Learning from judgments- application for adjournment must be made timely and with relevant evidence

[CA DEV KUMAR KOTHARI]

Aim Fincon (P.) Ltd. Versus Commissioner of Income-tax, Kolkata-III 2017 (5) TMI 982 - CALCUTTA HIGH COURT GA NO. 698 of 2016, And ITAT NO. 137 OF 2016

Scope of this article:

This article is limited on the issues related with petition for adjournment, submission of such petition and care while seeking  adjournment and principal of natural justice in case reasonable opportunity is not allowed by not granting adjournment or passing of order ex-parte in absence of noticee, even when adjournment petition was in records. Other aspects in the order / judgment are not discussed.

Date of hearing:

In any most of proceedings concerned authority is required to give a notice fixing time, date and place of hearing.  In case of adjournment, the new date can be noted in order sheet  and if the noticee was  present  new date is communicated without issuing a fresh notice. If noticee is not present then a fresh notice need to be issued.

Duty of noticee:

In his own interest, the noticee is required to submit his written submissions, paper book containing documents relied on, on or before the appointed time and he can also appear to explain his case and produce his submissions and evidences on which he rely.

Representation:

In some cases mere written submission can be enough and relied on in some cases mere personal appearance for explaining the case can be enough. However, in most of cases generally it is desirable that written submission and documents relied on should be filed at least few days before hearing so that authority can read them and can prepare himself for proper hearing with necessary preparation. Personal appearance of assessee or his representative is also desirable for making any clarifications and also to find out if further information and explanation or documents are required. 

Principal of natural justice – representation of noticee is necessary:

Giving notice of hearing and taking hearing (by way of documents and / or verbal explanations as may be chosen by noticee)  are important for meeting tests of principal of natural justice. Appearance of noticee is very important if he want to avail full opportunity. This is because in case of appearance and during course of discussions authority may require some more information, evidences and documents. If noticees does not comply to notice in any manner, then he cannot blame denying opportunity and not meeting test of principal of natural justice.

Seeking adjournment:

In case for any reason noticee is not ready for hearing or for some reasons want that hearing be taken after some time, then he must make an application well in advance.

If application is made well in advance out come on such application can also be ascertained before date of hearing. The concerned officer will also not be required to have study of file, in case adjournment is granted. In case officer does not allow adjournment, then representation can be made, as far and possible and again a request can be made for more time. In that case there will be no case of non-compliance on part of noticee.

In case outcome on adjournment petition is not known, before date of hearing, it is further desirable that at the appointed time, noticee or his representative must be present before the authority to request for adjournment and to know out outcome of his adjournment petition.

If the officer does not allow adjournment, and if there is reasonable cause for seeking adjournment, then only it can be said that principal of natural justice is not followed by not allowing reasonable opportunity of hearing. 

Ex-parte order in absence of representation or application for adjournment:

In case the noticee does not make representation and / or appearance and also does not seek adjournment before time of hearing, the office can pass an ex-parte order or in case of petition dismiss petition as not prosecuted.

Particularly when noticee does not respond to notices (duly served) on few occasions say 2 -3 times, the officer can in a very reasonable way decide the appeal or petition or other proceeding ex-parte or he can also dismiss petition or appeal as may be proper and permitted under law.

Belated petition for adjournment:

In case petition for adjournment is made after the date of hearing and in meanwhile the officer has passed order, then it cannot be said that principal of natural justice has not been followed.

Action which can be taken against ex-party order:

On consideration of applicable law and facts and circumstances there can be possible remedies against ex-parte order. Generally there can be following proceedings for example:  

              (a) Applying to recall the order and seeking fresh opportunity of hearing

              (b) Prefer appeal before appropriate authority or court

              (c) Apply for rectification of order if there is some mistakes apparent from record.

              (d) Approaching High Court for appropriate  order and / or directions.

Case of  Aim Fincon (P.) Ltd (supra.)

