RAM BABURAO SALVE,MUMBAI V. ITO WD 17(3)(1), MUMBAI

MA 85/MUM/2025

AI Insights

The case revolves around a miscellaneous application filed by Ram Baburao Salve seeking the recall of an ex-parte order passed by the Income Tax Appellate Tribunal. The ex-parte order was issued due to the non-appearance of the assessee at the hearing, which was attributed to the unavailability of his counsel, who was traveling abroad. The Tribunal considered the application under Rule 24 of the Appellate Tribunal Rules, 1963, which allows for the recall of ex-parte orders if sufficient cause for non-appearance is shown. The Tribunal examined precedents and legal provisions, ultimately deciding to recall the ex-parte order and restore the appeal for a hearing on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46960 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Other Referred Cases: Hajaram Purohit in M A No.407/Mum/2022, Cement Corporation of India Ltd. Vs. Assistant Commissioner of Income Tax [2023] 149 taxmann.com 192 (Delhi), Principal Commissioner of Income Tax-7 Vs. Income Tax Appellate Tribunal [2020] 116 taxmann.com 451 (Bombay)
• Laws Referred To: Appellate Tribunal Rules, 1963
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJKUMAR R. MAKWANA
• Assessee Lawyers: P RIYANKA JAIN
• Keywords: Condonation of delay; Set aside; Reasonable cause; Depreciation; Period of limitation; Principle of natural justice; Rectification of order; Time period of passing order
• Section: 192; 254(2); 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “D” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER M.A. No. 85/Mum/2025 (Arising out of ITA No. 1647/Mum/2016) Assessment Year : 2011-12 Ram Baburao Salve, 17/18, Vyapar Bhuvan P. D Mello Rd., Carnac Bunder, Mumbai-400009. PAN : AACPS5498L vs. ITO, Ward-17(3)(1), Aayakar Bhavan, M.K. Marg, Mumbai-400020. (Applicant) (Respondent) For Assessee : Ms. Priyanka Jain (Adv) For Revenue : Shri Rajkumar R. Makwana Date of Hearing : 04-04-2025 Date of Pronouncement : 07-04-2025 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this miscellaneous application under Rule 24 of Appellate Tribunal Rules, 1963 seeking recall of ex-parte order dated 29-05-2017 passed by the Tribunal in ITA No.1647/Mum/2016. 2. In the petition, it is stated that the assessee had engaged a counsel to look after the appeal, but he was travelling outside India and hence the assessee was not aware of the date of hearing. It is submitted that the assessee was under bona fide belief that his appeal would be properly attended to. Accordingly, it is submitted that the non- appearance of the appellant on the scheduled date was neither 2 M.A. No. 85/Mum/2025 deliberate nor intentional, but due to bona fide reasons beyond the control of the assessee. Accordingly, it is submitted that there was a reasonable cause for the assessee for non-appearance. Accordingly, it is prayed that the ex-parte order passed by the tribunal in the hands of the assessee may kindly be recalled. 3. We heard Ld D.R and perused the record. We notice that the present petition has been filed by the assessee after expiry of more than 7 years. With regard to the delay in filing the petition, the Ld A.R submitted that the present petition has been filed under Rule 24 of AppellateTribunal Rules and it does not prescribe any limitation period for filing the petitions. In support of this proposition, the Ld A.R placed her reliance on the decision dated 08-03-2024 passed by the co- ordinate bench in the case of Hajaram Purohit in M A No.407/Mum/2022. We have gone through the said decision and notice that the Co-ordinate Bench has placed its reliance on the decisions rendered by Hon’ble Delhi and Bombay High Courts and held that the Rule 24 of Appellate Tribunal Rules, 1963 does not prescribe any time limit for filing petitions under that Rule. For the sake of convenience, we extract below the relevant portion of the order passed by the Tribunal in the above said case:- “4. Thus, the appeal was dismissed as being barred by limitation by way of an ex-parte order dated 31/08/2017. The case of the Appellant is that the appeal hearing had gone unattended as at the relevant time Assessment Year: 2010-11 the Appellant did not have cordial relations with the Tax Consultant on account of some disputes and misunderstanding. Since the Appellant has been able to explain the reasons for not attending the hearing held on 02/08/2017, the order dated 31/08/2017, be recalled in terms of Rule 24 of the ITAT Rules. We note that in the case of Cement Corporation of India Ltd. Vs. Assistant Commissioner of Income Tax [2023] 149 taxmann.com 192 (Delhi) the Hon'ble Delhi High Court condoned the delay of more than 6 months in filing the miscellaneous application. After examining the provisions contained in Rule 24 of the Rules, the Hon'ble Delhi High Court held as under: \"4.1 Via the said order, the Tribunal has dismissed the Misc. APP NO. 606 (Delhi) of 2018, whereby a prayer was made for recalling the order dated 24-1-2018 passed by the Tribunal. 3 M.A. No. 85/Mum/2025 4.2 The Tribunal, on 24-1-2018, dismissed the appeal preferred by the petitioner, on the ground of non-prosecution. 4.3 A perusal of the said order shows, that the Tribunal noted that the petitioner had been served, and thus, no purpose would be served in issuing a fresh notice. 4.4 In the very same order i.e. the order dated 24-1-2018, the Tribunal also observes, that it would treat the appeal as not being admitted, and in this regard, the Tribunal has taken recourse to Rule 19 of the ITAT Rules. 