2013 preferred by the petitioner before the ITAT is ordered to be restored to its original position, as immediately before 10th December, 2015 W.P.(C) 2229/2021 Page 6 of 6 and the ITAT is requested to take up the same for hearing on 15th March, 2021 or on any other date which may be convenient to the ITAT.

    18. The petition is disposed of. RAJIV SAHAI ENDLAW, J SANJEEV NARULA, J FEBRUARY 19, 2021 SU..

    Use AI to get other relevant cases.
    Try AI Pro free for 7 days Upgrade to AI Pro

    Comments

    Pradeep Kumar Jindal v. Principal Commissioner Of Income Tax - 7 .
    (Feb 19, 2021)