2021 (6) TMI 260 - AT - Income Tax

Tribunal's Appeal Dismissal Overturned, Emphasis on Fair Opportunity

The Tribunal's decision to dismiss the appeal for non-prosecution was found to be in violation of legal principles and procedural requirements. The order ... Rectification of mistake u/s 254 - dismissal of appeal by the Tribunal on default of non-prosecution - HELD THAT:- On perusal of the order passed by the Tribunal, it is clear that the appeal was dismissed for non-prosecution as well as on the premise that defects in the appeal remains uncured without going into the merits of the issue, in the appeal. The approach of the Tribunal is contrary to the law laid down by the Hon’ble Supreme Court in the case of CIT Vs. S. Chenniappa Mudaliar [1969 (2) TMI 10 - SUPREME COURT] wherein held that the Tribunal is bound to give the decision on merits as questions of facts and law and not merely dismissing of appeal on the ground that party concerned had failed to appear considering the Rule 24 of the Income Tax Appellate Tribunal Rules, 1946. Therefore, in the light of the legal position enunciated above, we are of the considered opinion that the order passed by the Tribunal is not in consonance with the law laid by the Hon’ble Supreme Court and plain provisions of Rule 24 of the Income Tax Appellate Tribunal Rules. Even the Jurisdictional High Court in the case of Bharat Petroleum Corporation Limited [2013 (10) TMI 1085 - BOMBAY HIGH COURT] held that the dismissal of appeal by the Tribunal on default of non-prosecution is a mistake which can be rectified u/s 254(2) of the Act. On the similar lines, the decision of the Hon’ble Delhi High Court in the case of CIT vs. Ansal Housing & Construction Ltd.[2004 (5) TMI 22 - DELHI HIGH COURT] the decision of High Court in the case of M. S. Joseph Michael & Bros. [1991 (11) TMI 18 - KERALA HIGH COURT] and INCOME-TAX APPELLATE TRIBUNAL AND ANOTHER [1979 (4) TMI 22 - KERALA HIGH COURT] Therefore, it constitutes mistake apparent from the record, capable of being rectified in exercise of jurisdiction vested with the Tribunal u/s 254(2) - Miscellaneous Application filed by the assessee is allowed. Issues involved:Recall of order due to non-prosecution and uncured defects in appeal memo.Analysis:The appellant filed a Miscellaneous Application seeking the recall of the order passed by the Tribunal due to non-prosecution resulting in the dismissal of the appeal for the assessment year 2006-07. The appellant argued that the notice of hearing was not served, and all defects in the appeal memo had been cured and forwarded by registered post. However, during the hearing, no one appeared on behalf of the assessee. The Tribunal had dismissed the appeal for non-prosecution and uncured defects without delving into the merits of the case. The Tribunal's approach was found to be contrary to legal principles established by the Hon'ble Supreme Court and various High Courts, emphasizing the duty of the Tribunal to decide on merits rather than dismissing appeals solely due to non-appearance. The Orissa High Court also highlighted the importance of following legal procedures even in the absence of the taxpayer during appellate proceedings.The legal position laid down by the Supreme Court and various High Courts emphasized that the dismissal of appeals for non-prosecution is unjustified and contrary to the principles of natural justice. The right to natural justice is considered a personal right, and the Tribunal is obligated to afford an opportunity to be heard to the appellant, even if they choose not to participate. The Tribunal's duty is to decide on the merits of the appeal, regardless of the appellant's presence during the hearing. The Tribunal was directed to reconsider its decision, restore the appeal, and decide on merits after providing both parties with an opportunity to be heard.The Tribunal's order was deemed to be inconsistent with the legal precedents and Rule 24 of the Income Tax Appellate Tribunal Rules. The High Courts' decisions highlighted that the dismissal of appeals due to non-prosecution is a rectifiable mistake under Section 254(2) of the Income Tax Act, capable of being corrected by the Tribunal. Therefore, the Tribunal recalled the order and directed a fresh disposal of the appeal in accordance with the law, allowing the Miscellaneous Application filed by the assessee.In conclusion, the Tribunal's decision to dismiss the appeal for non-prosecution was found to be in violation of legal principles and procedural requirements. The order was recalled, and the appeal was directed to be reconsidered on its merits, emphasizing the importance of providing both parties with a fair opportunity to present their case during appellate proceedings.