Shri. Mangilal Jain, Bangalore V. Income Tax Officer, Ward- 5(2)(2), Bangalore

MA 69/BANG/2022

AI Insights

This case involves a miscellaneous petition filed by Shri Mangilal Jain seeking rectification of an earlier Tribunal order that dismissed his appeal as withdrawn. The dismissal was based on a letter from his Chartered Accountant, Mr. Sunil D. Surana, who allegedly acted without the assessee's instructions. The assessee contended that the withdrawal was unauthorized and constituted a mistake apparent from the record. The Tribunal found that the CA had no authority to withdraw the appeal and thus recalled the earlier order, allowing the appeal to be heard on its merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129993 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-01-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 10-04-2022
• Other Referred Cases: CIT Vs. Reliance Telecom reported in (2021) 133 taxmann.com 41 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Set aside
• Section: 143(1); 254(2)

Judgement Text

MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” “B’’ BENCH: BANGALORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER MP No.69/Bang/2022 (Arising out of ITA No.1563/Bang/2019) Assessment Year : 2014-15 Shri Mangilal Jain #11, 1 st Floor, Chennu Building, DS Lane Chickpet Bangalore 560 002 PAN NO : ACRPD6297R Vs. ITO Ward 5(2)(2) Bangalore APPELLANT RESPONDENT Appellant by : Shri Balram R Rao, A.R. Respondent by : Shri Ganesh R Gale, Standing Counsel for department. Date of Hearing : 13.01.2023 Date of Pronouncement : 06.02.2023 O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER: This is a miscellaneous petition filed by the assessee u/s.254(2) of the Income Tax Act, 1961 (Act) praying for rectification of the order dated 20.12.2019 passed by this Tribunal in ITA No.1563/Bang/2019 for AY 2014-15. 2. By the aforesaid order dated 20.12.2019 this Tribunal dismissed the above appeal of the assessee as withdrawn. However, the assessee filed a petition dated 28.2.2022 requesting for MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore Page 2 of 7 restoration of the aforesaid appeal by rectifying the mistake apparent from the record of its order stating the following reasons: “1. The Applicant is an Individual who is assessed to tax under the Income-tax Act, 1961 (the IT Act' in short). The Applicant is an honest and diligent taxpayer, and discharges the taxes payable by him under the IT Act and under all other applicable laws. 2. For the assessment year ('AY' in short) 2014-15, the Applicant had filed the return of income on 31.03.2015 declaring total income of Rs.NIL. The return as filed was processed U/s. 143(1) of the IT Act. Thereafter, however, pursuant to initiation of scrutiny assessment proceedings, an assessment order dated 29.12.2016 came to be passed under S.143(3) of the IT Act vide which an addition of Rs.9,83,908/- was made to the returned income of the Applicant. 3. Aggrieved, the Applicant preferred an appeal to the Commissioner of Income Tax (Appeals) -12 ("CIT-A" in short) against the aforesaid assessment order. However, the CIT-A only granted very minimal relief to the Applicant vide his order dated 07.05.2019. 4. As the Applicant was desirous of filing an appeal to this Hon'ble entrusted the matter to his Chartered Accountant (`CA' in short), Mr. Sunil D. Surana, with the instructions to prepare and file the appeal on his behalf and, most importantly, to appear on his behalf before this Hon'ble Tribunal as and when the case was posted for hearing and to thus prosecute the case before this Hon'ble Tribunal with due diligence on his behalf. 5. It is submitted that after the Applicant executed the appeal papers, the appeal came to be filed and. registered as ITA No.1563/Bang/2019. The Applicant humbly submits that he was of the bonafide belief that the said CA to whom he had entrusted the matter would keep him informed about the developments in the appeal as and when hearings took place. Similarly, he was of the bonafide belief that if any documents or details were required for the appeal, the CA would contact him and ask him for the same. Labouring under the aforesaid bonafide belief, since the Applicant did not hear from his CA in respect of the above appeal, it is humbly submitted that he was of the bonafide belief that the appeal was still pending before this Hon'ble Tribunal. 