Ufx Ventures Pvt.ltd.,Rep.by Its Managing Director v. Assistant Commissioner Of Income Tax,Corporate Circle – 3(2)Ayakar Bhavan Wanaparthy Block,Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.Nos.357 & 358 of 2020andC.M.P.Nos.11260 of 2020 UFX Ventures Pvt.Ltd.,Rep.by its Managing Director,33/1, Wallajah Road, Chepauk,Chennai – 600 002 ..Appellant in both T.C.As Versus Assistant Commissioner of Income Tax,Corporate Circle – 3(2)Ayakar Bhavan Wanaparthy Block,Room No.414, IV Floor,Nungambakkam High Road,Chennai – 600 034...Respondent in both T.C.As Common Prayer in T.C.A.Nos.357 & 358 of 2020:- Tax Case Appealfiled under Section 260-A of the Income Tax Act, 1961, againstthe order of the Income Tax Appellate Tribunal, Madras 'D'Bench, Chennai dated 20.02.2020 made in I.T.A.Nos.2217 &2218/Chny/2019 relating to the Assessment Years 2014-15 &2013 -14, against the proceedings passed by the commissioner ofIncome Tax (Appeals)-II, Chennai made in ITA No.64 and 269/16-17date of order 29.06.2018 against the proceedings passed by the Assistant Commissionerof Income Tax, Corporate Circle -3(2) Chennai -34 made in GIRNo/PAN. for the assessment Year 2013-14, date oforder 30.03.2016against the proceedings passed by the Assistant Commissionerof Income Tax, Corporate Circle 3(2) Chennai-34 made in GIRNo/PAN for the assessment year 2014-15, date of order20/12/2016. For Appellant:Mr.B.Deepak Narayanan[in both T.C.As] For Respondent : M/s.V.Pushpa Junior Standing counsel [in both T.C.As] JUDGMENT [Common Judgment was delivered by T.S.Sivagnanam,J.]These appeals have been filed by the assessee, challengingthe common order dated 20.02.2020 passed by the Income TaxAppellate Tribunal, ('the Tribunal' for brevity) Madras 'D'Bench, Chennai, in I.T.A.Nos.2217 & 2218/Chny/2019 for theAssessment Years 2014-15 and 2013-14 respectively. The assesseehas raised the following Substantial Questions of Law forconsideration: “1.Whether the Hon'ble ITAT was right in refusingto condone the delay of 317 days, without consideringthe restoration application filed by the Appellantbefore CIT(A) was duly acknowledged by CIT(A). 2. Whether the Hon'ble ITAT was right inobserving that there is no merits in the grounds ofappeal, where in fact there was neither anysubmissions made in respect to the merits of the casenor any observation was made in the Order of Hon'bleITAT pertaining to the merits of the dispute.” 2. We have elaborately heard Mr.B.Deepak Narayanan, learnedcounsel for the appellant/assessee and M/s.V.Pushpa, learnedJunior Standing counsel appearing for the respondent/Revenue. 3. The assessee is a Private Limited company, engaged in thebusiness of professional consistency services, publishingnewspapers, etc., It filed the return of income for theAssessment Year under consideration AY-2013-14 on 31.03.2015,admitting a loss of Rs.59,99,532/- and for the Assessment Yearunder consideration AY-2014-15 on 30.03.2016, admitting a totalincome as “NIL”. The Assessing Officer issued notice underSection 142(1) of the Act and completed the assessment by orderdated 30.03.2016 for the Assessment Year 2013-14 and by orderdated 20.12.2016 for the Assessment Year 2014-15. Aggrieved bythe same, the assessee preferred appeals before the Commissionerof Income Tax (Appeals) ['CIT(A)' for brevity]. The appeals weredismissed for default by common order dated 29.06.2018. Soonafter the assessee came to know about the dismissal of theappeals for default, they filed an application for restorationdated 24.07.2018, stating that they received the order passed by the CIT(A) on 18.07.2018, dismissing the appeals for default onaccount of non-appearance of the assessee on 13.06.2018 andexplained the reason for non-appearance by stating that theirauthorized representative, the Chartered Accountant was in hisnative place in Kerala State in connection with his daughter'smarriage fixed on 16.07.2018 and the assessee could not make anyalternate arrangements. Thus, the assessee pleaded that thecircumstance cited by them was beyond control and prayed beforethe CIT(A) that the order dated 29.06.2018, dismissing theappeals for default may be revoked and appeals be restored tothe file for being heard and disposed. To substantiate the causeshown by the assessee, the copy of the wedding invitation of themarriage of the daughter of the assessee's Chartered Accountantwas enclosed. The assessee would submit that the saidapplication was presented in the office of the CIT(A) on06.08.2018 and an acknowledgment has also been given by theoffice of the CIT(A). However, the application was not taken upfor consideration and it appears that the assessee was advisedto file an appeal before the Tribunal. By then, the period oflimitation for filing