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Issues: Whether Rule 24 of the Appellate Tribunal Rules, 1946, insofar as it authorised dismissal of an appeal for default of appearance, was ultra vires Section 33(4) of the Income-tax Act, 1922.
Analysis: Section 33(4) required the Appellate Tribunal, after giving the parties an opportunity of being heard, to pass such orders thereon as it thought fit, which meant a decision on the merits of the appeal. The statutory scheme of appeal and reference showed that the Tribunal's order had to be a proper order on the subject-matter of the appeal so that questions of law could thereafter be referred to the High Court. A rule framed under Section 5A(8) could regulate procedure only subject to the Act and could not authorise a procedure that conflicted with the mandatory duty under Section 33(4). A dismissal for default without adjudication on merits would defeat the reference machinery and was therefore inconsistent with the Act.
Conclusion: Rule 24, to the extent that it enabled dismissal of an appeal for default of appearance, was ultra vires and invalid. The answer to the referred question was rightly in the affirmative, against the appellant and in favour of the assessee.
Final Conclusion: The appeal was dismissed, and the Tribunal was held bound to decide the appeal on merits rather than terminate it for non-appearance.
Ratio Decidendi: Where the statute requires the appellate tribunal to pass orders on the appeal after hearing the parties, a procedural rule cannot permit dismissal for default of appearance because the appeal must be disposed of on the merits.
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