6. While so, when the Respondent contacted the Applicant in January 2022, he was utterly shocked and dismayed to find out from MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore Page 3 of 7 the Respondent that the appeal had been dismissed on 20.12.2019 and, what is more, dismissed as withdrawn. 7. It is submitted that immediately thereafter, the Applicant contacted his CA who informed him that the appeal was dismissed as withdrawn in terms of the CA's letter that was apparently filed on 18.11.2019 pursuant to which he appeared before this Hon'ble Tribunal on 18.11.2019 without the Applicant and orally requested that the appeal be dismissed as withdrawn. 8. The Applicant categorically submits that no instructions whatsoever were ever given by him, either orally or in writing, to the CA to withdraw the said appeal. It is most important to note that the said letter purportedly filed by the CA is only signed by him and does not bear any signature of the Applicant or any other mark of his indicating his acquiescence to the withdrawal of the appeal. 9. When the Applicant asked the CA why the letter was filed and why he had requested for dismissal of the appeal as withdrawn, he informed the Applicant that the said actions were committed by him due to a wholly bonafide and inadvertent error and unintentional oversight on his part. As a result of the above, the appeal came to be dismissed as withdrawn by this Hon'ble Tribunal vide an order dated 20.12.2019. 10. The Applicant most humbly submits that the dismissal of his appeal as withdrawn vide the aforesaid order dated 20.12.2019 solely on the basis of the unauthorised letter dated 18.11.2019 Applicant and signed by the CA alone and without there being any instructions whatsoever from the Applicant for withdrawal of his appeal, constitutes a mistake apparent from the record which may kindly be rectified by this Hon'ble Tribunal in exercise of the powers vested in it under Section 254(2) of the Act. It is humbly submitted that it is due to the _bonafide reasons stated above that the above appeal was dismissed as withdrawn by this Hon'ble Tribunal. 11. Thus, the Applicant most humbly prays that this Hon'ble Tribunal may be pleased to pass orders allowing the present application under Section 254(2) of the Act and thereby granting rectification of the aforesaid mistake apparent from the record of the order dated 20.12.2019 passed by this Hon’ble Tribunal. Consequently, the Applicant most humbly prays that this Hon'ble Tribunal may be pleased to restore the above appeal bearing ITA No.1563/Bang/2019 to the file of this Hon'ble Tribunal and to hear and consider the appeal on merits, in the interests of justice and equity. MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore Page 4 of 7 12. It is humbly submitted that there are genuine and sufficient reasons for allowing the present application under Section 254(2) of the Act and thereby granting rectification of the aforesaid mistake apparent from the record of the order dated 20.12.2019 passed by this Hon'ble Tribunal. It is further humbly submitted that since the dismissal of the appeal is for reasons beyond my control and, in any event, since it is neither deliberate nor intentional, the same may kindly be rectified by this Hon'ble Tribunal by adopting a lenient approach so as to ensure that the ends of justice are met. Thus, it is most humbly prayed that the Applicant ought not to be put to severe prejudice and irreparable injury for acts of inadvertence and oversight not committed by him. In addition, the Applicant has a good case on merits and is, therefore, more than likely to succeed in the appeal as a result of which the assessment order and the order of the CIT — A are liable to be set aside as being bad in law and on facts. 13. Thus, in view of the above, it has become necessary for the Applicant to file the present application under Section 254(2) seeking rectification of the aforesaid mistake apparent from the record of the order dated 20.12.2019 passed by this Hon'ble Tribunal. 14. It is humbly submitted that if the present application is allowed, no hardship or prejudice will be caused to the Respondent. On the other hand, grave injury and hardship will be caused to the Applicant if the application is not allowed. The balance of convenience, therefore, lies in favour of the Applicant. 