the appeal had expired and there was adelay of 317 days in filing the appeal before the Tribunal. Theassessee filed an affidavit, sought for condonation of delay andfiling the appeals and explained the reason for the delay periodby mentioning that they had approached the CIT(A) for recallingthe order, dismissing the appeals for default and restore theappeals to be heard on merits, but the CIT(A) did not pass anyorders on the Restoration Petition and this is the reason, theycould not approach the Tribunal within the period of limitation.The Tribunal, while considering the explanation offered by theassessee, held that the assessee has not filed any material toshow that they had filed Restoration Petition before the CIT(A)for recalling the exparte order. Accordingly, on the ground thatno proof has been filed by the assessee, the appeals weredismissed. These orders have been challenged by the assesseebefore us. As could be seen from the material papers placedbefore us, the letter dated 24.07.2018 from the assessee to theCIT(A) seeking for restoration of the appeals dismissed fordefault has been acknowledged by the office of the CIT(A) dated06.08.2018. Therefore, we are satisfied that the assessee didmove the CIT(A) for restoring the appeals. However, the factremains that the CIT(A) did not pass any orders. This could havebeen for the reason that the CIT(A) might had doubt in his mindas to whether he would be entitled to recall and review theearlier order and restore the appeals and hear the same afresh. 4. The learned counsel for the appellant had placed relianceon the decision of the High Court of Allahabad in the case ofCommissioner of Income Tax Meerut Vs. Smt.Madhu, in the case ofIncome Tax Appeal Defective No.93 of 2014 dated 28.10.2014. 4. The learned counsel for the appellant had placed relianceon the decision of the High Court of Allahabad in the case ofCommissioner of Income Tax Meerut Vs. Smt.Madhu, in the case ofIncome Tax Appeal Defective No.93 of 2014 dated 28.10.2014. 5. The Substantial Questions of Law framed for considerationin the said case was whether the Tribunal erred in law ingranting the CIT(A), the power of review when none is providedby the legislature and more so, owing to the fact that the powerof review is the specific statutory power, which may not beinterfered with, if not provided by the legislature. In the saidcase, the CIT(A), who initially dismissed the appeals fordefault, subsequently, had recalled the orders and restored theappeals for a fresh decision. However, subsequently, the CIT(A)informed the said assessee that the order, recalling the appeal,was incorrect and contrary to law and dismissed the appeal. Thisorder was challenged before the Tribunal. The Tribunal held thatthe CIT(A), who was conferred with the power to adjudicate upona particular issue had inherent power to recall its orders andif the same is done, no prejudice would be caused to the Revenueand it was pointed out that the right of hearing is an importantright and the CIT(A) had only passed its earlier orders onmerits, keeping in view of the principles of natural justice.The Revenue challenged the said order before the High Court ofAllahabad, contending that Section 251 of the Act confersspecified powers on the Commissioner (Appeals) and no power hasbeen granted to review his own order and hence, the order inwhich the CIT(A) recalled the earlier order, dismissing theappeals for want of prosecution was contrary to law. The saidsubmission was rejected by the Hon'ble Division Bench byassigning the following reasons: “We find no merit in the submission. TheCommissioner (Appeals), as the record would admittedlyindicate, dismissed the appeal filed by the assesseewithout going into the merits on the ground thatdespite several notices, the assessee had not appearedin support of the appeal. While restoring the appeal tofile and recalling the order of dismissal, the CIT (A)took due note of the submission of the assessee that onmost of the dates, either the CIT (A) had beentransferred or was not present at the hearing of theappeal. The CIT (A) restored the appeal to fileevidently in order to afford a fair opportunity ofhearing to the assessee. However, inexplicably, heproceeded to recall the order of restoration. In the case of Grindlays Bank Ltd. Vs. CentralGovernment Industrial Tribunal & Ors., AIR 1981 SC 606,the Supreme Court had occasion to deal with a similarissue. Under the provisions of Industrial Disputes Act,1947, the Tribunal has no jurisdiction to recall orreview an award after expiry of 30 days of itspublication. An application was moved to set aside anex parte award after thirty days. It was held by theTribunal that it had no power to set aside the saidaward. The