M/S. RAJ CORPORATION vs. INCOME TAX OFFICER,

Rule. Ms. Mauna Bhatt, learned senior standing counsel waives service of notice of rule on behalf of the respondent.

Having regard to the facts of the case and considering the fact that the controversy involved in the present case lies in a very narrow compass, with the consent of the learned counsel for the respective parties, the matter is taken up for final hearing today.

The facts stated briefly are that the respondent Income Tax Officer framed assessment under sub-section (3) of section 143 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) making an addition of Rs.31,00,000/- under section 68 of the Act. The petitioner carried the matter in appeal before the Commissioner of Income Tax (Appeals), who by an order dated 16.10.2010, dismissed the appeal and confirmed the addition. The petitioner thereafter, moved an application under section 154 of the Act on 19.2.2011 before the Commissioner (Appeals) requesting to rectify the factual error which had crept into the earlier order dated 16.11.2010. By an order dated 3.3.2011, the application under section 154 came to be allowed by the Commissioner (Appeals). Against the order passed by the Commissioner (Appeals) under section 154 of the Act, the revenue has preferred an appeal before the Income Tax Appellate Tribunal being Appeal No.1396/A/2011 which is pending for disposal. C/SCA/9354/2015 JUDGMENT

It appears that against the order dated 16.11.2010 passed by the Commissioner (Appeals), the assessee had preferred an appeal before the Tribunal being ITA No.77/Ahd/2011. By an order dated 13.6.2014, the appeal came to be decided ex parte as there was no appearance on behalf of the assessee. The petitioner thereafter filed an application under section 254(2) of the Act before the Tribunal seeking recall of the earlier order in the light of the fact that the previous order which was subject-matter of appeal before the Tribunal had been subsequently rectified by the Commissioner (Appeals). By the impugned order dated 19.2.2015, the Tribunal rejected the application on the ground that no sufficient cause had been made out for non- appearance at the time of hearing of the appeal.

Heard Mr. Ketan Shah, learned advocate for the petitioner and Mrs. Mauna Bhatt, learned senior standing counsel for the respondent.

From the facts, as emerging from the record, it is apparent that the earlier order passed by the Commissioner (Appeals) on 16.11.2010 came to be subsequently modified by her by the order dated 3.3.2011 and hence, the previous order merged with the subsequent order dated 3.3.2011 and did not have any independent existence of its own. It appears that at that relevant time, when the appeal preferred by the petitioner against the previous order of the Commissioner (Appeals) came up for hearing before the Tribunal, none appeared for the assessee before the Tribunal and the matter came to be decided ex parte. It appears that even on behalf of the revenue, it was not pointed out that the order which was C/SCA/9354/2015 JUDGMENT subject-matter of challenge before the Tribunal had subsequently been modified and had merged with the subsequent order passed by the Commissioner (Appeals). The petitioner thereafter, moved the miscellaneous application under section 254(2) of the Act seeking recall of the order passed by the Tribunal in the light of the fact that the same confirmed the previous order passed by the Commissioner (Appeals), which already stood merged with the subsequent order. The Tribunal, by the impugned order, has dismissed the miscellaneous application mainly on the ground that there was no sufficient reason for non-appearance at the time of hearing of the appeal on the part of the assessee.

In the opinion of this court, the approach adopted by the Tribunal cannot in any manner be said to be reasonable. When the order which was subject-matter of challenge before the Tribunal was no longer in existence as the same had merged with the subsequent order passed by the Commissioner (Appeals), the Tribunal was not justified in not recalling the previous order passed by it on the appeal preferred by the assessee confirming the previous order passed by the Commissioner (Appeals). Merely because the Tribunal did not find that sufficient cause had been made out by the assessee of remaining absent at the time when the appeal came to be decided, was no reason for the Tribunal, having regard to the facts and circumstances of the case to reject the application filed by the petitioner. Besides, it is an admitted position that against the subsequent order dated 3.3.2011 passed by the Commissioner (Appeals), the revenue had already preferred an appeal which is pending before the Tribunal, which fact had also not been brought to the notice of the Tribunal by the C/SCA/9354/2015 JUDGMENT departmental representative. It is in these circumstances that the Tribunal had proceeded to uphold the previous order passed by the Commissioner (Appeals). Having regard to the overall facts of the case, in the opinion of this court the Tribunal ought to have allowed the application and recalled its previous order confirming the order passed by the Commissioner (Appeals), inasmuch as on that date the said order passed by the Commissioner (Appeals) already stood merged with the subsequent order.

For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 19.2.2015 passed by the Tribunal in M.A. No.189/AHD/2014 is hereby quashed and set aside. The miscellaneous application is hereby allowed and the order dated 13.6.2014 passed by the Tribunal in ITA No.77/AHD/2011 is hereby recalled. Rule is made absolute accordingly with no order as to costs.

It is clarified that the fact that the present petition has been allowed shall in no manner prejudice the case of the revenue in the appeal preferred by it against the order dated 3.3.2011 passed by the Commissioner (Appeals) under section 154 of the Act. (HARSHA DEVANI, J.) (A.G. URAIZEE, J.) zgs