5. It is the petitioner's assertion, that the order dated 24-1-2018 was received by it on 5-2-2018. The petitioner also avers, that the aforementioned miscellaneous application was filed on 24-9-2018, which, as noticed, was dismissed on 7-9-2022. 6. The reasoning of the Tribunal for rejecting the miscellaneous application is contained in paragraph 4 of the impugned order, the order dated 7-9-2022. 6.1 For the sake of convenience, the same is extracted hereafter: \"4. We have heard the rival submissions and perused the records before us. From the record placed before us it is noticed that these Misc applications were filed on 24-9- 2018. The provisions of sub-section (2) of section 254 stipulates the time limit for disposal of Misc application filed at any time within 6 months from the end of the month in which the order was passed by the Tribunal under section 254(1) of the Act. It is noticed that the Tribunal had passed the order under section 254(1) of the Act on 24-1-2018 meaning thereby any Misc application filed under section 254(2) of the Act with a view to rectify any mistake apparent from record is to be disposed of at any time within 6 months from the end of the month in which the order was passed re before 31-7-2018. In the case of the assessee the Misc. applications were filed on 24th September, 2018 which is beyond the period of 6 months for disposal of the Misc applications set out in the provisions of section 254(2) meaning thereby the Misc applications should have been filed before 31st July, 2018. The assessee filed petition requesting for condonation of delay in filing Misc applications. However, nowhere in the statute provides for condonation of delay in filing Misc. applications before the Tribunal under section 254(2) of the Act. Condonation of delay in filing Misc applications by the Tribunal is beyond the powers of the Tribunal in the absence of any specific provision in the statute. In the circumstances the Misc applications filed by the assessee are liable to be rejected.\" 7. As would be evident, the Tribunal seems to have taken recourse to the provisions of section 254 of the Act. The Tribunal has 4 M.A. No. 85/Mum/2025 alluded to the fact, that since rectification of mistake, apparent from the record, can be made within six months from the end of the month in which the concerned order was passed, the petitioner's application for recall of the order dated 24-1-2018 could not have been entertained 7.1 In this context, the Tribunal has fixed two points de, the date on which the petitioner's miscellaneous application was filed i.e., 24-9- 2018, and when the six-month period expired, commencing from the end of the month in which the order was passed i.e., 31- 7-2018. Having noticed these dates, the Tribunal has concluded that under section 254 of the Act, it had no power to condone the delay qua the application for recall of its order, which was filed beyond six months. 8. In our view, the application moved by the petitioner was not moved with a view to rectify any mistake apparent from the record, or even to amend any order. The petitioner simply sought a recall of Assessment Year: 2010-11 the order dated 24-1-2018, whereby the appeal was dismissed for non-prosecution. Therefore, in our opinion, the said provision was not applicable for adjudicating the petitioner's application for recall of the order dated 24-1-2018. It appears, that the only avenue available to the Tribunal was as contemplated in Rule 24 of the ITAT Rules. 8.1 For the sake of convenience, the same is extracted hereafter: \"[Hearing of appeal ex parte for default by the appellant. 24. Where, on the day fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorised representative when the appeal is called on for hearing, the Tribunal may dispose of the appeal on merits after hearing the respondent Provided that where an appeal has been disposed of as provided above and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance, when the appeal was called on for hearing, the Tribunal shall make an order setting aside the ex parte order and restoring the appeal.]\" 9. A perusal of the said Rule seems to plainly convey, that if on the date fixed for hearing, or on any other date to which the hearing is adjourned, the appellant does not appear in person or through an authorized representative, when the appeal is called out for hearing, the Tribunal may dispose of the appeal on merits, after hearing the respondent. 10. Furthermore, the proviso appended to the Rule indicates, that where an appeal has been disposed of on merits, and the appellant appears thereafter, the Tribunal may set aside the ex parte order and restore the appeal, if it is satisfied that there was sufficient cause for his non-appearance Although in the main part of Rule 24, the expression used is \"may\", when read with the proviso appended thereto, it leads to the conclusion that if the 5 M.A. No. 85/Mum/2025 Tribunal chooses to dispose of the appeal on merits after hearing the respondent in the absence of the appellant, and the appellant thereafter appears and shows sufficient cause for not appearing on the date when the appeal is disposed of, the Tribunal is obliged, in law, to set aside the order passed on merits and restore the appeal. As it appears from a perusal of the record, the Tribunal's attention does not seem to have been drawn towards Rule 24 of the ITAT Rules The Tribunal, as noted Assessment Year: 2010-11 above, has, in our view, taken recourse to the wrong provision ie, Section 254 of the Act. 11. Having heard the learned counsel for the parties in some detail and examined the