OM DEVELOPERS, NAVI MUMBAI V. DCIT 28(2), NAVI MUMBAI

MA 285/MUM/2020

AI Insights

M/s. Om Developers filed a miscellaneous application under section 254(2) of the Income Tax Act, 1961, seeking to recall an earlier order due to alleged technical glitches during a virtual hearing, which they claimed prevented them from effectively presenting their case. The Tribunal acknowledged the disruptions and the rapid transition to virtual hearings due to the COVID-19 pandemic, which may have led to the assessee not receiving a fair hearing. The Tribunal decided to recall the order and set the case for a fresh hearing, underscoring the importance of providing a reasonable opportunity of being heard.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301138 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-11-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 26-11-2020
• Other Referred Cases: Dy. CIT vs. M/s. Pathik Constructions, Honda Siel Power Products Ltd. vs. CIT, Fedco (P) Ltd. & Another vs. S.N. Bilgrami & Others, CIT vs. M/s. Reliance Telecom
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Valuation report
• Section: 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI BASKARAN BR, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER MA No.285/M/2020 (Arising out of ITA No.1837/M/2018) Assessment Year: 2008-09 M/s. Om Developers, Office No.14, Mahavir Center, Sector-17, Vashi, Navi Mumbai-400 705 PAN: AAAFO9862A Vs. Dy. Commissioner of Income Tax-28(2), 4 th Floor, Room No.M6, Vashi, Navi Mumbai – 400 703 (Appellant) (Respondent) Present for: Assessee by : Shri K. Gopal, A.R. & Shri Manoj Harit, A.R. Revenue by : Shri Manoj Kumar Singh, D.R. Date of Hearing : 18 . 11 . 2022 Date of Pronouncement : 12.05. 2023 O R D E R Per : Kuldip Singh, Judicial Member: Heard : Applicant M/s. Om Developers (hereinafter referred to as the assessee) by moving an application under section 254(2) of the Income Tax Act, 1961 (for short ‘the Act’) sought to recall the order dated 06.10.2020 passed by the Tribunal in ITA No.1837/M/2018 by rectifying the mistake apparent on record on the grounds inter-alia that at the very outset the assessee had sought physical hearing keeping in view the nature of the case MA No.285/M/2020 M/s. Om Developers 2 and evidence before the Tribunal which was granted for 23.09.2020; that on 23.09.2020 the Ld. D.R. was not available, hence physical hearing could not take place and consequently case was listed for hearing for 24.09.2020 by way of virtual mode; that during the course of argument the Ld. A.R. for the assessee was facing technical glitches, audio video disturbances and resultantly on many occasions the assessee could not hear the Bench properly nor could convey his argument properly but kept on intimating the Bench qua the technical glitches and again made a request for physical hearing on the very next day or any suitable day to the Bench, however, the Bench in its wisdom has continued with the hearing and passed the order on 06.10.2022; that due to constant disruptions complete facts could not be explained or lost in the technical glitches hence not dealt with in the order (supra); that three days prior to the agreement for assignment cum sale signed between M/s. Pathik Constructions and applicant another tripartite agreement was entered into between Jai Ganesh Co-operative Housing Society, M/s. Pathik Constructions and M/s. Iconic Realtors later on declared to be the buyer of plot No.31 under the tripartite agreement but this issue has not been addressed in the impugned order, may be because of technical glitches the submissions of the assessee could not be properly understood; that aforesaid agreement being part of order dated 07.01.2015 passed by the Tribunal in case of Dy. CIT vs. M/s. Pathik Constructions and his sons has since attained finality, so the non consideration of the aforesaid agreement tantamount to mistake apparent on record; that valuation report of Valuation Officer, Income Tax Department, Mr. SB Chinchghad dated 09.05.2019 which is on record has also not been considered rather the Tribunal has held in para 13 of the order that Ld. A.R. has not pressed the said ground i.e. ground ‘h’ which may also occurred due to technical glitches; that similarly ground no.(g) and (i) have also not been dealt with by MA No.285/M/2020 M/s. Om Developers 3 the Tribunal; that additional grounds raised by the assessee having two distinct facets i.e. (a) & (b) but the Tribunal has also dealt with part ground (a) of the additional ground and has not dealt with ground (b) which is also mistake apparent on record thus the applicant has not been given effective hearing. The assessee also filed written submissions dated 24.11.2022, reiterating averments made in the application, which are made part of the file. 2. However, on the other hand, the Ld. D.R. for the Revenue vehemently opposed the application moved by the assessee on the grounds inter-alia that the Ld. A.R. for the assessee has extensively argued the case and order (supra) has been passed by the Tribunal on merits after providing adequate opportunity of being heard to both the parties; that there is no mistake apparent on record. However, at the same time the Ld. D.R. for the Revenue also submitted that there were interruptions during the initial period and thereafter adequate opportunity of being heard was provided to both the parties. 