Supreme Court held that the Tribunal had an ancillary or incidental power for doing justice in suchcircumstances. The Supreme Court observed as follows inparagraph 6 of the judgment:- ancillary or incidental power for doing justice in suchcircumstances. The Supreme Court observed as follows inparagraph 6 of the judgment:- "6. We are of the opinion that theTribunal had the power to pass the impugnedorder if it thought fit in the interest ofjustice. It is true that there is no expressprovision in the Act or the rules framedthereunder giving the Tribunal jurisdictionto do so. But it is a well-known rule ofstatutory construction that a Tribunal orbody should be considered to be endowed withsuch ancillary or incidental powers as arenecessary to discharge its functionseffectively for the purpose of doing justicebetween the parties. In a case of thisnature, we are of the view that the Tribunalshould be considered as invested with suchincidental or ancillary powers unless thereis any indication in the statute to thecontrary. We do not find any such statutoryprohibition. On the other hand, there areindications to the contrary." In our view, the Tribunal was justified in holdingthat the CIT (A) who had dismissed the appeal for wantof prosecution had inherent powers ex debito justitiaeto recall that order and restore the appeal for hearingon merits. This is not equivalent to the power ofreview. The CIT (A) has not exercised the power ofreview but has only exercised the inherent power in theinterests of justice of restoring the appeal which hadbeen dismissed for want of prosecution. That order ofrestoration was not contrary to law and the CIT (A)was, hence, found by the Tribunal to have erred insubsequently recalling his order of restoration. Theappeal after being restored to file was being heard onmerits, as observed by the Tribunal, and no prejudiceas such has been sustained by the Revenue, since boththe sides would be heard by the CIT (Appeals) beforeany final orders are passed. In this view of the matter, the appeal will notgive rise to any substantial questions of law. It is,accordingly, dismissed. There shall be no order as tocosts.” 6. Mr.B.Deepak Narayanan, learned counsel appearing for theappellant would argue that the above decision would come to theaid of the assessee and the CIT(A) ought to have passed an orderon the application for restoration. 7. In our considered view, we need not travel that far todecide the powers of the CIT(A) in these appeals nor theSubstantial Questions of Law framed for consideration is on thataspect. This is more so, because we are convinced that theassessee had filed an application before the CIT(A) on24.07.2018 for recalling the order, dismissing the appeals fordefault and the date seal is sufficient proof of filing suchapplication. Therefore, it appears that this record was notplaced before the Tribunal when it passed the impugned order.That apart, this Court has always been lenient, moreparticularly, to the Revenue when appeals are filed withinordinate delay. The reason being this Court is required totake a decision on a Substantial Questions of Law and it wouldbe inequitable to reject the appeal on the ground of delay andalso bearing in mind the legal principle that none benefits bylodging an appeal belatedly. The exception to this rule wouldbe, where the delay is on account of mala fide reasons or forcertain other collateral purposes. If such is the case, even adelay of one day can be rejected. We find the explanationoffered by the assessee to be convincing and acceptable andtherefore, the impugned order passed by the Tribunal warrantsinterference. 8. The appeals filed by the assessee are allowed and theSubstantial Questions of Law are answered in favour of theassessee. The order passed by the Tribunal is set aside.Consequently, the common order passed by the CIT(A) dated29.06.2018 is set aside and the appeals are restored on the fileof the CIT(A) to be heard and decided on merits, after affordingan opportunity of hearing to the appellant/assessee. With regardto the issue regarding the power of CIT(A) under Section 251 torecall its order, is left open to be adjudicated at anappropriatetime.Nocosts.Consequently,connectedmiscellaneous petition is closed. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar Kak To 1.The Income Tax Appellate Tribunal,'D' Bench, Chennai. https://hcservices.ecourts.gov.in/hcservices/ 2.The Commissioner of Income Tax (Appeals)-II,Chennai. 3.The Assistant Commissioner of Income Tax,Corporate Circle -3(2) , Chennai-34Corporate Circle -3(2) , Chennai-34 4.The Section Officer, VR Section, High Court Madras. +1 cc to M/s.M.Swaminathan, Advocate Sr.No. 33401 T.C.A.Nos.357 & 358 of 2020AK(CO)RMP(18/11/2020)