Income Tax Appellate Tribunal Rules, 1981‑‑‑

‑‑‑‑R.20‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑ Interpretation, scope and application of R.20, Income Tax Appellate Tribunal Rules, 1981‑‑‑"Default of hearing"‑‑‑Concept‑‑‑of assessee for rehearing the appeal on the ground that announcement of the judgment by the Tribunal after nine months amounted to "default of hearing" by the Tribunal and that the case deserved rehearing‑‑‑Validity‑‑‑None of the parties, in the present case, were in default during the hearing of the appeal before the Tribunal; Counsel for the assessee had admitted that both the parties appeared and participated in the appeal hearing and were not absent and the judgment was neither, a default nor an ex parte judgment‑‑‑Delayed delivery of judgment, in circumstances, did not amount to "default of hearing" for invoking proviso to R.20 by the assessee‑‑‑Principles.

Examination of Income Tax Appellate Tribunal Rules, 1981, rule 20 shows that the Tribunal is empowered under sub‑rules (2) and (3) of the said Rules to proceed ex parte and decide the appeal on merits in case of non‑appearance of any of the parties or both the parties before it and pronounce a judgment on merits. The proviso to Rule 20 under sub‑rule (3) provides that the "Tribunal may recall the order passed under this Rule if the party in default applies within 30 days ... ... . and satisfies the Tribunal that he was prevented by any sufficient cause from appearing ... ... ..." The assessee, in the present case, invoked the proviso to file application against order of the Tribunal dismissing its appeal on the ground of elapse of nine months in the judgment and the hearing of the appeal.

The resort to the proviso is available to a "party in default" to show a "sufficient cause" preventing it from appearing before the Tribunal on the day of appeal hearing. In the present case, none of the parties 'were in default during the hearing of the appeal before the Tribunal. The counsel for the assessee admitted that both the parties appeared and participated in the appeal hearing and were not absent and that the judgment was neither a default nor an ex parte judgment. He however, contended that delayed delivery of judgment amounts to "default of, hearing" wherefore the proviso could be invoked by the assessee.

This argument has no weight. The words "party in default" as used in proviso to Rule 20 is obviously meant for the person or persons failing to appear and, attend the hearing of appeal before the Tribunal in terms of sub‑rule (2) or sub‑rule (3) of Rule 20 and thus inviting a judgment in default or ex parte.

These sub‑rules respectively apply where "the appellant or the respondent does not appear" (sub‑rule (2)) or where "both the parties remain absent" (sub‑rule (3)), the Tribunal may decide the appeal on merits. The proviso provides a remedy against the decisions made by the Tribunal in the absence of one or both the parties referred to in the proviso as "the party in default". Such "party in default" can apply within thirty days to the Tribunal for recalling the order by proving that such party was prevented by a sufficient cause from appearing when the case was called on for hearing. This remedy is against default or ex parte decisions if the non‑appearing party can show a sufficient cause for its absence. The word "party in default" as used in the proviso and in the context of Rule 20 of ITAT Rules can by no stretch be interpreted to mean "the default in hearing". Default in hearing is denying an opportunity of hearing to a party even when the party was present before the Court or the Tribunal. The terms "party in default" and "default in hearing" or non‑hearing connote different meanings and arise out of different situations and entail different consequences. The non‑appearing party denies itself the hearing by remaining absent from the Court when the case is called for hearing. Its default in appearance becomes the reason for the judgment in default or ex parte judgment by the Court. Contrarily the default in hearing a party is attributable to the Court before whom the party or the parties appear but are denied the opportunity by the Court to submit their case either adequately or otherwise. The absence of hearing can also arise from the absence of notice or adequate notice in the case. As a consequence of no notice or inadequate notice if a party is unable to attend the Court on the day the case was fixed, remedy of the application under the proviso can be availed of if a decision is made on such non‑appearance of a party. If a party attends and participates in the hearing of the case proceedings, the proviso to Rule 20 will not be applicable.

