The Delhi High Court ruled that the tribunal cannot dismiss the Appeal merely for want of Non-Prosecution.
The petitioner, Pradeep Kumar Jindal before the ITAT, for Assessment Year 2008-09. However, the petitioner failed to appear when the appeal was listed on 9th December 2015 and the ITAT ordered recording that on earlier occasion also when the appeal was listed, an adjournment was sought on behalf of the petitioner and that the petitioner did not appear to be interested in pursuing the appeal, and held that the appeal does not mean the mere filing of memo of the appeal but effectively pursuing the same, dismissed the appeal for non-prosecution.
The petitioner, in or about March, 2017, filed an application for recall of the order dated 10th December, 2015 of dismissal for non-prosecution. The said application was dismissed by the ITAT vide order recording various reasonings.
The division bench of Justices Rajiv Sahai Endlaw and Sanjeev Narula opined that the order of the ITAT, dismissing the appeal of the petitioner for non-prosecution and not on merits, as the ITAT was required to do notwithstanding the non-appearance of the petitioner when the appeal was called for hearing, is violative of Rule 24 supra and thus void.
“We are unable to agree with the contention of the counsel for the respondent, that the action of the ITAT, of dismissing the appeal for non-prosecution instead of on merits and of refusal to restore the same notwithstanding applications of the petitioner, is merely an irregularity,” the Court said.
The court held that the need to go into the question of, whether an amendment of Section 254(2) of the Income Tax Act w.e.f 1st June 2016, is prospective or retrospective, does not arise inasmuch as the application filed by the petitioner in March 2017, also invoking, Rule 24 of the ITAT Rules, was within time and could not have been dismissed applying the provisions of limitation applicable to Section 254(2) of the Act; rather, entertain a doubt whether, in the face of the specific provision in the Rules, an application for setting aside of an ex-parte order would at all lie under Section 254(2) of the Act. However, the need to adjudicate finally on the said aspect is also not felt in the facts of the present case.