KHUSHALCHAND B DAGA Vs. SURENDRAN T K 4TH ITO

JUDGEMENT

(1.) THIS writ petition raises the question whether the order passed by the Tribunal on 24th Oct., 1961, dismissing the petitioner's appeal for default of his appearance is without jurisdiction and, therefore, a nullity or the said order is merely an erroneous or illegal order with jurisdiction ? The facts giving rise to the petition may briefly be stated: For the asst. year 1955 -56 (accounting year 1954 -55) the petitioner as the karta of HUF filed his income -tax return on 31st Jan., 1956, showing therein a loss of Rs. 2,16,945. Along with the return he also filed the balance -sheet, profit and loss account and several other statements. Notice under S. 23(2) and S. 22(4) of the INCOME TAX ACT, 1922, fixing the hearing on 20th Jan., 1960, was served on the petitioner on 13th Jan., 1960. The hearing was adjourned from time to time and finally it was fixed on 15th Feb., 1960, but as the petitioner could not remain present and as his application for adjournment was refused, the 1st respondent (4th ITO, A -I Ward), proceeded with assessment ex parte and he passed his best judgment assessment order on that day under S. 23(4) whereby he assessed the petitioner's income at Rs. 3,88,177. Against the said best judgment assessment order of the 1st respondent, the petitioner on 12th April, 1960, filed an appeal to the AAC, being Appeal No. APR -66. On 13th April, 1960, the petitioner filed an application before the 1st respondent under S. 27 of the Act for cancellation of the ex parte assessment order which application was rejected on 6th June, 1960. On 21st Nov., 1960, the AAC partly allowed the appeal and the total income as assessed by the 1st respondent was reduced by Rs. 54,000. On 25th Jan., 1961, the petitioner preferred an appeal to the Tribunal, being Appeal No. ITA 10236 of 1960 -61, against the AAC's order dt. 21st Nov., 1960. The hearing of the appeal was fixed on 24th Oct., 1961, and notice thereof was served upon the petitioner on 4th Oct., 1961. For certain reasons set out in paragraph 19 of the petition neither the petitioner nor his tax adviser could appear before the Tribunal on the aforesaid date. The Tribunal dismissed the appeal for default of appearance and not on merits. It passed the following order on 24th Oct., 1961:

(2.) ACCORDING to the petitioner, the aforesaid order of the Tribunal was not served upon him nor on his tax adviser and he came to know of the said order for the first time on 4th Jan., 1968, when one of his representatives learnt about this order while he was making search of the records of the assessment proceedings for the asst. year 1955 -56 in connection with certain refund vouchers. After the petitioner learnt about this order from his representative in the aforesaid manner, the petitioner made an application to the Tribunal on 29th Jan., 1968, for setting aside the said order dt. 24th Oct., 1961, and seeking a rehearing of the appeal on merits. On 17th April, 1968, the Tribunal rejected the application on the ground that there had been enormous delay in filing the application for restoration; the Tribunal did not accept the petitioner's case that it was on 4th Jan., 1968, that he came to know about the dismissal of his appeal. Thereafter, on 24th Feb., 1969, the Supreme Court delivered its judgment in the case of CIT vs. S. Chenniappa Mudaliar (1969) 74 ITR 41 (SC) : TC8R.655 confirming the decision of the Madras High Court in the same matter to the effect that r. 24 of the ITAT Rules, 1946, as amended in 1948, in so far as it enabled dismissal of an appeal before the Tribunal for default of appearance of the appellant was ultra vires being repugnant to S. 33(4) of the Act. Relying on the aforesaid decision of the Supreme Court the petitioner on 23rd June, 1969, preferred a miscellaneous application before the Tribunal for setting aside the Tribunal's order dt. 24th Oct., 1961, and seeking a rehearing of his appeal on merits. Though the application was stated to be for rectification of a mistake under S. 35 of the Act, a two - fold submission was put forward by the petitioner in his said application : first, that the order dt. 24th Oct., 1961, dismissing his appeal for default of appearance was bad in law and could never be passed in view of the aforesaid Supreme Court judgment, and, secondly, in the alternative, the said order suffered from a mistake apparent on the face of the record which should be rectified and on either of these grounds the petitioner sought a rehearing of his appeal on merits. At the hearing of the application counsel for the petitioner reiterated the two -fold submission before the Tribunal. In the first place, he urged that r. 24 of the ITAT Rules, 1946, as amended in 1948, having been declared ultra vires as being repugnant to S. 33(4) of the Act by the Supreme Court, the Tribunal's order dt. 24th Oct., 1961, dismissing the petitioner's appeal for default of appearance was a nullity and as such the petitioner's appeal filed on 25th Jan., 1961, was in law still undisposed of and the same continued to remain on the file of the Tribunal and that the same should be disposed of after hearing the parties. Alternatively, counsel contended that the said order of the Tribunal clearly suffered from a mistake apparent on the face of the record and the same may be rectified by restoring the appeal to the file and fixing it for rehearing. It was also submitted that since the petitioner came to know of the said order dt. 24th Oct., 1961, for the first time on 4th Jan., 1968, the application for rectification was within time. The Tribunal by its order dated 5th Sept., 1969, dismissed the said application. The Tribunal did not accept the petitioner's contention that its previous order dt. 24th Oct., 1961, was a nullity but held that it was an order with jurisdiction but contained a mistake apparent on the face of the record, which could be rectified under S. 35 of the old Act or S. 254(2) of the new Act, 1961, but the application for rectification was barred by the limitation, inasmuch as it had been made clearly after the expiry of 4 years. The Tribunal reiterated its view that it was not possible for it to accept the petitioner's case that he had come to know of the order dated 24th Oct., 1961, on 4th Jan., 1968, as alleged by him -which case had already been rejected by it on an earlier occasion while dismising the petitioner's application dt. 29th Jan., 1968, for restoration of the appeal. The petitioner has challenged before me both the orders of the Tribunal dated 24th Oct., 1961 (dismissing the petitioner's appeal for default of appearance) and 5th Sept., 1969 (dismissing the petitioner's miscellaneous application dt. 23rd June, 1969).

(3.) ON behalf of the respondents, Mr. Joshi in the first place urged that the petitioner was guilty of laches since by the present petition preferred on 18th Dec., 1969, he was seeking to quash the Tribunal's order dt. 24th Oct., 1961, and as such on that ground alone the petitioner should be denied relief. He further pointed out that in the earlier application preferred on 29th Jan., 1968, for setting aside the ex parte assessment as well as in the latter miscellaneous application preferred on 23rd June, 1969, the Tribunal had rightly rejected the petitioner's case that he had come to know of the order dt. 24th Oct., 1961, as late as on 4th Jan., 1968, and had proceeded on the basis that he must have learnt about the said order when the same had been immediately sent to him by registered post and on that basis it should be held by this Court that the petitioner has approached this Court after inordinate delay. On merits he tried to support the view of the Tribunal that the Tribunal's order dt. 24th Oct., 1961, dismissing the petitioner's appeal for default of appearance was not a nullity but was an erroneous order with jurisdiction -an order containing an error apparent on the face of the record needing rectification -and, according to him, the Tribunal was right in coming to the conclusion that the petitioner's miscellaneous application for rectification of a mistake was barred by limitation, inasmuch as, the case was covered by S. 35 of the old Act and not by S. 254(2) of the new Act. In the circumstances, he contended that the petition should be dismissed.