Madras High Court
M/S.Ramgosri Constructions P Ltd vs The Deputy Commissioner Of Income ... on 23 August, 2021
T.C.A.No.215 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.08.2021
CORAM :
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP
T.C.A. No.215 of 2013
M/s.Ramgosri Constructions P Ltd.,
No.225, Mettukuppam
Okkiam, Thoraipakkam,
Chennai – 600 096. ... Appellant
Vs.
The Deputy Commissioner of Income Tax,
Company Circle – V(3),
Chennai – 600 034. ... Respondent
Tax Case Appeal preferred under Section 27A of the Wealth Tax Act,
1957, against the order, dated 25.02.2011, passed by the Income Tax
Appellate Tribunal, Chennai "C" Bench, in W.T.A.No.41/Mds/2010, for the
Assessment Year 1998-99.
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T.C.A.No.215 of 2013
For Appellant : Mr.A.S.Sriraman
For Respondent : Mr.T.Ravi Kumar
Senior Standing Counsel
JUDGMENT
(Judgment was delivered by T.S. SIVAGNANAM, J.)
This Tax Case Appeal has been filed by the assessee under Section
27A of the Wealth Tax Act, 1957 ("the Act" for brevity), challenging the
order, dated 25.02.2011, passed by the Income Tax Appellate Tribunal,
Chennai "C" Bench, in W.T.A.No.41/Mds/2010, for the Assessment Year
1998-99.
2.The assessee has raised the following substantial questions of law in
this appeal :
“1.Whether the Appellate Tribunal is correct in law in
accepting the appeal of the Department/respondent relating to
the Assessment Year 1998-99 exparte without granting
reasonable opportunity of hearing while grossly violating the
principles of natural justice?
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T.C.A.No.215 of 2013
2.Whether the Appellate Tribunal is correct in law in
rejecting the plea for exclusion of the value of the factory land
and buildings within the scope of the exception carved out in
the definition of net wealth in Section 2(ea) of the Act read
with the charging provisions of the Act by overlooking the
purposive legislation as well as the schematic interpretation of
such provisions?
3.Whether the Appellate Tribunal is correct in law in
rejecting the plea for exclusion of the value of factory land
and buildings within the purview of charging provisions of the
Act even though the said asset was a commercial asset
occupied and used for commercial purposes?”
3.We have heard Mr.A.S.Sriraman, learned counsel for the
appellant/assessee and Mr.T.Ravi Kumar, learned Senior Standing Counsel
for the respondent/Revenue.
4.Three questions arise for consideration in the present appeal, the first
of which is, whether the Tribunal was right in proceeding ex parte on the
ground that the counsel, who was engaged to appear in the matter and filed a
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T.C.A.No.215 of 2013
petition for adjournment, had not filed vakalat or Power of Attorney
empowering to appear on behalf of the assessee. Therefore, the Tribunal
refused to entertain the request for adjournment and proceeded to decide the
matter on merits. The assessee had filed a Miscellaneous Petition on
14.10.2011 stating that the notice was handed over to the Chartered
Accountant to defend the case of the assessee and on account of sickness, the
Chartered Accountant could not brief the counsel who was engaged to defend
the assessee and in his absence, an adjournment letter was filed on the first
date of hearing of the matter. Further, the learned counsel, who filed the said
letter of adjournment, appeared before the Hon'ble High Court of Kerala on
the said date of hearing before the Tax Bench. Therefore, it was submitted
that the inability of the Chartered Accountant and the counsel to file a letter
of adjournment should not have resulted in passing an ex parte order,
inasmuch as the assessee should not suffer for the default of the Chartered
Accountant and the counsel who moved the petition on their behalf, stating
personal reasons/professional preoccupation. Therefore, the assessee pleaded
that their case should be considered as reasonable and sufficient for non
appearance within the scope of Rule 25 of the Appellate Tribunal Rules,
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T.C.A.No.215 of 2013
1963. It is pointed out that the proviso to the said Rule gives scope for the
recall of the ex parte order and in fact, the said proviso uses the term "shall"
which conveys the mandatory nature of the power to recall vested with the
Tribunal.
5.In the said Miscellaneous Petition, the present counsel, who is
appearing for the assessee before us, was engaged. The Tribunal held that
there is no mistake, whatsoever, which has been pointed out by the assessee
on the decision taken by the Tribunal, dated 25.02.2011, which was on
merits and accordingly, the Miscellaneous Petition was dismissed. As
mentioned above, the issue is whether the Tribunal should have afforded an
opportunity to the assessee to appear and make submissions on merits. The
other two substantial questions of law which have been raised are on the
aspect whether the Tribunal was correct in rejecting the plea for exclusion of
the value of the factory land and building by bringing the same under Section
2(ea) of the Act, even though the asset was a commercial asset occupied and
used for commercial purposes.
