M/S. RAJ CORPORATION V. INCOME TAX OFFICER,

SCA/9354/2015

AI Insights

The case involves M/S. Raj Corporation, the petitioner, who contested an addition of Rs.31,00,000 made under section 68 of the Income Tax Act, 1961 by the Income Tax Officer. Initially, the Commissioner of Income Tax (Appeals) dismissed the appeal against this addition. Subsequently, a rectification application under section 154 was allowed, modifying the earlier order. However, the Tribunal's earlier ex parte decision, which did not account for this modification, led to the present petition. The High Court found that the Tribunal's failure to recognize the merger of the orders and uphold the rectified decision was unreasonable, leading to the setting aside of the Tribunal's order.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 753667 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 24-08-2015
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: KETAN SHAH
• Keywords: Appeal; Assessment; Ex-parte; Income Tax; Miscellaneous Application; Rectification
• Section: 143(3); 154; 254(2); 68

Judgement Text

"C/SCA/9354/2015 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 9354 of 2015 FOR APPROVAL AND SIGNATURE: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR.JUSTICE A.G.URAIZEE ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? No ========================================================== M/S. RAJ CORPORATION....Petitioner(s) Versus INCOME TAX OFFICER,....Respondent(s) ========================================================== Appearance: MR KETAN H SHAH, ADVOCATE for the Petitioner(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR.JUSTICE A.G.URAIZEE Date : 24/08/2015 Page 1 of 5 C/SCA/9354/2015 JUDGMENT ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE HARSHA DEVANI) 1. Rule. Ms. Mauna Bhatt, learned senior standing counsel waives service of notice of rule on behalf of the respondent. 2. Having regard to the facts of the case and considering the fact that the controversy involved in the present case lies in a very narrow compass, with the consent of the learned counsel for the respective parties, the matter is taken up for final hearing today. 3. The facts stated briefly are that the respondent Income Tax Officer framed assessment under sub-section (3) of section 143 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) making an addition of Rs.31,00,000/- under section 68 of the Act. The petitioner carried the matter in appeal before the Commissioner of Income Tax (Appeals), who by an order dated 16.10.2010, dismissed the appeal and confirmed the addition. The petitioner thereafter, moved an application under section 154 of the Act on 19.2.2011 before the Commissioner (Appeals) requesting to rectify the factual error which had crept into the earlier order dated 16.11.2010. By an order dated 3.3.2011, the application under section 154 came to be allowed by the Commissioner (Appeals). Against the order passed by the Commissioner (Appeals) under section 154 of the Act, the revenue has preferred an appeal before the Income Tax Appellate Tribunal being Appeal No.1396/A/2011 which is pending for disposal. Page 2 of 5 C/SCA/9354/2015 JUDGMENT 4. It appears that against the order dated 16.11.2010 passed by the Commissioner (Appeals), the assessee had preferred an appeal before the Tribunal being ITA No.77/Ahd/2011. By an order dated 13.6.2014, the appeal came to be decided ex parte as there was no appearance on behalf of the assessee. The petitioner thereafter filed an application under section 254(2) of the Act before the Tribunal seeking recall of the earlier order in the light of the fact that the previous order which was subject-matter of appeal before the Tribunal had been subsequently rectified by the Commissioner (Appeals). By the impugned order dated 19.2.2015, the Tribunal rejected the application on the ground that no sufficient cause had been made out for non- appearance at the time of hearing of the appeal. 5. Heard Mr. Ketan Shah, learned advocate for the petitioner and Mrs. Mauna Bhatt, learned senior standing counsel for the respondent. 6. From the facts, as emerging from the record, it is apparent that the earlier order passed by the Commissioner (Appeals) on 16.11.2010 came to be subsequently modified by her by the order dated 3.3.2011 and hence, the previous order merged with the subsequent order dated 3.3.2011 and did not have any independent existence of its own. It appears that at that relevant time, when the appeal preferred by the petitioner against the previous order of the Commissioner (Appeals) came up for hearing before the Tribunal, none appeared for the assessee before the Tribunal and the matter came to be decided ex parte. It appears that even on behalf of the revenue, it was not pointed out that the order which was Page 3 of 5 C/SCA/9354/2015 JUDGMENT subject-matter of challenge before the Tribunal had subsequently been modified and had merged with the subsequent order passed by the Commissioner (Appeals). The petitioner thereafter, moved the miscellaneous application under section 254(2) of the Act seeking recall of the order passed by the Tribunal in the light of the fact that the same confirmed the previous order passed by the Commissioner (Appeals), which already stood merged with the subsequent order. The Tribunal, by the impugned order, has dismissed the miscellaneous application mainly on the ground that there was no sufficient reason for non-appearance at the time of hearing of the appeal on the part of the assessee. 7. In the opinion of this court, the approach adopted by the Tribunal cannot in any manner be said to be reasonable. When the order which was subject-matter of challenge before the Tribunal was no longer in existence as the same had merged with the subsequent order passed by the Commissioner (Appeals), the Tribunal was not justified in not recalling the previous order passed by it on the appeal preferred by the assessee confirming the previous order passed by the Commissioner (Appeals). Merely because the Tribunal did not find that sufficient cause had been made out by the assessee of remaining absent at the time when the appeal came to be decided, was no reason for the Tribunal, having regard to the facts and circumstances of the case to reject the application filed by the petitioner. Besides, it is an admitted position that against the subsequent order dated 3.3.2011 passed by the Commissioner (Appeals), the revenue had already preferred an appeal which is pending before the Tribunal, which fact had also not been brought to the notice of the Tribunal by the Page 4 of 5 C/SCA/9354/2015 JUDGMENT departmental representative. It is in these circumstances that the Tribunal had proceeded to uphold the previous order passed by the Commissioner (Appeals). Having regard to the overall facts of the case, in the opinion of this court the Tribunal ought to have allowed the application and recalled its previous order confirming the order passed by the Commissioner (Appeals), inasmuch as on that date the said order passed by the Commissioner (Appeals) already stood merged with the subsequent order. 8. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 19.2.2015 passed by the Tribunal in M.A. No.189/AHD/2014 is hereby quashed and set aside. The miscellaneous application is hereby allowed and the order dated 13.6.2014 passed by the Tribunal in ITA No.77/AHD/2011 is hereby recalled. Rule is made absolute accordingly with no order as to costs. 9. It is clarified that the fact that the present petition has been allowed shall in no manner prejudice the case of the revenue in the appeal preferred by it against the order dated 3.3.2011 passed by the Commissioner (Appeals) under section 154 of the Act. (HARSHA DEVANI, J.) (A.G. URAIZEE, J.) zgs Page 5 of 5 "