High Court directs payment to Kerala Chief Minister’s Distress Relief Fund for restoration of the appeals and consideration on merits by Tribunal
ABCAUS Case Law Citation:
ABCAUS 2573 (2018) (10) HC
Many High Courts have issued directions to Petitioners to deposit sums to Kerala Chief Minister’s Distress Relief Fund as costs towards filing frivolous Petitions. Similar directions have also been given for restorations of appeals.
Among the names of such High Courts are Delhi High Court, Madhya Pradesh High Court, Karnataka High Court. Recently the Kerala High Court in a batch of Income Tax Appeals, also issued a similar direction for the appellant to pay an amount of Rs. 25,000/- for each for the assessment years for restoration of their appeals.
The appellant company was aggrieved with the orders of the Tribunal, for three assessment years in rejecting the applications to recall an ex-parte order. The applications were rejected for reason of they having been filed beyond the six months’ period as provided under Section 254(2) of the Income Tax Act, 1961 (Act).
In the present case, when appeals filed for the respective years had came up for hearing before the Tribunal they were dismissed for the non-appearance of the party and the Advocate.
It was contended that there was no warrant for treating the applications as one for rectification. Though there is no specific application for restoration as provided in the Act, Rule 24 of the Income Tax Appellate Tribunal Rules, 1963 (ITAT Rules) provides for hearing of an appeal ex-parte when there is default by the appellant and also provides for setting aside the ex-parte order and restoration of the appeal, if the Tribunal is satisfied of sufficient cause for the default.
In the order dismissing appeals for non appearance, it was also specifically provided that “if the assessee on a later stage gives explanation in regard to its non-appearance before the Tribunal on the date of hearing before the Tribunal by filing a Miscellaneous Application as per the ITAT Rules and if the Bench is so satisfied these appeals of the assessee can be recalled for hearing on merits.“
The Hon’ble High Court opined that the Tribunal erred insofar as treating the present applications as rectification applications. Though an application for restoration is not specifically provided; hearing of an appeal after declaring the appellant ex-parte and dismissal for reason of non-appearance of the appellant are procedural in nature and sufficient prescriptions have been made in the ITAT Rules as noticed hereinabove, for restoration and hearing the appeal on merits.
The Hon’ble High Court further stated that in such circumstances, the applications filed ought to have been treated as one filed for setting aside the ex-parte order and the appeals ought to have been restored to be heard on merits. It was also noticed that there was no order on merits passed by the Tribunal at the earlier stage and the appeals were dismissed giving liberty to the appellant to restore the same on sufficient cause being shown.
The Hon’ble High Court opined that normally, it would have remanded the matter back to the Tribunal for fresh consideration. However, noticing that it would only lead to multiplicity of proceedings, the Court considered the reasons stated by the appellant for the delay.
It was seen that there was a Company Appeal pending before the National Company Law Appellate Tribunal (NCLAT), for reason of disputes having arisen within the Management and between the Directors. Notice on the appeal was said to have been received by one of the Directors, who have been specifically removed as per the order of the NCLAT. The dismissal of the earlier appeals was earlier then the date the present management came into office on the basis of the NCLAT order.
The Hon’ble High Court opined that though sufficient cause had been shown, the appeals could be directed to be considered by the Tribunal only on terms.
The Hon’ble High Court directed the appellant to pay an amount of Rs. 25,000/- each for the assessment years in question to the Kerala Chief Minister’s Distress Relief Fund for restoration of the appeals and consideration on merits.