RANJANABEN MUKESHBHAI PATEL vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2
What did the High Court hold?
The High Court declined to answer the substantial questions of law framed at the time of admission. The Court noted that the assessee had already filed an application before the ITAT invoking the proviso to Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, seeking to set aside the ex parte order due to sufficient cause for non-appearance. The Court directed the ITAT to take up this application for hearing and pass an appropriate order in accordance with law at the earliest. The Court stated that it should not interfere with the impugned order solely on the ground that this application is pending. If the application is rejected by the ITAT for good reason, the assessee may then avail appropriate legal remedies. The ITAT's order was effectively left to be decided based on the pending application under Rule 24.
What were the facts?
The assessee, Ranjanaben Mukeshbhai Patel, filed a Tax Appeal before the Gujarat High Court challenging an order dated 13.03.2020 passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad, for Assessment Year 2015-16. The appeal stemmed from an order passed by the DCIT on 14.11.2017 under Section 143(3), which was partly allowed by the CIT(A) on 15.05.2018. The assessee, dissatisfied with the CIT(A)'s order, appealed to the ITAT. The assessee's counsel submitted that the assessee was unable to appear before the ITAT. The ITAT, in its order, noted that since the assessee had not rebutted the CIT(A)'s findings with written submissions, it dismissed the appeal.
What were the issues?
1. Whether the Hon'ble Tribunal committed a substantial error of law by dismissing the appellant's appeal without assigning reasons, resulting in a non-speaking and cryptic order? (Question of law) 2. Whether the Hon'ble ITAT erred in not following the mandate of Section 254 of the Act read with Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, by not disposing of the appeal on merits? (Question of mixed law and fact) Assessee's contentions: The assessee argued that even in the absence of appearance, the ITAT was obligated to dispose of the appeal on merits and should not have affirmed the CIT(A)'s order solely due to the lack of submissions. The assessee relied on Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, which allows for ex parte disposal on merits after hearing the respondent, but also provides for setting aside the ex parte order if the appellant shows sufficient cause for non-appearance. The assessee prayed for the ITAT order to be quashed and the matter remitted for a hearing on merits. Revenue's contentions: The Revenue argued that the proposed questions of law were not substantial. The Revenue pointed out that the assessee had already filed an application before the ITAT invoking the proviso to Rule 24, seeking to set aside the ex parte order due to sufficient cause for non-appearance.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act, 1961’) is at the instance of an assessee and is directed against the order passed by the Income Tax Appellate Tribunal, ‘SMC’ Bench, Ahmedabad dated 13.03.2020 in the ITA No.1714/Ahd/2018 for the A.Y. 2015-16. 2. This Tax Appeal came to be admitted by this Court on the following two substantial questions of law: “(i) Whether the Hon’ble Tribunal has committed substantial error of law in not assigning any reasons while dismissing the appeal of the appellant and passing a non-speaking and cryptic order? (ii) Whether the Hon’ble ITAT has erred in not following the mandate of section 254 of the Act read with Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 in not disposing
the appeal of the appellant on merits?”
We have heard Mr. Hiren Trivedi, the learned counsel appearing for the appellant-assessee and Mr. Manish Bhatt, the C/TAXAP/268/2021 ORDER DATED: 01/02/2022 learned Senior Counsel assisted by Mr. Karan Sangani, the learned counsel appearing for the Revenue.
It appears from the materials on record that the appellant-assessee being dissatisfied with the order passed by the DCIT, CIR(2), Bhavnagar dated 14.11.2017 under Section 143(3) of the Act, preferred an appeal before the Commissioner of Income Tax bearing No.CIT(A)-6/139/17-18.
The appeal preferred by the appellant-assessee came to be partly allowed by the CIT(A) vide order dated 15.05.2018. The appellant herein being dissatisfied with the order passed by the CIT(A), challenged the same before the Income Tax Appellate Tribunal. It appears and as fairly submitted by the learned counsel appearing for the appellant that the appellant- assessee was not in a position to appear before the Appellate Tribunal.
In such circumstances referred to above, the Appellate Tribunal observed in paragraph 12.1 of its impugned order as under: “12.1 Since the assessee has not rebutted or controverted the findings of the ld.CIT(A) by way of any written submission,
therefore we find no reason to interfere with the findings of the Id.CIT(A) and hence the ground raised by the assessee is dismissed.”
The Appellate Tribunal ultimately dismissed the appeal.
The principle argument of Mr. Trivedi, the learned counsel appearing for the assessee is that even if the appellant was not in a position to appear before the Tribunal, the Tribunal was obliged to dispose of the appeal on merits. The Tribunal ought not to have affirmed the order passed by the CIT(A) only on the ground that the appellant failed to make any C/TAXAP/268/2021 ORDER DATED: 01/02/2022 submissions before the Tribunal.
Mr. Trivedi, invited our attention to Rule 24 of the Income Tax (Appellate Tribunal) Rules,1963 which reads thus: “[Hearing of appeal ex parte for default by the appellant.
Where, on the day fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorised representative when
the appeal is called on for hearing, the Tribunal may dispose of the appeal on merits after hearing the respondent : Provided that where an appeal has been disposed of as provided above and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non- appearance, when the appeal was called on for hearing, the Tribunal shall make an order setting aside the ex parte order and restoring the appeal.]”
In such circumstances referred to above, Mr. Trivedi prays that both the substantial questions of law as framed by this court may be answered in favour of the assessee and against the Revenue. Mr. Trivedi, would pray that the impugned order passed by the Tribunal may be quashed and set aside and the matter may be remitted back to the Tribunal with the direction that the appeal filed by the assessee be heard on its own merits.
On the other hand, Mr. Bhatt, the learned Senior Counsel appearing for the Revenue has vehemently opposed this appeal submitting that none of the two questions of law as proposed by the appellant could be termed as substantial questions of law. Mr. Bhatt, pointed out something very pertinent which should be taken cognizance of. Mr. Bhatt, pointed out that the appellant herein has already preferred an application before the Appellate Tribunal invoking the proviso to Rule 24 referred to above. Mr. Bhatt would submit that by C/TAXAP/268/2021 ORDER DATED: 01/02/2022 way of such application filed by the appellant herein, the appellant is seeking to point out to the Tribunal that there was sufficient cause for his non appearance when the appeal was taken up for hearing on 12.03.2020. 10. Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that as the appellant has already filed an application before the Appellate Tribunal invoking the proviso to Rule 24 of the Rules, 1963, he should pursue such application. We are of the view that we should not interfere with the impugned order passed by the Appellate Tribunal only on this short point that the application filed by the appellant herein invoking the proviso to Rule 24 of the Rules, 1963 is pending for hearing before the Appellate Tribunal. We direct the Appellate Tribunal to take up such application filed by the appellant herein for hearing and pass an appropriate order in accordance with law at the earliest.
In such circumstances referred to above, we decline to answer the two substantial questions of law framed by this Court at the time of admission of this appeal leaving it open for the Income Tax Appellate Tribunal to decide the appeal filed by the appellant-assessee under Rule 24 of the Rules, 1963. In the event if such application is rejected for any good reason by the Appellate Tribunal then in such circumstances, the appellant may avail appropriate legal remedy available to him in law. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) NEHA
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