"Hearing" is obviously a proceeding where the parties are heard or evidence is taken to determine the issue and also to record decision on the basis thereof. It consists of any confrontation, oral or otherwise, between an affected individual and the decision maker sufficient to allow individual to present his case in a meaningful manner. Sub‑rules (2) and (3) of Rule 20 of ITAT Rules can only be resorted to by the Tribunal to proceed ex parte or in default upon non appearance of one or both the parties. Sub‑rule (1) however applies where both the parties appear. On the appearance of both the parties, the Tribunal under sub‑rule (1) is bound to give hearing to both the parties. Scope of these sub‑rules is thus well defined. Each sub‑rule applies to a distinct situation. A judgment delivered after hearing the parties under sub‑rule (1) cannot be recalled by the Tribunal under the proviso, which is applicable only to judgments delivered under sub‑rule (2) or (3) of Rule 20.

Assessee's application before the Tribunal under the proviso was not maintainable as the assessee was not a party in default. It had appeared through its counsel and had fully participated in the appeal proceedings.

Syed Iftikhar‑ud‑Din Shaider Gardazi v. Central Bank of India Ltd., Lahore 1996 SCMR 669 and Aftab Ahmad C/o Automotive Components Ltd., Lahore v. Assistant Commissioner of Income‑tax and others PTR No. 1 of 1998 ref.

Sajid Ijaz Hotiana for Appellant.

Nemo for Respondent.

Date of hearing: 14th January, 2004.

JUDGMENT

Tire only contention raised in the present Constitutional petition by the petitioner is that after hearing the parties in Income Tax Appeal No.2138/LB of 2002 filed by the petitioner company, the learned Income Tax Appellate Tribunal, Lahore dismissed petitioner's appeal through the order, dated 22-7‑2003 passed after a period of nine months after the hearing. And that the petitioner thus invoking proviso to sub‑rule (3) of Rule 20 of the Income Tax Appellate Tribunal Rules, 1981 filed an application for rehearing of the case. This application was also dismissed by the learned Tribunal on 15‑10‑2003 principally for the reasons that the petitioner was heard and all the grounds urged by the petitioner were considered and decided by the learned Tribunal in the judgment, dated 22‑7‑2003 and that no prejudice was caused to the petitioner. Hence the present Constitutional petition against order, dated 15‑10‑2003.

2. The petitioner after filing the petition also filed a reference application before the learned Tribunal against dismissal of appeal by order, dated 22‑7‑2003. The grounds urged in the present Constitutional petition were also raised in the reference application therefore the learned counsel for the petitioner was asked to address arguments on the maintainability of the present Constitutional petition in view of the availability of an adequate remedy.

3. The learned counsel for the petitioner has relied upon the judgments of "Syed Iftikhar‑ud‑Din Shaider Gardazi v. Central Bank of India Ltd., Lahore" (1996 SCMR 669) and "Aftab Ahmad C/O Automotive Components Ltd., Lahore v. Assistant Commissioner of Income Tax and others" (PTR No. 1 of 1998) to contend that announcement of the judgment after the delay of nine months amounted to default of hearing by the learned Tribunal and that the case deserved a rehearing.

4. I have considered the submissions of the learned counsel for the petitioner, the applicable provisions of the law and the cited judgments. The preliminary question requiring decision in the present case is as to whether petitioner's application under proviso to sub‑rule (3) of the Rule 20 of the Income Tax Appellate Tribunal Rules, 1981 was maintainable. Above referred Rule 20 reads as under:‑‑

"Hearing of appeal. (1) On the day fixed, or on any other day to which the hearing is adjourned, the appellant shall be heard in support of the appeal. The Tribunal shall, then, if necessary, hear the respondent against the appeal and in such case the appellant shall be entitled to reply.

(2) Where, on the day fixed for hearing, or any other day to which the hearing is adjourned, the appellant or the respondent does not appear, the Tribunal may proceed ex parte and decide the appeal on merits.

(3) Where on the day fixed for hearing or any other day to which the hearing is adjourned, both the parties remain absent when the appeal or application is called on for hearing, the Tribunal may, in its discretion, decide the appeal on merits on the basis of the record available to it:

Provided that the Tribunal may recall the order passed under this rule if the party in default applies within thirty days of the date of communication of the order, and satisfies the Tribunal that he prevented by any sufficient cause from appearing when the appeal or application was called on for hearing."

