Income-tax---

----Appeal to Appellate Tribunal---Penalty---Delay in filing returns---Penalty imposed under 5.271(1)(a)---Assessee's appeal allowed by CIT (Appeals)-- Appeal by Department before Tribunal ---Assessee seeking adjournment -- Tribunal rejecting assessee's applications---Ex parte order passed-- Application by assessee to set aside ex parte order---Tribunal informing assessee that his application rejected---Tribunal ought to have considered the application on merits, after giving an opportunity to assessee---Tribunal to consider the application on merits---Indian Income Tax Act, 1961, S.271(1)(a)---Indian Income-tax (Appellate Tribunal) Rules, 1963, R.24.

A penalty for delay in filing the return of income was imposed upon the assessee under section 271(1)(a) of the Income Tax Act, 1961. His appeal before the Commissioner of Income-tax (Appeals) was allowed. On the Revenue filing an appeal before the Income-tax Appellate Tribunal, the assessee sought for an adjournment. Rejecting the assessee's application for adjournment the Tribunal passed an ex parte order. The assessee filed a petition to set aside the ex parte order and he was informed by a letter from the Tribunal that it had decided not to register the petition, his request being rejected. On a writ petition by the assessee, assailing the Tribunal's letter:

Held, that the principles of natural justice require that when a petition is filed seeking to set aside the ex parte orders, the Tribunal ought to have considered it after giving an opportunity to the assessee to advance his case and then decide it on its merits. A reading of the Tribunal's letter showed that the Tribunal had decided not even to register the petition and rejected it without giving an opportunity to the assessee. There was no order of the Tribunal rejecting the petition on its merits but what was communicated was only the information that the petition was rejected without even being registered. The Tribunal was to consider the petitions and dispose of them on the merits after giving an opportunity to the assessee.

P. Balachandran for Petitioner.

P.K. Ravindranatha Menon, Senior Advocate and N.R.K. Nair for Respondents.

JUDGMENT

N. DHINAKAR, J.---A penalty for delay in filing the return of the income was imposed upon the petitioner after initiating proceedings under section 271(1)(a) of the Income Tax Act, 1961. Aggrieved by the said order. of penalty, the petitioner filed an appeal before the second respondent which was al4)wed. Aggrieved by the said order made by the second respondent, the Revenue filed an appeal before the third respondent. It is submitted that the appeal was posted for hearing on February 10, 1994, and as the petitioner's chartered accountant, who was representing the petitioner in the appeal could not be present on the said day he sent a petition Exh.P-3, dated February 7, 1994, seeking for an adjournment of the said case to a future date. The third respondent rejected the said application for adjournment and passed an order in Exh.P-4. The said order Exh.P-4 is, therefore, an order passed by the Tribunal ex parte.

The petitioner aggrieved by the said ex parte orders passed in Exh.P-4 filed a petition to set aside those ex paste orders and he was later informed by the Assistant Registrar of the Income-tax Appellate Tribunal by his letter, dated May 23, 1994 (Exh.P-6), stating that the Bench has decided not to register the petitions as miscellaneous petitions and, therefore, decided to reject the request. The petitioner assails the said letter Exh.P-6, sent by the Assistant Registrar.

There is no doubt that Exh.P-4 order was passed ex parte. It is also not in dispute that the petitioner filed petitions to set aside those ex parte orders by filing petitions. The petitions filed by the petitioner to set aside those ex parte orders could be only under rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, which reads as follows (see (1987) 167 ITR (St.) 79):

"24. Hearing of appeal ex parte for default by the appellant:-- Where, on the day fixed for hearing or on any other date of 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".

The proviso to the above rule shows that where an appeal has been disposed of in the absence of the appellant or his authorised representative 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 by restoring the appeal. The proviso mandates the Tribunal to consider the petition of the petitioner and then decide the said petition on its merits. A reading of Exh.P-6 would show that the Tribunal decided not even to register the petitions and rejected them without giving an opportunity to the petitioner. Further, it is seen from Exh.P-6 that-there is no order of the Tribunal rejecting the said petition on its merits, but what was communicated to the petitioner was only the information by the Assistant Registrar that the petitions of the petitioner were rejected without even being registered as miscellaneous petitions. The principles of natural justice require, that when a petition is filed seeking to set aside the ex parte orders, the Tribunal ought to have considered it after giving an opportunity to the petitioner to advance his case on the petitions and then decide it on its merits. The Tribunal cannot simply refuse the petitions and then direct the Assistant Registrar to pass on the information that the Tribunal has decided

not even to register the petition. No reasons are found given in Exh.P-6 as to why the Tribunal decided not to register the petitions and why the petitioner cannot be given an opportunity to put forth his case on the petitions filed by him. In my view, Exh.P-6 has to be quashed and accordingly it is quashed. The Tribunal is directed to consider the petitions of the petitioner seeking to set aside the ex parte order, Exh.P-4, and dispose of them on their merits after giving an opportunity to the petitioner or his authorised representative.

This original petition is disposed of with the above directions.

M.B.A./1589/FC Order accordingly.