Merely because tax payer was not participating in proceeding ITAT cannot dismiss an Appeal: Orissa High Court

Fact and Issue of the case

The petitioner is an Individual engaged in the business of arrangement of trucks for transportation of materials of different parties. The Assessing Officer, vide assessment order dated 30.06.2014, added Rs. 72,23,004/- towards undisclosed transportation receipt and Rs. 2,23,885/- in the shape of TDS towards excess of assets over liabilities to the total income of the petitioner for the Assessment Year 2009-10. Being aggrieved, the petitioner approached the Commissioner of Income Tax (Appeals) – 2, Bhubaneswar, which vide its order dated 22.2.2016 in I.T. Appeal No.0288/2015-16, partly allowed the appeal of the petitioner herein i.e. it conformed the addition of the undisclosed transportation receipt of Rs. 72,23,004/- to the income while waived of the addition of Rs.2,23,885 in the shape of TDS towards excess of assets over liabilities. Being aggrieved by the order dated 22.02.2016 of the CIT (A)–2, Bhubaneswar, the petitioner approached the Income Tax Appellate Tribunal (hereinafter called “the Tribunal”), Cuttack Bench, Cuttack vide ITA No. 300/CTK/2016 for the assessment year 2009-The Ld. Tribunal issued notice for hearing on 06.07.2017 and on the said date, the authorised representative of the petitioner filed an adjournment application and the case was placed for hearing on 30.08.2017 accordingly. However, on 30.08.2017 neither the petitioner nor his authorised representative or his counsel were present. The Tribunal, therefore, dismissed the appeal for want of prosecution. The petitioner preferred an appeal by way of filing W.P.(C) No.2487 of 2019 before this Court even though no restoration application was filed before the Ld. Tribunal.

Observation of the court

“Section 254(1) of the Income Tax Act, 1961 – Provides that “the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.”

On the conjoint reading of the aforesaid provisions, court find that the Act enjoins upon the Tribunal to pass order on the appeal as it thinks fit after giving both the parties an opportunity of being It does not give any power to the Tribunal to dismiss the appeal for default or for want of prosecution in case the Petitioner is not present when the appeal is taken up for hearing.

The Supreme Court of India had confronted with such a question in The Commissioner of Income-Tax, Madras S. Chenniappa Mudaliar, Madurai 1969 (1) SCC 591, wherein it considered the provisions of Section 33 of the erstwhile Income-tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946 which gave power to the Tribunal to dismiss the appeal for want of prosecution. For ready reference, Section 33(4) of the Income Tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946 are reproduced below:-

“Section 33 (4) of the Income Tax Act, 1922 “33(4). The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner.”

Rule 24 of the Appellate Tribunal Rules, 1946 – ” Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may dismiss the appeal for default or may hear it ex-parte.”

In the said case the High Court of Madras held that under Section 33 (4), the Tribunal was bound to dispose of the appeal on merits, whether the Petitioner was present or not. The language of Section 33(4) and in particular the use of the word “thereon” signifies that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant. This can only be done by giving a decision on the merits on questions of fact and law and not by merely disposing of the appeal on the ground that the party concerned had failed to appear. The position becomes quite simple when it is pointed that the assessee or the CIT, if aggrieved by the orders of the Appellate Tribunal, can have resort only to the provisions of Section 66. So far as the questions of fact are concerned the decision of the Tribunal is final and reference can be sought to the High Court only on questions of law. The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers. The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed proper order under Section 33(4). It follows from all this that the Appellate Tribunal is bound to give a proper decision on questions of fact as well as law which can only be done if the appeal is disposed of on the merits and not dismissed owing to the absence of the appellant. This position of law was affirmed by the Apex Court.

Article 265 of the Constitution mandates that no tax can be collected except by authority of law. Appellate proceedings are also laws in strict sense of the term, which are required to be followed before tax can legally be collected. Similarly, the provisions of law are required to be followed even if the tax payer does not participate in the proceedings. No assessing authority can refuse to assess the tax fairly and legally, merely because the tax payer is not participating in the Hence, dismissal of appeals by ITAT for non- persecution is wholly illegal and unjustified.

If one see this issue through the prism of the Principles of natural justice, an appellate authority is required to afford an opportunity to be heard to the It has been held in plethora of cases that “right to natural justice” is a personal right, either a person can waive it or a person may not avail it. Merely because a person is not availing his right of natural justice, it cannot be a ground of refusal to perform statutory duty of deciding appeal by the Tribunal.

Applying the principles laid down in the aforesaid cases to the facts of the present case, Court is of the considered opinion that the Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing.

In view of the above analysis, the Rules and the provisions of the Act would pave way for the Tribunal to reconsider its The writ petition is allowed and the court direct the Tribunal to restore the appeal and decide the appeal on merit after giving both the parties an opportunity of being heard.