5. Examination of the above reproduced rule shows that the Tribunal is empowered under sub‑rules (2) and (3) to proceed exparte and decide the appeal on merits in case of non‑appearance of any of the parties or both the parties before it and pronounce a judgment on merits. The above proviso to Rule 20 under sub‑rule (3) provides that the "Tribunal may recall the order passed under this Rule if the party in default applies within 30 days ... ... . and satisfies the Tribunal that he was prevented by any sufficient cause from appearing ... ... ..." The petitioner invoked the above proviso to file application against order dated 22‑7‑2003 dismissing its appeal on the ground of elapse of nine months in the judgment and the hearing of the appeal.

6. I am afraid, this application before the learned Tribunal was un- maintainable. The resort to the said proviso is available to a "party in default" to show a "sufficient cause" preventing it from appearing before the Tribunal on the day of appeal hearing. In the present case, none of the parties were in default during the hearing of the appeal before the learned Tribunal. The learned counsel for the petitioner admitted that both the parties appeared and participated in the appeal hearing and were not absent and that the judgment was neither a default nor an exparte judgment. He however contended that delayed delivery of judgment amounts to "default of hearing" wherefore the proviso could be invoked by the petitioner.

7. This argument has no weight in my opinion. The word "party in default" as used in proviso to Rule 20 is obviously meant for the person or persons failing to appear and attend the hearing of appeal before the Tribunal in terms of sub‑rule (2) or sub‑rule (3) of Rule 20 and thus inviting a judgment in default or exparte.

8. These sub‑rules respectively apply where "the appellant or the' respondent does not appear" (sub‑rule(2)) or where "both the parties remain absent" (sub‑rule (3)), the Tribunal may decide the appeal on merits. The proviso provides a remedy against the decisions made by the Tribunal in the absence of one or both the parties referred to in the proviso as "the party in default". Such "party in default" can apply within thirty days to the Tribunal for recalling the order by proving that such party was prevented by a sufficient cause from appearing when the, case was called on for hearing. This remedy is against default or exparte decisions if the non‑appearing party can show a sufficient cause for its absence. The word "party in default" as used in the proviso and in the context of Rule 20 of ITAT Rules can by no stretch be interpreted to mean "the default in hearing". Default in hearing is denying an opportunity of hearing to a party even when the party was present before the Court or the Tribunal. The terms "party in default" and "default in non‑hearing connote different meanings and arise out of different situations and entail different consequences. The non‑appearing party denies itself the hearing by remaining absent from the Court when the case is called for hearing. Its default in appearance becomes the reason for the judgment in default or exparte judgment by the Court. Contrarily the default in hearing a party is attributable to the Court before whom the party or the parties appear but are denied the opportunity by the Court to submit their case either adequately or otherwise. The absence of hearing can also arise from the absence of notice or adequate notice in the case. As a consequence of no notice or inadequate notice if a party is unable to attend the Court on the day the case was fixed, remedy of the application under the proviso can be availed of if a decision is made on such non‑appearance of a party. If a party attends and participates in the hearing of the case proceedings, the proviso to Rule 20 ibid will not be applicable.

9. "Hearing" is obviously a proceeding where the parties are heard or evidence is taken to determine the issue and also to record decision on the basis thereof. It consists of any confrontation, oral or otherwise, between an affected individual and the decision maker sufficient to allow individual to present his case in a meaningful manner per Blacks Laws Dictionary. Sub‑rules (2) & (3) of Rule 20 of ITAT Rules can only beg resorted to by the Tribunal to proceed exparte or in default upon non‑appearance of one or both the parties. Sub‑rule (1) however applies; where both the parties appear. On the appearance of both the parties, the Tribunal under sub‑rule (1) is bound to give hearing to both the parties.

Scope of these sub‑rules is thus well defined. Each sub‑rule applies to distinct situation. A judgment delivered after hearing the parties under sub‑rule (1) cannot be recalled by the Tribunal under the proviso, which is applicable only to judgments delivered under sub‑rules (2) or (3) of Rule 20.

10. In view thereof, in my considered opinion, petitioner's application before the learned Tribunal under the above‑referred proviso was not maintainable as the petitioner was not a party in default. It had appeared through its counsel and had fully participated in the appeal proceedings. Under these circumstances, the Constitutional petition is, dismissed with no order as to costs.

M.B.A./E‑45/L Petition dismissed.