record, according to us, this matter may deserve a hearing on merits, for the following reason: (i) The petitioner has been denied depreciation allowance, amounting to Rs. 53,31,982/- for the period in issue te, AY 2011-2012. According to the petitioner, the Commissioner of Income-tax (Appeals) [\"CIT(A)\"] had denied the depreciation allowance to the petitioner, on the ground that the subject plants had been closed, and the plant and machinery was held only for the purpose of selling the same, in pursuance of the scheme framed by the Board for Industrial and Financial Reconstruction (BIFR) constituted under the Sick Industrial Companies (Special Provisions) Act, 1985. However, the petitioner claims, that in the previous AYs i.e., AY 2003-2004 to AY 2010-2011 and in AY 2014-2015, depreciation claimed with respect to the very same block assets was sustained by the CIT(A). 12. Furthermore, in our view, while there was delay, the appellant seems to have furnished some reasons for explaining the delay. Broadly, the reasons given were that the notice of hearing issued by the Tribunal for the hearing on 24-1-2018 was misplaced, and did not reach the concerned officer of the petitioner, which according to the petitioner, was the primary cause for non- attendance on the said date. Furthermore, as per the petitioner, it was unaware of the passing of the dismissal order dated 24-1- 2018, and only came to know about the same only on 5-2-2018. The petitioner also contends, that the inadvertent delay in filing the miscellaneous application was caused on account of the concerned persons in the Department being temporarily transferred to a plant outside Delhi, and some persons retiring during the relevant period. 13. Having regard to the aforesaid, in our opinion, the appeal deserves to be heard on merits. 13.1 Accordingly, the impugned order dated 7-9-2022 is set aside. The matter is remitted to the Tribunal for disposal of the petitioner's statutory appeal on merits.\" (Emphasis Supplied) Assessment Year: 2010-11 6 M.A. No. 85/Mum/2025 5. On perusal of the above judgment, we find that in the above case, the appeal was dismissed by the Tribunal on the ground of non- prosecution, without examining the merits. The Hon'ble High Court condoned the delay of more than 6 months in filing application for recall of the ex-parte order by placing reliance on Rule 24 of the ITAT Rules and restored the appeal before the Tribunal for adjudication on merits. 6. Further, we note that in the case of Principal Commissioner of Income Tax-7 Vs. Income Tax Appellate Tribunal [2020] 116 taxmann.com 451 (Bombay)/ [2020] 425 ITR 581 (Bombay) [24-01-2020], the Hon'ble Bombay High Court had made following observations: \"15. From a reading of Rule 24 as extracted above, it is seen that Tribunal is vested with the power to recall an ex-parte order. Requirement of the proviso is that Tribunal must be satisfied that there was sufficient cause for non-appearance of the appellant. No time limit is prescribed in Rule 24. 16. On a conjoint reading of the two provisions, there appears to be no contradiction between section 254(2) of the Act and Rule 24 of the Rules as extracted above. Both the provisions can be and should be read harmoniously to advance the objective that a decision on merit should be avoided in the absence of the aggrieved litigant. It is an established principle of natural justice that a litigant should be heard before a decision is taken. 17. In Srei Infrastructure Finance Ltd. (supra) Supreme Court referred to its earlier decisions in the case of Grindlays Bank Ltd. v. Central Government Industrial Tribunal, 1980 Supp SCC 420 and Kapra Mazdoor Ekta Union v. Birla Cotton Spg& Weg Mills Ltd. [2005] 13 SCC 777 and distinguished between a procedural review and a review on merit. Supreme Court held that a Tribunal or a quasi- judicial body is always endowed with such ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties. Such a power inheres in every Tribunal.\" (Emphasis Supplied) Assessment Year: 2010-11. 7. On perusal of the above judgments of the Hon'ble High Courts, it can be concluded that (a) provision contained in Section 254(2) of the Act are not applicable for adjudicating the application for recall of the ex-parte order and the only avenue available to the Tribunal is as contemplated in Rule 24 of the ITAT Rules whereby the Tribunal has been vested with the power to recall an ex-parte order; (b) Requirement of the proviso to Rule 24 of the ITAT Rules is that Tribunal must be satisfied that there was sufficient cause for non- appearance of the Appellant on the date when the Appellant was proceeded ex-parte and (c) no time limit is prescribed in Rule 24 of the ITAT Rules for filing an application for recall of the order.” 4. In the instant case, we noticed that the assessee has furnished reasons for non-appearance on the date of hearing of the appeal. In our view, there was sufficient cause for non-appearance on the date of 7 M.A. No. 85/Mum/2025 hearing. Accordingly, exercising the power vested in the Tribunal under Rule 24 of Appellate Tribunal Rules, 1963, we recall the impugned order dated 29-05-2017 passed in ITA No.1647/Mum/2016 in the hands of the assessee. 5. The registry is directed to post the appeal for hearing in the normal course under intimation to the parties. 6. In the result, the Miscellaneous Application filed by the assessee is allowed. Order pronounced in the open court on 07-04-2025 Sd/- Sd/- [SANDEEP GOSAIN] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 07-04-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "