M/s. Jagjivandas Nandlal and Co., vs. The Income Tax Appellate Tribunal Mumbai Bench

These petitions, filed under Article 226 of the Constitution of India, are directed against the order dated 3rd March, 2010 passed by the Income Tax Appellate Tribunal, Mumbai   (“Tribunal”   for   short)   dismissing   appeal   filed   by the petitioner together with order dated 25th  March, 2010 whereby   the   miscellaneous   application   filed   by   the petitioner   was   rejected.     The   petitioner   has   prayed   for CNR No : HCBM020189172010 Uploaded on - 21/08/2020 wp-1805.10--.sxw direction to the Tribunal to grant fresh hearing on merits. Since   the   issues   involved   in   both   the   petitions   are interlinked,   they   are   being   disposed   of   by   this   common judgment. The Facts :

The   factual   matrix   giving   rise   to   the   present petitions is as under: The search and seizer action under section 32(1) of the Income Tax Act, 1961 (“Act” for short) carried out on the residential premises of one of the partners of the petitioner followed by survey action under section 133A of the Act at the business premises resulted in impounding of books   of   account   under   section   131   of   the   Act.     The petitioner had filed return of income   showing total loss of Rs.3,35,997/­ for the assessment year 1993­94 enclosed with Profit and Loss Account, Balance Sheet with necessary annexures.

The Assessing Officer assessed the income of the petitioner and passed assessment order under section 143(3) of   the   Act   making   addition   of   Rs.55,34,140/­.     He   added estimated   profit   of   Rs.16,25,981/­   together   with   loan transactions   and   interest,   details   of   which   are   not necessary for the view taken.

Aggrieved by the aforesaid order of assessment, the   petitioner   assessee   filed   appeal   before   the Uploaded on - 21/08/2020 wp-1805.10--.sxw Commissioner of Income Tax (Appeals), who was pleased to passed   an   ex­parte   order   dated   18th December,   1996 confirming the assessment order.

Aggrieved   by   the   aforesaid   order,   the   assessee carried appeal to the Tribunal on 11th February, 1997. 7. It   appears   that   during   the   pendency   of   the aforesaid appeal, the petitioner­ assessee vide its letter dated   17th  March,   2004     claims   to   have   informed   the   new address   to the Assistant Registrar of the Tribunal with further letters dated 7th June, 2007; 20th November, 2008 and 19th  December, 2008   enquiring about status of the appeal. According to the petitioner­ assessee the certified copy of the Tribunal’s order dated 3rd  March, 2003 was handed over to the petitioner on 9th January, 2009. The order reads as under: “The Notice fixing the hearing of the above appeals   on   26/2/2003,  sent   by   R.P.A.D.   at the   address   indicted   by   the   assessee   in column   No.10   of   Form   No.36   has   not   been returned   by   the   postal   authorities. However,   at   the   time   of   hearing   none appeared on behalf of the assessee, nor any request for adjournment was also filed.   In these circumstances, following the decision of the Delhi Bench of the Tribunal in the case   of   Multiplan   India   (P)   Ltd.   (38   ITD 320),   we   dismiss   these   appeals   as unadmitted.” (Emphasis supplied)

After   receipt   of   the   copy   of   the   order,   the petitioner claims to have written a letter to the registry of the Tribunal seeking permission to inspect the documents Uploaded on - 21/08/2020 wp-1805.10--.sxw so as to enable it to move miscellaneous application for recalling   the   order   dated   3rd  March,   2003. Accordingly inspection was given to the petitioner.   The petitioner­ assessee   during   the   course   of   the   inspection   found   that R.P.A.D. envelop was returned to the Tribunal with postal endorsement  “Not   found   at   given   address. Returned   to Sender”. After   receipt   of   the   aforesaid   inspection petitioner moved miscellaneous application to the Tribunal praying  for  recalling   of   the   order   dated   3rd  March,   2003 for   want   of   service   of   notice   of   hearing   resulting   in denial of opportunity of hearing.  The said application was rejected by the Tribunal by an order dated 25th March, 2010. The   said   orders   are   subject   matter   of   challenge   in   this petitions. Submissions:

The learned counsel appearing for the petitioner submits   that   the   change   of   address   was   intimated   to   the registry of the Tribunal vide letter dated 17th March, 2004 followed   by   series   of   letters   making   enquiry   about   the status of the appeal.  He, thus, submits that it is not a case wherein the Tribunal was not aware of the address of the   petitioner­assessee.     He,   thus,   submits   that   it   was obligatory on the part of the Tribunal to send the notice of hearing to the petitioner on the changed address.   The photocopies of the letters carrying initials of the person alleged   to   have   received   letters   in   the   registry   of   the Tribunal   are   produced   on   record   in   support   of   the submission made.  Learned counsel for the petitioner, thus, submits   that   the   impugned   orders   are   in   breach   of Uploaded on - 21/08/2020 wp-1805.10--.sxw principles of natural justice as such liable to be quashed and set aside and that the matter needs to be remitted back to the Tribunal for consideration afresh.

Per   contra,   learned   counsel   for   the   Revenue sought to create some doubt on the letters alleged to have been written and delivered to the registry of the Tribunal. He   submits   that   from   the   alleged   acknowledgments,   which does   not   carry   full   signature   of   the   person   receiving letters, it is not possible to make statement as to whether or not those letters were really received by the Tribunal. He further submits that the record being old, it is not possible   to   confirm   the   receipt   of   those   letters.     He further submits that it was obligatory on the part of the petitioner­ assessee to amend the cause title of the appeal memo   so   as   to   indicate   the   change   of   address.     In   his submission,     most   of   the   time   it   happens   that   the delivered letters do not get tagged to the appeal record. He,   thus,   submits   that   the   method   adopted   by   the petitioner­ assessee of writing letters and intimating the change   of   address   is   not   a   procedure   recognised   by   the Rules   governing   the   appeal   procedure.   He,   thus,   submits that the petitions are without any merits and are liable to be dismissed. Consideration :

Having heard rival contentions canvassed by the advocates appearing for the parties, without going into the issue   relating   to   the   correspondence   between   the petitioner­ assessee and the Tribunal leading to change of Uploaded on - 21/08/2020 wp-1805.10--.sxw address,   these   petitions   can   be   decided   on   the   admitted facts   available  on   record.    The  impugned   order   dated   3rd March,   2003   specifically   mentions   that   the   notice   of hearing   of   appeal   informing   date   of   hearing   as   26th February, 2003 was sent to the appellant/petitioner herein by   R.P.A.D.   at   the   address   indicated   by   the   petitioner­ assessee   in   column   10   of   Form   No.36   and   had   not   been returned   by   the   postal   authorities.     The   said   statement made in the order impugned is factually wrong and incorrect in   view   of   the   fact   that   the   notice   intimating   date   of hearing sent by R.P.A.D. was, admittedly, returned back to the   Tribunal   by   the   postal   authorities   with   postal endorsement  “Not   found   at   given   address.     Returned   to Sender”.    It   is,   thus,   clear   that   the   notice   sent   by R.P.A.D.   was   not   served.     It   was   returned   for   want   of correct   address.     The   Tribunal,   thus,   could   not   have treated   the   service   by   R.P.A.D.   as   good   service.     Under these   circumstances,   the   impugned   order   is   unsustainable and   is   liable   to   be   quashed   and   set   aside   since   it   is clearly in breach of principles of natural justice.  It was also expected on the part of the Tribunal either to issue fresh notice or at least to send an additional copy of the notice to the advocate appearing for the assessee.  No such notices     appear   to   have   been   sent.     Consequently,   the petitions   deserve   to   succeed,   since   the   orders   are   in breach of principles of natural justice.

Having said so, we may place it on record that in number of cases it has come to our notice that the parties are entering into correspondence with the registry of the Uploaded on - 21/08/2020 wp-1805.10--.sxw Tribunal to intimate the change of address without amending the   address   given   in   column   10   of   Form   No.36   or   in   the cause title of the appeal memo.  It is also noticed that in most of the cases change of address is not taken on record. Sometime the letter written by the assessee is not attended by   the   registry   of   the   Tribunal.     With   the   result,   the assessee does not get notice of hearing.   The matter is heard   behind   the   back   of   the   assessee   or   his   advocate which,   ultimately,   leads   to   unsustainable   order.     It generates   litigation   either   in   the   same   Court   by   way   of rectification application or in the higher Court.  In order to   avoid   this   situation,   it   is   desirable   to   direct   the appellant or parties to the appeal to amend cause title of the appeal memo in the event of change of address followed by   amendment   in   column   10   of   Form   No.36;   instead   of permitting   the   parties   to   enter   into   the   correspondence with the registry of the Tribunal.

We, in the above premise, request the President of the Tribunal either to frame rule or issue practice note making   it   clear   to   all   concerned   that   in   the   event   of change of address there should be amendment to the cause title of the memo of appeal followed by amendment in column 10   of   Form   No.36   with   further   reiteration   that   any correspondence in this behalf shall not be entertained by the Tribunal.  If the procedure suggested is adopted, then the parties before the Tribunal would be compelled to amend their memo of appeal or cross objections as the case may be followed by amendment in Column No.10 of Form No.36 so that it   will   clearly   indicate   to   the   Tribunal   the   correct Uploaded on - 21/08/2020 wp-1805.10--.sxw address of the appellant so as to enable it to serve the notice   of   hearing   on   the   assessee   at   its   given   address. This will avoid ex­parte hearing and consequent challenge to the order of the Tribunal on the ground of breach of principles of natural justice for want notice.  We hope the Tribunal shall take note of anxiety expressed by this Court and inform this Court the compliance of this order.

In   the   result,   impugned   orders   are   quashed   and set aside.   Proceedings are remitted back to the Tribunal for consideration afresh on merits.   Petitioner undertakes to appear before the Tribunal on 8th  November, 2010. Both petitions   are   allowed.     Rule   in   both   petitions   is   made absolute in terms of this order with no order as to costs.

Prothonotary   and   Senior   Master   is   directed   to send   copy   of   this   judgment   to   the   President,   Income   Tax Appellate Tribunal.  The copy of this judgment should also be forwarded to the President of Central Excise, Customs and   Service   Tax   Appellate   Tribunal   since   the   problem noticed by this Court is common to both the Tribunals. (R.M.SAVANT, J.)                       (V.C.DAGA J.) Uploaded on - 21/08/2020 Powered by TCPDF (www.tcpdf.org)