15. The Applicant further declares that it has not filed any other application under Section 254(2) of the Act before this Hon'ble Tribunal or before any other Court or Tribunal against the impugned order dated 20.12.2019 passed by this Hon'ble Tribunal 16 The Applicant submits that the present application is being filed within the period of limitation prescribed under Section 254(2) of the Act read with the orders dated 23 rd March 2020, 27 th April 2021, 23 rd September 2021, and 20 th January 2022 passed by the Hon'ble Supreme Court in terms of which the period of limitation under all general and special laws, including under the IT Act, has been directed to be excluded from 15 th March 2020 till 28 th February 2022 in all judicial proceedings. 17. The Applicant submits that it has paid the requisite fee of Rs.50/- for preferring the present application before this Hon'ble Tribunal. MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore Page 5 of 7 Wherefore, the Applicant most respectfully prays that this Hon'ble Tribunal may be pleased to allow the present application by rectifying the aforesaid mistake apparent from the record of its order pronounced in ITA No.1563/Bang/2019 on20.12.2019 and to restore the above appeal to the file of this Hon'ble Tribunal and to hear, consider and dispose off the said appeal on merits, in the interests of justice and equity.” 3. On the other hand, ld. D.R. argued that the appeal may need not be restored for hearing as there was no mistake crept on record while disposing the appeal. He also relied on the judgement of Hon’ble Supreme Court in the case of CIT Vs. Reliance Telecom reported in (2021) 133 taxmann.com 41 (SC). He further submitted that the addition made by the AO is for penny stock and the Hon’ble Kolkata High Court has decided the issue in favour of the revenue. 4. I carefully gone through the case records. As seen from the above facts submitted by the ld. AR for the assessee , it is clear that the concerned CA of the assessee Mr. Sunil D. Surana has inadvertently made a mistake by withdrawing the appeal at the time of appeal. 4.1 The Tribunal has inherent power to rectify a wrong and / or correct error committed by it. In my view, while disposing off assessee’s appeal, the Tribunal has power to rectify the order under section 254(2) of the Act. Under Rule–24 of the Income Tax (Appellate) Tribunal Rules, 1963, empowers the Tribunal to recall the order if the assessee satisfies the Tribunal that there was sufficient cause for withdrawing the appeal when the appeal was called for hearing. Thus, a reading of section 254(2) of the Act along with rule 24 of the ITAT rules would make it clear that the Tribunal can recall an appeal order under two situations. Firstly, if there is a mistake apparent on the face of record as per section 254(2) and secondly, if the appeal order is passed ex–parte, the Tribunal can MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore Page 6 of 7 recall it under rule 24 of the ITAT rules if it is satisfied that the non– compliance of the assessee was for sufficient cause. Therefore, the recall of the appeal order is not automatic but bound by certain conditions. In the facts of the present case, apparently, there is mistake on the record. On going through the letter of authorization dated 18.11.2019 in favour of C.A. Shri D. Surana placed n record, he had no authority given to appear before the ITAT. The letter of authority given by the assessee is for appearing before the Income Tax authority. Therefore, only provision under which the order could have been recalled is rule 24 of the ITAT rules. The C.A. D. Sunil D. Surana appeared without the letter of authority before the ITAT and therefore, the letter submitted by Shri Sunil Surana, CA for withdrawing the appeal was incorrect and the coordinate bench accepted the letter was mistake on record. Accordingly, exercising power under Rule 24 of ITAT, I recall the order for deciding the same on merit. The miscellaneous petition filed by the assessee is allowed. The registry is directed to fix the case in due course. 5. In the result, the MP filed by the assessee stands allowed. Order pronounced in the open court on 6 th Feb, 2023. Sd/- (Laxmi Prasad Sahu) Accountant Member Bangalore, Dated 6 th Feb, 2023. VG/SPS MP No.69/Bang/2022 Shri Mangilal Jain, Bangalore Page 7 of 7 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore