2020 (11) TMI 396 - HC - Income Tax

Court quashes tribunal order, directs filing of accounts within 4 weeks, emphasizes merits over penalizing.

M/s. SWETHA REALMART LLP (SUCCESSOR IN INTEREST OF M/s. SWETHA HEALTH RESEARCH PVT. LTD.) Versus THE DEPUTY COMMISSIONER OF INCOME TAX

The Court found in favor of the assessee, quashing the tribunal's order and remitting the matter back to the tribunal. The assessee was directed to file ... Tribunal dismissing the Appeal instead of disposing the matter on merits - ITAT dismissed the appeal inter alia on the ground that in the absence of documentary evidence in support of assessee's claim that the property sold in question was not depreciable asset, no ground is made out to interfere with the order passed by the CIT(Appeals) - HELD THAT:- It is trite law that for the fault committed by a counsel, a party should not be penalized. It appears that on account of inadvertence, the senior chartered accountant engaged by the assessee could not comply with the directions of the Tribunal to file the documents. The tribunal, infact, should have adjudicated the matter on merits instead of summarily dismissing the same. Substantial question of law framed by this Court is answered in favour of the assessee and against the revenue - Order passed by the tribunal is quashed. The matter is remitted to the tribunal. Issues:Appeal under Section 260-A of the Income Tax Act, 1961 regarding dismissal of the appeal without considering merits by the Tribunal.Analysis:The appeal pertains to the Assessment Year 2016-17, where the assessee declared an income of Rs. 15,64,59,600. The Assessing Officer passed an order under Section 143(3) of the Act, which was later appealed by the assessee before the Commissioner of Income Tax (Appeals). The appeal was dismissed by the Commissioner, leading the assessee to approach the Income Tax Appellate Tribunal. The Tribunal dismissed the appeal, citing lack of documentary evidence supporting the claim that the property sold was not a depreciable asset. The assessee argued that their senior chartered accountant failed to comply with the tribunal's directions to file necessary documents, leading to the dismissal of the appeal without considering the merits. The Court acknowledged that a party should not be penalized for a counsel's fault and opined that the tribunal should have adjudicated the matter on merits instead of dismissing it summarily.The Court found in favor of the assessee, quashing the tribunal's order and remitting the matter back to the tribunal. The assessee was directed to file the audited accounts and computation of income within four weeks for the tribunal to proceed with adjudicating the appeal on merits. Consequently, the appeal was allowed, emphasizing the importance of considering the merits of the case rather than penalizing a party for a counsel's inadvertence.