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

ITA/38/2018HC KeralaKLHC01061121201818 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 for assessment years 2008-09, 2009-10, and 2011-12. These appeals were dismissed ex-parte by the Income Tax Appellate Tribunal (ITAT) on November 19, 2015, due to the assessee's non-appearance. The assessee subsequently filed Miscellaneous Applications before the ITAT to recall the ex-parte order. The ITAT rejected these applications, treating them as rectification applications filed beyond the six-month period prescribed under Section 254(2) of the Income Tax Act, 1961. The assessee challenged this rejection before the High Court of Kerala.

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 reasoned that while a specific application for restoration might not be explicitly provided, the ITAT Rules, particularly Rule 24, offer sufficient prescription for setting aside ex-parte orders and restoring appeals when sufficient cause for default is demonstrated. The ITAT's initial order dismissing the appeals also contained a liberty for the assessee to seek recall. Therefore, the applications ought to have been treated as those for setting aside the ex-parte order and restoring the appeals for hearing on merits. The Court noted that no order on merits had been passed previously. Considering the pendency of a Company Appeal before the NCLAT due to management disputes, which led to the non-appearance, the Court found sufficient cause. However, to avoid multiplicity of proceedings, the Court directed the assessee to pay Rs. 25,000/- to the Chief Minister's Distress Relief Fund for each assessment year. Upon production of the receipt, the appeals would be restored and heard on merits by the Tribunal.

What were the issues?

1. Whether the applications filed by the assessee to recall the ex-parte order of the ITAT should have been treated as applications for rectification under Section 254(2) of the Income Tax Act, 1961, or as applications for setting aside an ex-parte order under Rule 24 of the ITAT Rules, 1963? Assessee's contentions: - The applications were not for rectification but for restoration of the appeals dismissed ex-parte. - Rule 24 of the ITAT Rules, 1963, provides for setting aside an ex-parte order and restoration of an appeal if sufficient cause for non-appearance is shown. - The ITAT order dismissing the appeals explicitly allowed for recall on a later stage if a Miscellaneous Application was filed and the Bench was satisfied. Revenue's contentions: - Not recorded in the judgment.

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. 38 of 2018 AGAINST THE ORDER/JUDGMENT IN ITA 94/COCH/2015 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 2.3.2018 (ORDER MA NO.12/COCH/2018) APPELLANT/S:/APPELLANT/ASSESSEE VIJAYA HOSPITALITY AN RESORTS LTD. 37/991, IST FLOOR, EMMY SQUARE, SA ROAD, ELAMKULAM, ERNAKULAM 682 030 [PAN AABCV6710G] REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR, MR.BABOO K.C. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.PAULOSE C. ABRAHAM SRI.RAJA KANNAN RESPONDENT/S:/RESPONDENT/REVENUE THE COMMISSIONER OF INCOME TAX C R BUILDINGS, IS PRESS ROAD, ERNAKULAM, KOCHI 682 018. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX DEPT. OTHER PRESENT: SRI PKR MENON, SR COUNSEL FOR GOI (TAXES) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.09.2018, ALONG WITH ITA.42/2018 AND ITA.43/2018, 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 Tribunal, for t

The order continues below.

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