3. We have heard the Ld. Authorised Representatives of the parties to the application, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 4. At the very outset, the Ld. A.R. for the assessee in order to support his application contended that the first date of hearing i.e. 24.09.2020 falls during the covid-19, during which hybrid mode of hearing was in operation for hearing the appeals in the Tribunal and keeping in view the nature of the case the assessee had made a specific request for physical hearing on 14.09.2020 which was allowed for 21.09.2020. On 21.09.2020 since the MA No.285/M/2020 M/s. Om Developers 4 Ld. D.R. for the Revenue was not available the case was adjourned to 23.09.2020 and then adjourned to 24.09.2020 on which date argument was heard by way of virtual mode and order (supra) was passed. It is further contended by the Ld. A.R. for the assessee that despite specific request made during the course of hearing that there are some technical glitches leading to the loss of communication but argument was completed and order was passed which ultimately lead to the non grant of adequate opportunity of being heard to the assessee, which amounts to mistake apparent on record. 5. It is undisputed fact on record that due to pandemic nationwide lockdown was imposed and the Tribunal has started hearing the appeals by way of virtual mode, however, vide order dated 05.06.2020 Hon’ble Vice President of ITAT, Mumbai made the hearing through web based video conferencing entirely optional to the assessee. The relevant part of the order is extracted for ready perusal as under: “it is clarified that the hearing of appeals, or any other matters, through web based video conferencing is entirely optional to the assesse, and that, any stage of such proceedings and without assigning any reason. The assesse may withdraw from the proceedings. No adverse orders shall be passed against the assesse on account of his non-participation in these proceedings." 6. When we examine the aforesaid contention raised by the Ld. A.R. for the assessee in the light of the fact that the appeal was required to be disposed of within a period of six weeks as per directions issued by the Hon’ble High Court vide order dated 14.02.2020 prima-facie it cannot be ruled out that despite a request made by the assessee for physical hearing the case was heard on the priority basis even by ignoring the request made by the assessee for physical hearing, just to comply with the directions of the Hon’ble High Court. MA No.285/M/2020 M/s. Om Developers 5 7. Furthermore, when we examine the contentions raised by the assessee that there was constant technical glitches in the hearing and constant loss of communication between the Bench and the lawyers in the light of the limited admission made by the Ld. D.R. for the Revenue, that “there were interruptions during the initial period of hearing due to technical glitches” but the order was passed on merits and there is no mistake apparent on record, prima-facie tilted the balance in favour of the assessee that technical glitches were there and the Ld. A.R. for the assessee could not convey or the Bench could not hear the argument in entirety. 8. Furthermore, we are of the considered view that when on the specific request of the Ld. A.R. for the assessee on 14.09.2020 physical hearing was granted for 21.09.2020, it is highly improbable as to how the mode of hearing was abruptly changed on 24.09.2020. 9. The Ld. D.R. for the Revenue contended that when the assessee has made a specific request and sought physical hearing for 21.09.2020 the Ld. A.R. should not have opted hearing through virtual mode on 24.09.2020. We are of the considered view that when this argument of the Ld. D.R. for the Revenue is examined in the light of the fact that this case was made time bound by the Hon’ble High Court and all the time the Ld. A.R. for the assessee or the Ld. D.R. for the Revenue as the case may be cannot take a stubborn stance in the courts, which is a matter of common knowledge to all of us. 10. In other words invariably lawyers/A.Rs are ought to swing with the Bench in order to create conducive atmosphere of hearing in the court. So again prima-facie it goes in favour of the assessee that he has not been given reasonable opportunity of being heard. Even it is contended by the Ld. A.R. MA No.285/M/2020 M/s. Om Developers 6 for the assessee that during the course of hearing he has objected to the hearing through video conferencing mode but Bench proceeded to conclude the hearing. We are of the considered view that this fact can only be within the notice of Bench which has passed the order but when examined in totality of facts again prima-facie case and the balance of convenience tilt in favour of the assessee. 11. Furthermore, when we examine the contentions raised by the Ld. A.R. for the assessee in the light of the provisions contained under the rule 24 & 25 of the Appellate Tribunal Rules, 1963 the applicant has an inherent right to get the order set aside passed by the Tribunal in his absence even on merits. In the instant case from the very beginning the case of the Ld. A.R. for the assessee is that due to technical glitches, voice breakdown etc. he could not hear the queries of the Bench nor could he reply his argument in entirety, and as such the order passed by the Tribunal is akin to ex-parte order. So in all probabilities benefit of doubt needs to be given to the assessee to advance the cause of justice. 12. The Ld. A.R. for the assessee contended that the Tribunal has power to rectify the mistake crept in the order due to which prejudice has been caused to the either party by relying upon the decision rendered by Hon’ble Supreme Court in case of Honda Siel Power Products Ltd. vs. CIT (2007) 295 ITR 466 (SC) wherein the “scope of power of rectification” under section 254(2) of the Act has been explained. A broad principle has been laid down by the Hon’ble Supreme Court qua the power of rectification of the Tribunal that “When prejudice results from an order attributable to the Tribunal’s mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the Court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power MA No.285/M/2020 M/s. Om Developers 7 to review and that if prejudices had resulted to the party, which prejudice is attributable to the Tribunal’s mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake”. This proposition laid down by the Hon’ble Supreme Court (supra) is squarely applicable to the facts and circumstances of the case because by not providing reasonable opportunity of being heard to the assessee mistake has crept in and prejudice is certainly caused to the assessee who has a right to have reasonable opportunity of being heard. 