Despite 678 delays, the ITAT reinstates the appeal as being dismissed for lack of prosecution due to the failure of an income tax practitioner.
Facts and Issue of the case
The present application filed by the assessee seeks restoration of the appeal filed by the assessee in ITA No.956/Ahd/2012, pertaining to A.Y 2006-07 which was dismissed for want of prosecution vide order dated 27.03.2017. Court has noted that the said appeal was disposed off without dealing with the merits of the case and only for the reason that the assessee was not serious in pursuing the appeal which, it mentioned, was evident by the fact that it did not appear on various dates fixed for hearing.
Rule 24 of the Income Tax Appellate Tribunal Rules requires that where none appears for the assessee, the appeal is to be disposed of on merits after hearing the respondent and further after having done so, the assessee appears thereafter and satisfies the Tribunal that there was a reasonable cause for none appearance when the appeal was called for hearing then the Tribunal shall set aside the ex parte order and restore the appeal.
In the facts of the present case, the appeal which was disposed of ex parte was not in accordance with Rule 24 since it did not deal with the merits of the case. The Registry has marked the application filed by the assessee as delayed by 678 days on the basis of limitation prescribed u/s. 254(2) of the Income Tax Act which provides for rectifying any mistake in the order of the Tribunal and provides a time limit for doing so, which earlier was four years from the end of the month in which the order appealed against was passed, amended to six months w.e.f 01-06-2016.. Since the present application relates to exparte disposal of order, it is not an application seeking rectification in the order passed by the ITAT in terms of section 254(2) of the Act, but merely seeking a recall of the exparte order in terms of Rule 24 of the Income Tax Appellate Tribunal Rules 1963 as noted above. The limitation for moving an application prescribed u/s 254 (2) of the Act therefore does not apply to the present case. This view has been taken by Hon’ble High Court of Delhi in the case of Om Prakash Sangwan in ITA 625/2018 & CM APPL 21436/2018, ITA 626/2018 & CM APPL 21437/2018.
Moreover, the Ld. Counsel for the assessee has taken the entire blame for the inordinate delay in filing the present application for recalling the ex parte order stating that being a very small Practitioner of tax laws, he was under the mistaken belief that the time period for moving an application was four years as originally prescribed u/s. 254(2), though it had subsequently been reduced to six months by the Finance Act, 2016 w.e.f. 01.06.2016 and he was totally unaware of the same. He pointed out that the ITAT order was dated 27.03.2017 and the amendment had come into effect just nine months back on 01.06.2016 and being a small time practitioner, he was unaware of the same and harboring the belief that there was four years’ time to move an application, accordingly, the application got delayed by almost two years, i.e 678 days. He further pointed out that assessee was a very small assessee who had returned net taxable income of Rs. 82,590/- and huge addition had been made in assessment on account of unexplained cash deposits of Rs. 75,000/- and on account of unexplained investment in Mutual Fund of Rs. 13,81,330/- resulting into total addition of Rs. 14,56,330/- against meagre returned of income of Rs. 82,590/-.That penalty had been levied on the same and the assessee was in appeal against the penalty order. That grave prejudice and injustice would be caused to a small assessee like this if he was not given an opportunity of hearing, that too on account of the fault of his counsel. He therefore prayed for recalling the ex parte order restoring the original appeal giving the assessee an opportunity to argue his case in the interest of justice.
Observation of the case
Court finds that firstly there is no delay in terms of Rule 24 and 25 of the Income Tax (Appellate Tribunal) Rules,1963 in seeking to recall the exparte order passed in the impugned appeal and even if so held the assessee has adduced sufficient cause for the same, being the mistake of his counsel who failed to take note of the amendment in law, brought about a few months prior to the passing of the order by the Ld.CIT(A) ,restricting the time period for filing of rectification applications before us from four years to six months. .And keeping in mind the small background of the assessee and the huge additions made to his income, punishing him in the shape of tax liability by not recalling the earlier order dismissing his appeal is highly disproportionate to the negligence of the assessee in the delay in filing the present application. And therefore taking a sympathetic view we deem it appropriate to even otherwise condone the delay. We draw support from the order of the coordinate bench of the ITAT in the case of Gaurav Vinod Bhai Mitra vs ITO in ITA No.641/Ahd/2019 dated06/12/2021,where the delay in filing appeal before the Ld.CIT(A) of 26 months was condoned.
Court does not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon’ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach.
Having held so and noting that the dismissal of the appeal was not on merits, in terms of Rule 24 of the ITAT Rules, 1963, therefore court recall the order passed, restoring the appeal to its original position to be fixed for hearing on 25/05/2022.
Application of the assessee was allowed by the court.Manjulaben-C.-Vs-ITO-ITAT-Ahmedabad