Madras High Court
Income-Tax Officer, Assessment Ii And ... vs Fagoomal Lakshmi Chand And Anr. on 3 July, 1978
Equivalent citations: [1979]118ITR766(MAD)
JUDGMENT Koshal, J.
1. The cross-objections filed by the respondent No. 1 were dismissed for fault. According to Rule 22 of the Income-tax (Appellate Tribunal) Rules, 1963, all rules relating to appeals, so far as may be, are made applicable to cross-objections. Therefore, the cross-objections could be restored under Rule 24 of the said Rules which gives power to the Tribunal to order such restoration, if satisfied that there was sufficient cause for the earlier non-appearance of the party at fault. No illegality thus attaches to the order of restoration which in effect appears to be eminently just. The appeal filed by the petitioners being undoubtedly in connection with the cross-objections, the order deciding it ex parte has also to be set aside, the Tribunal having inherent power to do so.
JUDGMENT OF DIVISION BENCH Ramaprasada Rao, C.J.
2. Koshal J. was right in having dismissed, at the admission stage, a writ petition filed by the income-tax department against the order of the Income-tax Appellate Tribunal, Cochin Bench, at Ernakulam. The short facts are as follows. Against the order of the AAC, which was prejudicial to the revenue, the department took up the matter before the Tribunal, Cochin Bench. After the filing of the appeal, the assessee taking advantage of the provision in Section 253(4) of the I.T. Act, 1961, filed a memorandum of cross-objections against the AAC's order. Both the appeal and the memorandum of cross-objections came up for hearing before the Tribunal on January 8, 1975. The assessee was not present. It appears that the Tribunal disposed of the revenue's appeal and, in consequence, dismissed the cross-objections. Thereafter, the assessee filed an application before the Tribunal stating that there was sufficient cause for his non-appearance when his cross-objections were called for hearing, and the Tribunal made an order setting aside the dismissal of the cross-objections. Effectually, therefore, they had set aside the order passed by them ex parte in the revenue's appeal as well. This provoked the revenue to file the writ petition to quash the order of the Tribunal. Koshal J., after referring to the relevant provisions in the Act and the Rules made under the I.T. Act, was of the view that no illegality was attached to the order of restoration which in effect appeared to him to be eminently just. He also expressed the view that, as the appeal filed by the revenue was inextricably connected with the cross-objections filed by the assessee, the order of the Tribunal setting aside the ex parte order passed by them in favour of the revenue was also held to be in order. It is as against this, the present writ appeal has been filed.
3. Mr. J. Jayaraman, learned counsel for the appellant, contends that a memorandum of cross-objections could only be against a part of the order of the AAC and not against the order as such, and, in the instant case, the memorandum of cross-objections is against the entirety of the order of the AAC, and that, therefore, the cross-objections themselves are not maintainable. His second objection is that under Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, the Tribunal can do one of two things, namely, dismiss the appeal preferred by the appellant for default or may hear it ex parte. His further contention is that it is only in cases where an appeal has been dismissed for default, that a provision is made as in the proviso to Rule 24 of the Appellate Tribunal Rules enabling the aggrieved party to move the Tribunal to set aside such an order passed on the ground of default and seek for its restoration on proof of sufficient cause for non-appearance of the appellant shown to the Tribunal. As, in this case, the appeal was disposed of ex parte by the Tribunal, the proviso to Rule 24, which contemplates only the restoration of an appeal, which was dismissed for default, and that too for sufficient cause, would not apply and, therefore, the Tribunal did not have jurisdiction to restore the memorandum of cross-objections which were dismissed by them in consequence of the quondam order passed by them on the basis that it was an ex parte order. We shall consider these three contentions.
4. We are unable to agree that a memorandum of cross-objections could only be against a part of the order of the AAC. The words deployed under Sub-section (4) of Section 253 of the I.T. Act, 1961, would show that such memorandum of cross-objections shall be against any part of the order of the AAC. The use of the expression "any part of the order" is clearly an indicia to show that it could be also against the entirety of the order of the AAC in so far as it is prejudicial to the cross-objector. Therefore, the contention that the memorandum of cross-objections filed by the assessee in the instant case is said to be against the whole of the order of the AAC and that by itself is sufficient to reject the same on the threshold, is not sustainable.
5. Under Rule 22 of the Appellate Tribunal Rules of 1963, a memorandum of cross-objections filed under Sub-section (4) of Section 253 shall be registered and numbered as an appeal and all the rules, so far as may be, shall apply to such appeal. Therefore, a memorandum of cross-objections, though it is a follow up of an appeal filed by one or the other of the aggrieved parties, yet it has an identity of its own and stands separate and distinct from the appeal. A memorandum of cross-objections, therefore, ought to be disposed of in the manner provided for under the Act and under the Rules. An appeal could be dismissed for default or may be heard ex parte. In the instant case, the appeal has been^eard ex parte and the Tribunal, it is conceded before us, did not say that the memorandum of cross-objections was also being dealt with ex parte and an order passed ex parte thereon. But what the Tribunal did was that they heard the appeal in the absence of the assessee and decided it ex parte. What is now contended before us is that the proviso to Rule 24 of the Appellate Tribunal Rules would be attracted only in a case where the appeal has been dismissed for default and not in a case where the appeal was heard ex parte. This hyper-technical contention of the revenue can easily be met thus. The Tribunal did not record, as we said, that there was a dismissal of the memorandum of cross-objections after hearing it ex parte, but they dismissed it in consequence of their ex parte-order passed in the appeal. In the circumstances, therefore, it should be taken that the memorandum of cross-objections has been dismissed for default. If that were so, the proviso to Rule 24 enables the Tribunal to accept an application for restoration of an appeal, which could also be a memorandum of cross-objections for setting aside any order in relation thereto on the ground that there was sufficient cause for the non-appearance of the appellant which includes a cross-objector. What the Tribunal did in this case was to accept the reason and restore the memorandum of cross-objections. After having restored such memorandum of cross-objections on the ground that it was dismissed for default, they had to necessarily set aside the ex parte order passed by them in relation to the main appeal filed by the revenue. This is a consequential one and it could not be avoided in law. Even otherwise, we are satisfied that the proviso would not only take in a case in which appeals have been dismissed for default but also would take in, under certain circumstances, appeals which have been heard ex parte. As we said, the line of distinction drawn between orders in appeal disposed of for default and in appeals heard ex parte is very thin and we are of the view that such meticulous distinction ought not to be made in order to avoid renderance of justice to a party, who is really afflicted by an order which affects his rights. In these circumstances, we are of the view that the technical objection of the revenue cannot prevail. We agree with Koshal J. and dismiss this appeal.