2023 (2) TMI 925 - HC - Income Tax

High Court overturns ITAT's dismissal of appeal, emphasizes Rule 24 for setting aside ex parte orders.

Cement Corporation Of India Ltd. Versus Assistant Commissioner Income Tax Circle 5 (2), New Delhi

The High Court set aside the ITAT's order dismissing a Miscellaneous Application for recalling an order due to non-prosecution, remitting the matter to ... Rectification of mistake u/s 254 - time limit for disposal of Misc. application - error in order on appeal as dismissed for non-prosecution - Tribunal has concluded that u/s 254 it had no power to condone the delay qua the application for recall of its order, which was filed beyond six months - HELD THAT:- The application moved by the petitioner was not moved with a view to rectify any mistake apparent from the record, or even to amend any order. The petitioner simply sought a recall of the order [2018 (1) TMI 1708 - ITAT DELHI], whereby the appeal was dismissed for non-prosecution. Therefore, in our opinion, the said provision was not applicable for adjudicating the petitioner’s application for recall of the order dated 24.01.2018. It appears, that the only avenue available to the Tribunal was as contemplated in Rule 24 of the ITAT Rules. While there was delay, the appellant seems to have furnished some reasons for explaining the delay. Broadly, the reasons given were that the notice of hearing issued by the Tribunal for the hearing on 24.01.2018 was misplaced, and did not reach the concerned officer of the petitioner, which according to the petitioner, was the primary cause for non-attendance on the said date. Furthermore, as per the petitioner, it was unaware of the passing of the dismissal order dated 24.01.2018, and only came to know about the same only on 05.02.2018. The petitioner also contends, that the inadvertent delay in filing the miscellaneous application was caused on account of the concerned persons in the Department being temporarily transferred to a plant outside Delhi, and some persons retiring during the relevant period. Having regard to the aforesaid, in our opinion, the appeal deserves to be heard on merits.The matter is remitted to the Tribunal for disposal of the petitioner’s statutory appeal on merits. Issues:Challenge to order of Income Tax Appellate Tribunal (ITAT) dismissing miscellaneous application for recalling an order due to non-prosecution.Analysis:1. The petitioner challenged the ITAT's order dated 07.09.2022, which dismissed the Miscellaneous Application seeking to recall the order dated 24.01.2018 due to non-prosecution. The Tribunal observed that the application was filed beyond the six-month limit prescribed by Section 254(2) of the Income Tax Act for rectification of mistakes apparent from the record. 2. The Tribunal's reasoning for rejecting the miscellaneous application was based on the time limit set by Section 254(2) of the Act. The Tribunal concluded that since the application was filed after the prescribed period, it lacked the power to condone the delay in filing the application. The Tribunal referred to the statutory provisions to support its decision.3. The High Court analyzed the situation and found that the petitioner's application was not aimed at rectifying a mistake but at recalling the order of dismissal for non-prosecution. The Court noted that the ITAT should have considered Rule 24 of the ITAT Rules instead of Section 254 of the Act for adjudicating the petitioner's request for recalling the order.4. Rule 24 of the ITAT Rules allows the Tribunal to dispose of an appeal on merits if the appellant fails to appear, but also provides for setting aside the ex parte order and restoring the appeal if the appellant shows sufficient cause for non-appearance. The High Court emphasized that the Tribunal should have considered this rule in the present case.5. The High Court found merit in the petitioner's case, noting that the denial of depreciation allowance worth Rs. 53,31,982 for AY 2011-2012 deserved a hearing on merits. The Court considered the reasons provided for the delay in filing the miscellaneous application, including misplacement of the hearing notice and personnel changes within the Department.6. Consequently, the High Court set aside the ITAT's order dated 07.09.2022 and remitted the matter to the Tribunal for disposal of the petitioner's statutory appeal on merits. The Court directed the registry to send a copy of the judgment to the Tribunal and instructed the parties to act based on the digitally signed copy of the order.