ITAT ought to set aside ex-parte order, irrespective of final order decided the appeal on merits: Delhi High Court [Read Order]

ITAT - Delhi High Court - Taxscan

The Delhi High Court while ruling in favour of the assessee held that the ITAT is ought to set aside ex-parte order, irrespective of final order decided the appeal on merits.

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.

Aggrieved by the said order, the Petitioner filed an appeal before the Commissioner of Income Tax (Appeal), which was decided by the CIT(A) in favour of the Petitioner, and the additions made by the Assessing Officer were deleted.

The Revenue, thereafter, preferred an appeal before the ITAT wherein the ex-parte order was passed and finally allowed in favour of the Revenue.

The assessee being aggrieved with the ex-parte order 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.

Thereafter, the ITAT rejected the Miscellaneous Application vide the Impugned Order on the grounds that even if the order was ex parte, the same is well reasoned and has considered all the material available on record. As no factual error has been pointed out, and the ITAT did not find any reason to recall the order.

Mr. Salil Kapoor, the counsel for the Petitioner, submits that the impugned order is unjust, illegal, bad in law, and contrary to principles of natural justice.

Mr. Kapoor also strongly urges 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 afore-noted scheme.

The division bench of Justice Manmohan and Justice Sanjeev Narula noted 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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