2023 (12) TMI 33 - HC - Income Tax

ITAT order set aside for improper notice service under Rule 19 - communication incomplete without addressee receipt

The HC set aside ITAT's order due to improper notice service to the appellant. The court held that mere posting of hearing dates in cause lists is ... Validity of order passed by the Tribunal (ITAT) - Non issuance or service of notice to the appellant for hearing - Date and Place for hearing of appeal to be notified - as argued procedure under Rule 19 of ITAT Rules, 1963 regarding listing of the Miscellaneous Petition in the cause list had gone un-noticed and therefore, the petitioner was unaware of the listing of the miscellaneous petition - HELD THAT:- Communication of information is deemed to be made by any act or omission of the party by which he intends to communicate such proposal, which has the effect of communicating it. Therefore, communication/intimation is complete when it comes to the knowledge of the person to whom it is made. Mere posting of the date of hearing of the Miscellaneous Petition in the Cause List is not sufficient. A proper communication has to be sent to the parties regarding the date of hearing of the Miscellaneous Petition, once an appeal is disposed of. As per Sub-Clause 2 to Rule 34A of the Income Tax (Appellate Tribunal) Rules, 1963, procedure for filing appeal under the Rules will apply mutatis mutandis to application u/s 254(2) of the Income Tax Act, 1961. Sub- Clause 3 to Rule 34A of the Income Tax (Appellate Tribunal) Rules, 1963 states that the Tribunal shall dispose the application after giving both the parties to the application a reasonable opportunity of being heard. Rule 19(1) of the Income Tax (Appellate Tribunal) Rules, 1963, contemplates serving of a copy of the Miscellaneous Petition on the Assessee or on the counsel or authorized persons respectively. Tribunal has to notify to the parties specifying the date and place of hearing of the appeal and send a copy of the memorandum of appeal to the respondent. Thus, application under Section 254(2) of the Income Tax Act, 1961, has to be communicated to the petitioner. In this case, it appears that the copy of the petition has not been sent to the petitioner. Thus, mere dispatch of a notice is not sufficient. To hold that notice came to the knowledge of the petitioner, the notice should also have been received by the person/assessee to whom it was addressed. There are no records to show the notice of intimation was received by the petitioner. The impugned Order passed by the Income Tax Appellate Tribunal is set aside and the case is remitted back to the Income Tax Appellate Tribunal, to pass a fresh order after hearing the petitioner. Issues Involved:1. Validity of the Tribunal's order dated 18.05.2022 under Section 254(2) of the Income Tax Act, 1961.2. Procedural compliance regarding notice issuance to the petitioner.3. Merits of the Tribunal's decision to recall its earlier order dated 23.12.2020.Summary:Issue 1: Validity of the Tribunal's order dated 18.05.2022 under Section 254(2) of the Income Tax Act, 1961The petitioner challenged the Tribunal's order dated 18.05.2022, which was passed under Section 254(2) of the Income Tax Act, 1961. The Tribunal had recalled its earlier order dated 23.12.2020, citing a 'wrong application of law' and directed the registry to fix the appeal for a fresh hearing before a regular bench. The petitioner contended that the order dated 18.05.2022 was passed without issuing any notice to the petitioner, thus necessitating its annulment and remittance back to the Tribunal for a fresh order.Issue 2: Procedural compliance regarding notice issuance to the petitionerThe petitioner argued that the Tribunal did not follow the procedure under Rule 19 of the Income Tax (Appellate Tribunal) Rules, 1963, as the petitioner was unaware of the listing of the miscellaneous petition in M.P. No. 47/CHNY/2021. The Tribunal's order dated 18.05.2022 was passed without the petitioner receiving any notice. The learned Senior Standing Counsel for the second respondent claimed that notices dated 06.04.2022 and 04.05.2022 were issued, but there were no records to substantiate that these notices were dispatched and received by the petitioner. The court emphasized that mere posting of the date of hearing in the cause list is not sufficient and proper communication must be sent to the parties.Issue 3: Merits of the Tribunal's decision to recall its earlier order dated 23.12.2020The petitioner asserted that the Tribunal's earlier order dated 23.12.2020, which allowed the petitioner's appeal, was well-reasoned and there was no apparent error on the face of the record. The Tribunal's decision to recall the order was challenged on the grounds that the respondents should have appealed against the order instead of seeking its recall. The court noted that the Tribunal's order dated 23.12.2020 was quashed due to being barred by limitation under Section 153(3) of the Income Tax Act, 1961. The court found that the Tribunal did not provide the petitioner with a reasonable opportunity to be heard before passing the impugned order dated 18.05.2022.Conclusion:The court set aside the impugned order dated 18.05.2022 passed by the Income Tax Appellate Tribunal and remitted the case back to the Tribunal to pass a fresh order after hearing the petitioner in M.P. No. 47/Chny/21. The writ petition was disposed of with these observations, and no costs were awarded. Consequently, connected Writ Miscellaneous Petitions were closed.