13. The Ld. A.R. for the assessee further contended that due to constant technical glitches, voice breakdown etc. and due to the bulky nature of the case he had sought physical hearing but reasonable opportunity of being heard has not been given to him which amounts to mistake on record by relying upon the decision rendered by the Hon’ble Supreme Court in case of Fedco (P) Ltd. & Another vs. S.N. Bilgrami & Others 1960 AIR 415. 14. The ratio of the judgment (supra) is, “in order to determine, whether assessee has succeeded in showing that no reasonable opportunity has been given, the requirement is that reasonable opportunity of being heard must be given has two elements “the first is that an opportunity to be heard must be given; the second is that this opportunity must be reasonable and that it is for the court to decide whether an opportunity has been given and whether that opportunity has been reasonable”. In view of what has been discussed above, we are of the considered view that the facts and circumstances discussed above certainly lead to the conclusion that reasonable opportunity has not been granted to the assessee on account of hearing the appeal through virtual mode having constant technical glitches despite showing insistence by the Ld. A.R. of the assessee that the appeal being bulky in nature must be heard through physical mode. MA No.285/M/2020 M/s. Om Developers 8 15. When we apply the aforesaid principle laid down by the Hon’ble Supreme Court to the facts and circumstances of the case in which the Tribunal was working with 50% strength of its secretarial staff; complete infrastructure for virtual hearing was not in place; the appeals were being heard in hybrid mode that too at the option of the appellant because physical files were before the Bench but arguments were being addressed through virtual mode and the fact that the assessee had specifically sought physical hearing due to bulky nature of the appeal and was so granted by the Bench the reasonable opportunity of being heard cannot be said to be given to the assessee. 16. The Ld. D.R. for the Revenue by relying upon the decision rendered by Hon’ble Supreme Court in case of CIT vs. M/s. Reliance Telecom (2022) 284 Taxman 517 (SC) contended that when the order was passed on merits the same cannot be recalled. We have perused the decision rendered by the Hon’ble Supreme Court in case of CIT vs. M/s. Reliance Telecom (supra), which is distinguishable on facts because the assessee by filing the present application has not sought to challenge the merits of the order rather sought to recall the order on the sole ground that due to technical glitches in the web based hearing he was not given effective hearing and more so he was already granted physical hearing by the Bench. So the contention raised by the Ld. D.R. for the Revenue is not sustainable. 17. In view of what has been discussed above, we are of the considered view that prima-facie case for interference is made out on the grounds inter- alia that due to nationwide pandemic (Covid-19), the period under reference, hearing of appeals were in operation by way of virtual mode as per order dated 05.06.2020 (supra), however to provide reasonable opportunity of MA No.285/M/2020 M/s. Om Developers 9 being heard, arguing the appeals by way of virtual mode were made optional, with liberty to the assessee to withdraw from the virtual proceedings at any stage and no adverse order was to be passed; that in view of the timeline of six weeks to dispose of the appeal in question given by the Hon’ble Bombay High Court, the chronology of date of hearing from 21.09.2020 to 23.09.2020 and then to 24.09.2020 (the date of concluding the argument) indicates that the appeal was heard to meet with the timeline given by the Hon’ble Bombay High Court by virtual mode to speed up the hearing despite having technical glitches in the video conferencing particularly when assessee’s request for physical hearing was already accepted by the Tribunal; that when at the very outset the assessee has opted for physical hearing which was so granted on 14.09.2020 the hearing of the appeal by way of virtual mode that too with constant disruptions, breaking of voice on account of technical glitches, which fact is corroborated from the partial admission of the Ld. D.R. for the Revenue “that at initial stage technical glitches were there disrupting virtual hearing”, it appears that reasonable opportunity of being heard has not been granted to the assessee which caused prejudice to the assessee ; that in these circumstances passing the order (supra) by the Bench is akin to the ex- parte order to which rule 24 applies, hence without entering into the merits of the order passed in this appeal, the same is liable to be recalled under section 254(2) read with rule 24 of the Appellate Tribunal Rules, 1963 to advance the cause of justice. 18. Resultantly, order dated 06.10.2020 passed by the Tribunal in ITA No.1837/M/2018 is hereby recalled and registry is directed to list the present MA No.285/M/2020 M/s. Om Developers 10 appeal in due course for fresh hearing under intimation to both the parties, hence miscellaneous application filed by the assessee is allowed. Order pronounced in the open court on 12.05.2023. Sd/- Sd/- (BASKARAN BR) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 12.05.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. MA No.285/M/2020 M/s. Om Developers 11 Date Initial WHETHER DICTATION PAD ENCLOSED WITH THE FILE : Yes/No (as the order has been typed with the help of manuscript) 1. Draft dictated on 21.04.23 Sr.PS 2. Draft placed before author 25.04.23 Sr.PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Date of pronouncement Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the Head Clerk 9. Date of dispatch of Order