2025 (6) TMI 656 - HC - Income Tax

Validity of order passed u/s 250 - appeal submitted by the petitioner was rejected for non-appearance of the petitioner - specific challenge raised by the petitioner is on the ground that the impugned order does not conform to the statutory requirements contemplated under the provisions of the Income Tax Act. HELD THAT - Evidently going by Sub-section 6 of Section 250 no other meaning can be assigned to the words points for determination as it obviously leads to the question that arises for consideration based on the contentions raised in the appeal. Therefore it was obligatory on the part of the appellate authority to refer to the points raised in the appeal and to determine the same by supplying reasons for such determination. On going through Section 250 of the Act which deals with the procedure in appeal there is no provision for rejecting an appeal for non appearance of the appellant. Therefore in the absence of any such provision irrespective of the question the appellant had appeared or not the appellate authority has to take decision by strictly following the mandate contemplated under Section 250(6) of the Income Tax Act 1961 which can only be a decision answering the points raised in the appeal. Therefore Ext.P1 order cannot be treated as an order passed in tune with the statutory requirements and therefore it requires reconsideration. This writ petition is disposed of quashing Ext.P1 with a direction to the 1st respondent to reconsider the appeal after giving a reasonable opportunity of being heard to the petitioner.

Summary

The core legal questions considered by the Court in this matter include: (1) Whether the impugned order rejecting the appeal for nonappearance of the appellant complies with the statutory requirements under Section 250(6) of the Income Tax Act, 1961; (2) The interpretation and scope of the phrase "points for determination" as mandated by Section 250(6); (3) Whether the appellate authority is empowered to reject an appeal solely on the ground of nonappearance of the appellant; and (4) The procedural obligations of the appellate authority in disposing of an appeal under Section 250.

Regarding the first issue, the relevant legal framework is Section 250 of the Income Tax Act, 1961, particularly subsection (6), which requires that any order disposing of an appeal must be in writing, state the points for determination, the decision on those points, and the reasons for the decision. The Court examined whether the impugned order (Ext.P1) fulfilled these statutory mandates. The petitioner contended that Ext.P1 failed to comply as it did not address the substantive points raised in the appeal but merely recorded reasons related to the petitioner's nonappearance. The respondents argued that the order was justified due to repeated nonappearance despite notices and that the reasons given sufficed under Section 250(6).

The Court's interpretation emphasized the statutory language of Section 250(6), particularly the phrase "points for determination." It held that this phrase necessarily refers to the substantive questions arising from the contentions raised in the appeal, not procedural issues such as nonappearance. The Court reasoned that the appellate authority is obligated to identify and address the substantive points raised in the memorandum of appeal and provide reasoned decisions on those points. The order under challenge failed this test as it did not engage with the merits of the appeal but dismissed it solely on procedural grounds.

In analyzing the second and third issues, the Court noted that the Income Tax Act does not contain any express provision empowering the appellate authority to reject an appeal merely for nonappearance of the appellant. The appellate process envisaged by Section 250 requires a decision on the merits of the appeal. The Court found that the impugned order's rejection of the appeal on grounds of nonappearance without adjudicating the substantive points contravened the statutory scheme. The Court underscored that procedural noncompliance by the appellant does not automatically justify dismissal without considering the appeal's merits.

The key evidence and findings included the record of repeated notices issued to the petitioner for hearings and the petitioner's failure to appear on those dates. However, the Court found that these procedural facts did not absolve the appellate authority from its duty to comply with Section 250(6) by addressing the substantive points raised in the appeal. The Court also noted that the impugned order referenced judicial pronouncements to justify the rejection, but these did not override the statutory mandate.

In applying the law to the facts, the Court concluded that the impugned order was not in conformity with the statutory requirements. The order's failure to state the points for determination arising from the appeal and to provide reasons on those points rendered it invalid. The Court held that the appellate authority must reconsider the appeal afresh, giving the petitioner a reasonable opportunity to be heard, and must pass a reasoned order addressing the substantive points raised.

The Court considered and rejected the respondents' argument that the reasons related to nonappearance sufficed under Section 250(6). It clarified that while procedural compliance is important, it cannot substitute for the statutory obligation to address substantive issues. The Court's analysis stressed that the statutory language and scheme require a reasoned adjudication on the merits, not merely procedural dismissal.

In conclusion on the issues: (1) The impugned order did not comply with Section 250(6) as it failed to state and decide the substantive points raised in the appeal; (2) The phrase "points for determination" necessarily refers to the substantive legal and factual questions arising from the appeal; (3) The appellate authority is not empowered to reject an appeal solely on the ground of nonappearance; and (4) The appellate authority must reconsider the appeal in accordance with the statutory mandate, providing a reasoned order on the substantive points after affording a hearing.

The significant holdings of the Court include the following verbatim reasoning: "...the said provision imposes an obligation upon the appellate authority that, while disposing of the appeal, the order shall be in writing and shall state points for determination, the decision thereon and reason for the decision... no other meaning can be assigned to the words 'points for determination' as it obviously leads to the question that arises for consideration based on the contentions raised in the appeal." Further, the Court held: "...there is no provision for rejecting an appeal for non appearance of the appellant. Therefore, in the absence of any such provision... the appellate authority has to take decision by strictly following the mandate contemplated under Section 250(6)... which can only be a decision answering the points raised in the appeal."

The core principles established are that compliance with Section 250(6) is mandatory and requires a reasoned order addressing the substantive points raised in the appeal; procedural defaults such as nonappearance do not authorize outright dismissal; and appellate authorities must afford a fair hearing and decide appeals on merits. The final determination was that the impugned order was quashed, and the appellate authority was directed to reconsider the appeal within three months, providing the petitioner a reasonable opportunity to be heard and issuing a reasoned order in accordance with law.