Relevant portion from the reported judgment in relation to aspect of application for adjournment , and order passed are reproduced from judgment with highlights added for analysis:

Quote:

        “ 3. Hearing of the proceeding under section 263 was notified by a letter dated 28th November, 2013 to the assessee (Annexure-C to the stay petition) fixing 10th December, 2013 as the date of hearing. There was prayer for adjournment of hearing on that date on the ground of passing away of father of the senior authorised representative of the assessee on 9th December, 2013. But there is no material to show that such prayer for adjournment was made on 10th December, 2013 or on any date prior thereto. As it appears from the despatch slip, photocopy of which is reflected in Annexure-D to the stay petition, the letter seeking adjournment was posted on 12th December, 2013, two days after the date fixed for hearing. The Commissioner appears to have had concluded the hearing on the scheduled date i.e. on 10th December, 2013. But the order was passed on 13th March, 2014. In this order, however, there is reference to the prayer for adjournment in paragraph 5 thereof. The Commissioner has observed in the order :-

"Notice u/s.263 of the I.T. Act was issued for the said reasons on 28.11.2013 in response to that the assessee filed an adjournment petition on 13/12/2013 by which the assessee requested for adjournment of hearing. In this respect it stated that father of senior A/R has expired, but did not annex any supporting evidence like, copy of the death certificate alongwith the adjournment petition which was submitted in the receiving section without appearing before the undersigned. But this petition can not be accepted on the face of it as the same was not supported with any evidence and also the assessee was asked to appear before the undersigned which it did not do, though the undersigned was very much present in the chamber. Hence its adjournment petition was rejected."

4. Submission of Mr. Dasgupta is that the Commissioner did not communicate the order of rejection of prayer for adjournment to the assessee. Xxx

5. As regards the first point of Mr. Dasgupta, we find that the prayer for adjournment was not before the Commissioner on the day the hearing took place. Opportunity of hearing thus cannot be said to have had been denied. Reference to the letter of adjournment in the order of the Commissioner cannot be a ground for revisiting the circumstances under which the order was passed on 10th December, 2013. We are of this view because on the date scheduled for hearing the assessee had not applied for adjournment, the assessee cannot take advantage of post hearing prayer for adjournment, even though the Commissioner had referred to such prayer in his order.

6. In our opinion, mere reference to the adjournment petition in the order, which petition was received by the Assessing Officer after the date of hearing does not render the order invalid on the ground of violation of the principles of natural justice. On this point, Revenue's argument was that in exceptional cases, an order passed in violation of the principles of natural justice need not be set aside by the Writ Court in every situation, and one of the circumstances in which this principle would apply is in a case where no prejudice is caused. In the decision of the Supreme Court in the case of Aligarh Muslim University v. Mansoor Ali Khan 2000 (8) TMI 1104 - Supreme Court of India - [2000] 7 SCC 529 it has been, inter alia, held :-

"Chinnappa Reddy, J. in S.L. Kapoor case 1980 (9) TMI 280 - SUPREME COURT -(1980) 4 SCC 379 laid down two exceptions (at SCC p.395) namely, if upon admitted or indisputable facts only one conclusion was possible, then in such a case, the principle that breach of natural justice was in itself prejudice, would not apply. In other words if no other conclusion was possible on admitted or indisputable facts, it is not necessary to quash the order which was passed in violation of natural justice. Of course, this being an exception, great care must be taken in applying this exception".

7. In our opinion, the very fact that the adjournment petition was received after the hearing was concluded at best could imply that the assessee was seeking re-hearing, and we do not think such a plea was justified. No application for adjournment was made on the day the hearing was scheduled to take place before the Commissioner. If the noticee does not turn up before the authority before whom he has to respond to the notice, but seeks adjournment of hearing after two days, the noticee cannot complain of violation of the principles of natural justice. This would constitute a default on the part of the noticee in availing of the opportunity of being heard. A subsequent prayer for rehearing would be akin to an application under Order IX Rule 13 of the Code of Civil Procedure, in which case the noticee has to demonstrate sufficient cause for recalling the order passed in a proceeding in which he could not remain present. The letter of the assessee, a copy of which has been made Annexure-"D" to the stay petition, has not been framed in such manner. The grounds of appeal before the Tribunal is also not founded on that plea. The Commissioner did not commit any error of law warranting interference from a superior appellate forum under the circumstances in deciding the case on merit. Moreover, the assessee had full opportunity to deal with the issue on merit before the Tribunal. “

Unquote;

In this case:

a. the application was filed in receiving section two days after date of hearing.

b. It seems that name of senior Authorised Representative (A/R) and his deceased father was not mentioned in the petition seeking adjournment. Even letter or email from office of the seniorA/Rwas not enclosed.

c. The application was not supported by evidence like death certificate of father of senior counsel. This reason seems not justified because death took place on 09^th December and date of hearing was fixed on 10^th December and application was submitted on 13^th December. By this time a copy of death certificate was difficult to be available with the assessee.

d. When the petition speaks about senior A/R, there must be other junior A/R. Even otherwise assessee / noticee is a company and must have other persons who could have appeared before the CIT.

e. The petition should have been submitted on or before appointed time on 10^th December.

f. When death of senior A/R took place on 9^th December, a petition for adjournment could have been filed/ emailed on 9^th December itself.

g. Other junior A/R or any officer of Assessee Company should have appeared on 10^th December to file petition and also verbally pray for adjournment.

h. It is expected that if someone has appeared before the CIT, he would have allowed a short adjournment.

i. In this case, instead of approaching High Court, appeal before Tribunal should have been made. It is most likely that Tribunal would have restored the matter to the CIT to allow further opportunity of hearing andpass a fresh order as per law.

j. A petition before CIT, enclosing message from the senior A/R and copy of death certificate of his father , requesting to recall the order and allow fresh opportunity of hearing could also be made.

k. In nutshell, the assessee and his A/R made a mistake by not applying for adjournment timely and by not appearing before CIT.

Some discrepancies about events and dates:

:

On reading of the reported judgment we find following dates:

Date of hearing 10^th December 2013.

Application as per dispatch (sic. Receipt register) received on 12^th December 2013.

The Commissioner has observed in the order :-

"Notice u/s.263 of the I.T. Act was issued for the said reasons on 28.11.2013 in response to that the assessee filed an adjournment petition on 13/12/2013

In paragraph 3

The Commissioner appears to have had concluded the hearing on the scheduled date i.e. on 10th December, 2013. But the order was passed on 13th March, 2014.

In paragraph 5

Reference to the letter of adjournment in the order of the Commissioner cannot be a ground for revisiting the circumstances under which the order was passed on 10th December, 2013.

Date of application:

Whether the application was filed on 12^th or 13^th December does not make much difference because both are after the date of hearing that is 10^th December 2013.

Dates of order:

        We find two dates of order one is  the same date as date of hearing that is 10^th December, 2013, if that be correct then question is how the CIT could have taken a note of application for adjournment received on 13^th December, 2013. This means that the order was not passed on 10^th December, 2013.

        If the order was passed on   13^th March 2014, then the question arises is why the CIT did not allow at least one more opportunity because (a) there was long time gap between date of hearing fixed that is 10^th December and date of order  13^th March and ( b) assessee had sought adjournment  for which application was received on  12^th or 13^th December, that is much before the date of passing of the order.

Inference by High Court:

There seems an inference by the honourable High Court  that hearing was concluded on 10^th December 2013. This is found in the sentence

      “The Commissioner appears to have had concluded the hearing on the scheduled date i.e. on 10th December, 2013. But the order was passed on 13th March, 2014”.

               The question is how it can be said that hearing was concluded on 10^th December, When the CIT has mentioned about adjournment petition filed on 13^th December, it is clear that order was not passed on 10^th December so the hearing could not be said to have concluded on 10^th December when the CIT has taken a note of adjournment petition filed on 13^th December.

Therefore, the judgment and order on this issue need a rectification. When it is clear that before the order was passed adjournment petition was on record of the CIT, therefore, it was in interest of good tax administration that the CIT should have allowed one more opportunity of hearing before passing the order.