VIJAYA HOSPITALITY AND RESORTS LTD vs. THE COMMISSIONER OF INCOME TAX

ITA/42/2018HC KeralaKLHC01062876201818 September 2018Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON7 pages
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What were the facts?

The assessee, Vijaya Hospitality and Resorts Ltd., filed appeals before the Income Tax Appellate Tribunal (ITAT) for assessment years 2008-09, 2009-10, and 2011-12. These appeals were dismissed ex-parte on November 19, 2015, due to the non-appearance of the assessee or its counsel. The assessee subsequently filed applications before the ITAT to recall the ex-parte order. The ITAT rejected these applications, treating them as applications for rectification and holding that they were filed beyond the time limit prescribed under Section 254(2) of the Income Tax Act, 1961. The assessee then filed these appeals before the High Court of Kerala against the ITAT's order rejecting their recall applications.

What did the High Court hold?

The High Court held that the Tribunal erred in treating the assessee's applications as rectification applications. The Court found that the applications were, in substance, for setting aside the ex-parte order of dismissal and for restoration of the appeals to be heard on merits. The Court noted that the ITAT Rules, specifically Rule 24, provide for such restoration if sufficient cause for default is shown. The original dismissal order also contained a liberty to recall the appeals. While the Court found sufficient cause for the non-appearance, citing a pending Company Appeal before the National Company Law Appellate Tribunal (NCLAT) due to management disputes, it directed the restoration of the appeals on terms. The assessee was directed to pay Rs. 25,000/- to the Chief Minister's Distress Relief Fund for each assessment year within one month. Upon production of the receipt, the appeals would be restored and considered on merits.

What were the issues?

1. Whether the applications filed by the assessee before the ITAT to recall the ex-parte order of dismissal should have been treated as applications for rectification under Section 254(2) of the Income Tax Act, 1961, or as applications for setting aside the ex-parte order under Rule 24 of the Income Tax Appellate Tribunal Rules, 1963. Assessee's contentions: The assessee argued that the applications were not for rectification but for restoration of the appeals dismissed ex-parte. They relied on Rule 24 of the ITAT Rules, 1963, which provides for setting aside an ex-parte order if sufficient cause for non-appearance is shown. The original dismissal order itself provided liberty to recall the appeals if a satisfactory explanation for non-appearance was filed through a Miscellaneous Application as per ITAT Rules. Revenue's contentions: The judgment does not record any specific contentions made by the revenue before the High Court regarding the nature of the applications or the applicability of the rules.

Which sections of the Income-tax Act were involved?

Section 254(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUE AY ,THE 18TH DAY OF SEPTEMBER 2018 / 27TH BHADRA, 1940 ITA.No. 42 of 2018 AGAINST THE ORDER/JUDGMENT IN ITA 97/COCH/2015 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 2.3.2018 (ORDER MA NO.15/COCH/2018) APPELLANT/S:/APPELLANT/ASSESSEE VIJAYA HOSPITALITY AND RESORTS LTD. 37/991, 1ST FLOOR, EMMY SQUARE, SA ROAD, ELAMKULAM, ERNAKULAM - 682 020 (PAN AABCV6710G), REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR, MR.BABOO K.C BY ADVS. GOPIKRISHNAN NAMBIAR M. SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.P.GOPINATH SRI.RAJA KANNAN RESPONDENT/S:/RESPONDENT/REVENUE THE COMMISSIONER OF INCOME TAX C R BUILDINGS, I S PRESS ROAD, ERNAKULAM, KOCHI - 682 018. ADV.SRI.PKR MENON, SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, INCOME TAX DEPT. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.09.2018, ALONG WITH ITA.43/2018 & ITA.38/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA NOS.38, 42 & 43/18 -2- I.T.A.Nos.38, 42 and 43 of 2018 JUDGMENT K.Vinod Chandran, J. These appeals arise from the order of the Tribu

The order continues below.

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