The Delhi High Court held that the ITAT can not dismiss an application merely on the basis of seeking frequent adjournments.
The Petitioner, M/s Kalra Papers Private Limited filed its Return of Income. Based on the survey under Section 133A of the Income Tax Act, 1961 and other materials, an assessment order was framed under Section 143(3) of the Act, making additions to Petitioner’s income.
The Petitioner filed an appeal before the CIT(A) and the appeal was decided in favour of the Petitioner, and the additions made by the Assessing Officer were deleted.
The Revenue, thereafter, preferred an appeal before the ITAT said appeal was heard ex-parte and finally allowed in favour of the Revenue.
The Petitioner filed the Miscellaneous Application before the ITAT, under Section 254(2) of the Act, read with Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963 seeking setting aside of the ex-parte order and restoration of the appeal.
Whilst the Miscellaneous Application was pending, the Petitioner also filed an appeal under Section 260A of the Act before this High Court and assailed the order.
However, as the application was still pending before the ITAT, the Court disposed of the said appeal, granting liberty to the Petitioner to approach this Court in the event the Miscellaneous Application was not accepted by the Tribunal. Thereafter, the ITAT rejected the Miscellaneous Application.
Mr. Salil Kapoor, the counsel for the Petitioner, submitted that the impugned order is unjust, illegal, bad in law, and contrary to principles of natural justice.
Mr. Kapoor has contended that the Petitioner had sufficient reasons and reasonable cause for non-appearance. In the affidavit, it was specifically stated that the non-appearance was on account of illness of the counsel.
The Counsel also strongly urged that the Petitioner is interested to take recourse to the amnesty scheme ‘Vivad Se Vishwas 2020’. He states that in the event the Court were to allow the present petition and restore the appeal to its original number, Petitioner undertakes to apply under the said scheme.
He submits that the entire endeavour is to put a quietus to the present dispute and that the Petitioner has every intention to settle the outstanding dues by taking benefit of the scheme.
The division judge bench of Justice Manmohan and Justice Sanjeev Narula held that the assessee was prevented by sufficient cause from appearing before the ITAT when the appeal was taken up for hearing. Further, the Tribunal has taken into consideration such reasons which were not germane for deciding the Miscellaneous Application. The sufficiency of the cause, which was the only factor to be examined, has been ignored by the Tribunal. If sufficient cause is shown, the Tribunal is obligated to consider the same and make an order setting aside the ex-parte order, irrespective of the fact that the final order decided the appeal on merits.
“We are also persuaded to allow the petition, in view of the undertaking given by the Petitioner that it would apply under the ‘Vivad Se Vishwas’ Scheme in the event the appeal is restored to its original number. The Petitioner’s undertaking is taken on record and it shall be held bound by the same,” the court said.
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