Ex parte order recalled u/s 254(2), HUF's appeal restored after counsel's lapse accepted as genuine

The ITAT Pune allowed the assessee-HUF's Miscellaneous Application and recalled its earlier ex parte order for A.Y. 2014-15. The Tribunal noted that the prior ex parte disposal followed repeated adjournment requests by the erstwhile counsel, who subsequently withdrew vakalatnama without the assessee's knowledge. Accepting the explanation of bona fide non-compliance and holding that a party should not be penalized for counsel's lapse, the ITAT directed de novo adjudication of the appeal. The Registry was instructed to list the matter before the "A" Bench on 08.07.2025 for fresh hearing.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the ex-parte appellate orders passed in the earlier appeals, consequent to non-appearance of the assessee's counsel and withdrawal of Vakalatnama, could be recalled for de novo adjudication.

1.2 Whether the assessee had shown a bona fide and sufficient cause for non-compliance on the date of hearing, warranting recall of the ex-parte order, particularly where the lapse was attributed to the conduct of earlier counsel.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Recall of ex-parte order - bona fide cause and effect of counsel's conduct

Interpretation and reasoning

2.1 The Tribunal noted that in the original appeals the assessee's earlier counsel had repeatedly sought adjournments, and the Bench had clearly indicated that the adjournment to 01.09.2022 would be the last opportunity.

2.2 On 01.09.2022, an email was received stating that the counsel had been detected with Covid-19, but no supporting medical certificate was filed, and the Tribunal proceeded ex-parte. During that hearing, the same counsel appeared virtually and stated that he had withdrawn his Vakalatnama, leading the Tribunal to decide the matter ex-parte.

2.3 In the miscellaneous applications it was specifically contended that the withdrawal of Vakalatnama by the earlier counsel was without the assessee's knowledge.

2.4 The Kartha of the assessee-HUF personally appeared along with new counsel and pleaded that the assessee should not be punished for the mistake of the earlier counsel, and requested an opportunity to explain the facts on merits.

2.5 On being queried by the Tribunal whether any complaint had been made to the Bar Council regarding the conduct of the earlier counsel, the Kartha explained his own serious health issues (hypertension and tumours under investigation) and expressed fear of taking action, while seeking a lenient view and an opportunity for proper hearing on merits.

2.6 The new counsel further submitted that, since the earlier order was passed ex-parte, the assessee did not get an opportunity to place factual submissions, and requested recall of both ex-parte orders covered by the two miscellaneous applications.

2.7 Considering the sequence of events, the prior adjournments, the explanation of the assessee, and the health condition of the Kartha, the Tribunal accepted that there existed a bona fide reason for non-compliance on 01.09.2022 and that the assessee deserved an opportunity to contest the appeals on merits.

Conclusions

2.8 The Tribunal held that the non-appearance on 01.09.2022 was supported by a bona fide cause and that, in the circumstances, the assessee should not suffer for the lapses or conduct of the earlier counsel.

2.9 The ex-parte orders in the two appeals were recalled for de novo adjudication, and the matters were directed to be fixed for hearing before the concerned Bench on a specified future date, with an assurance from the assessee and new counsel that no adjournment would be sought.

2.10 Both miscellaneous applications were allowed, resulting in recall of the earlier ex-parte appellate orders.

---