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T.C.A.No.215 of 2013
6.We have perused the order passed by the Tribunal, dated
25.02.2011, and it is clear from Para No.8 that the order is an ex parte
order. It is true that, unless and until the counsel or the authorized
representative has been duly authorized to appear in the matter, the Courts
and Tribunals will not entertain the said person to represent, as the assessee
can always take a stand that the person who had appeared had not been
authorized to appear. In the instant case, facts had to be adjudicated. We
find that the order passed by the Commissioner of Wealth Tax (Appeals)-V,
Chennai (“CWT(A)” for brevity), dated 26.08.2010, which was impugned
before the Tribunal at the instance of the Revenue, has not elaborately gone
into the facts, nor has the Assessing Officer done so while passing the
Assessment Order dated 30.09.2005. Therefore, the duty cast upon the
Tribunal became more onerous and it has done in-depth study of the nature
of transactions done by the assessee. However, if the assessee had an
opportunity to place their submissions before the Tribunal, the order would
have been more elaborate and a speaking order and it would satisfy the
principles of natural justice and the principle of audi alteram partem. In our
considered view, this opportunity could have been granted to the assessee
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T.C.A.No.215 of 2013
when they filed the Miscellaneous Petition, which was filed within the
reasonable time.
7.Before us, elaborate submissions have been made by the learned
counsel for the appellant/assessee as well as the learned Senior Standing
Counsel for the respondent/Revenue.
8.The learned counsel for the appellant would place reliance on the
decision of the Hon'ble High Court of Gujarat in the case of Commissioner
of Wealth Tax v. Dr.Narayan T. Baddi [Tax Case No.TAXAP/540/2006
dated 16.06.2012] and submitted that the Court had taken note of and
followed the decision of the Calcutta High Court in the case of Maynak
Poddar (HUF) v. Wealth Tax Officer reported in (2003) 262 ITR 633,
which has been taken note of by the CWT(A) while passing the order dated
26.08.2010.
9.The learned Senior Standing Counsel would submit that the decision
of the High Court of Kerala in the case of Commissioner of Income-tax,
Thiruvananthapuram v. Ponnamma Lakshmi Narayani Asiatic Export
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T.C.A.No.215 of 2013
Enterprises reported in (2010) 324 ITR 278 (Kerala) would squarely apply
to the facts and circumstances of the case, as the case pertains to the very
same Assessment Year, which is subject matter of the present appeal, viz.,
1998-99. The learned counsel for the appellant would submit that, factually
the said decision is distinguishable.
10.As noticed above, the reason assigned by the assessee in the
Miscellaneous Petition as to why they sought for adjournment, appears to be
a reasonable explanation, more particularly, when the Revenue did not
controvert the facts stated in the Miscellaneous Petition nor it was found to be
a false statement. Therefore, we are of the view that an opportunity could
have been granted to the assessee to place the factual position before the
Tribunal for a more effective adjudication and decision on merits. Hence, on
that ground alone, we are inclined to interfere with the order passed by the
Tribunal, leaving the legal issues open to be decided by the Tribunal on
remand.
11.For the above reasons, this Tax Case Appeal is allowed to the extent
indicated and the order passed by the Tribunal in the Miscellaneous Petition,
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T.C.A.No.215 of 2013
dated 16.03.2012, as well as the order dated 25.02.2011, are set aside and
the matter is remanded back to the Tribunal for fresh consideration.
Consequently, the substantial question of law No.1 is answered in favour of
the appellant/assessee and the substantial questions of law Nos.2 and 3 are
left open. No costs.
(T.S.S., J.) (S.S.K., J.)
23.08.2021
(2/2)
mkn
Internet : Yes
Index : Yes / No
Speaking order / Nonspeaking order
To
1.The Income Tax Appellate Tribunal,
Chennai, “C” Bench.
2.The Deputy Commissioner of Income Tax,
Company Circle – V(3),
Chennai – 600 034.
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T.C.A.No.215 of 2013
T.S. SIVAGNANAM, J.
and
SATHI KUMAR SUKUMARA KURUP, J.
mkn
T.C.A. No.215 of 2013
23.08.2021
(2/2)
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