ITAT can not dismiss appeal ex-parte without addressing merits of issues in appeal

ITAT can not dismiss appeal ex-parte without addressing merits of issues in appeal- Allahabad High Court

ABCAUS Case Law Citation
ABCAUS 3561 (2021) (11) HC

Important case law relied referred:
Multiplan India Ltd. 38 ITD 320
Estate of Late Tukojirao Holkar vs. vs. CWT 223 ITR 480
CIT vs. B. Bhattachargee & Another 118 ITR 461

In the instant case, the Income Tax Appellate Tribunal (ITAT) had dismissed the appeal filed by the assessee ex-parte on the ground that none appeared on behalf of the assessee nor any application seeking for adjournment was filed. 

The Tribunal concluded that apparently, the assessee was not interested in prosecuting the appeal.

The Tribunal relied upon several judgments of the Hon’ble High Courts and Hon’ble Supreme Court wherein their Lordships held that the appeal does not mean, mere filing of the memo of appeal but effectively pursuing the same.

The question of law to be decided by the High Court was whether it is open to the Tribunal to dismiss an appeal, without addressing itself to the merits of issues in appeal, because one of the parties has not appeared before the Tribunal?

The Hon’ble High Court noted that there was dispute whether the assessee had noted the further date fixed in the appeal. According to the assessee there was no noting of adjournment on the order sheet and was not informed of the next date fixed, whereas, the Tribunal had observed that such date was noted by the representative of the assessee.

Though, the Hon’ble High Court, in view of the recital made in the order of the Tribunal assumed that the same is correct and such date had been noted by the representative of the assessee. However, it stated that by virtue of the language of Section 254(1) of the Income Tax Act 1961 read with Rule 24 of the Appellate Tribunal Rules, 1963, the Tribunal may decide an appeal only on merits.

The Hon’ble High Court stated that though, the Tribunal proceeded ex-parte against the appellant on account of unexplained absence, at the same time, the Tribunal could not dismiss an appeal for default without looking into the merits of the grounds raised in the appeal.

The Hon’ble High Court held that the ITAT being a creature of statute and being bound by its own rules of procedure, the impugned order was contrary to the law that binds the Tribunal.
Accordingly, the question of law framed was answered in the negative i.e. in favour of the assessee and against the Revenue.

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