TMI Blog1995 (6) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties be given fresh opportunity of being heard as per rules. Per Shri M.A.A. Khan, Judicial Member --- I fully agree with the order proposed by my ld. brother. But in view of the arguments advanced before us by the ld. counsels for the parties I would like to elaborate the purport of the proposed order. 2. The ld. D.R. challenged the very maintainability of the application on the grounds that giving an opportunity to the applicant of being heard before the dismissal of the application, may be for absence of the applicant, was not necessary, that no application u/s 254(2) lies against an order passed u/s 256(1), that even if one is assumed to lie the prayer of setting aside the order passed under section 256(1) and restoring the application cannot be accepted as that would amount to reviewing or revising the original order itself which was not permissible under the limited scope of section 254(2) and that, in any case, since the order under section 256(1) was passed after due service of notice of hearing to the applicant there existed no mistake apparent from record. 3. Mr. N.M. Ranka, the ld. counsel for the applicant, in his thought-provoking and learned arguments, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and hence rectifiable under section 254(2) of the Act. In support of such arguments Mr. Ranka made reference to sections 254(1), 254(2), 256(1), 282 of the Act, section 27 of the General Clauses Act, 1897, Rules 10, 12, 15, 17 and 20 of Order V of CPC and Rules 24, 25 and 37 of the Rules, 1963. Reliance was also placed by the ld. counsel on the following cases : 1. ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 (SC) 2. L. Hirday Narain v. ITO [1970] 78 ITR 26 (SC) 3. CIT v. Ramendra Nath Ghosh [1971] 82 ITR 888 (SC) 4. CIT v. Poonam Chand Manmal Trust [1988] 171 ITR 153 (Raj.) 5. Jaipur Mineral Development Syndicate v. CIT [1977] 106 ITR 653 (SC) 6. K. R. Venkitaperumal Raja v. CAIT [1992] 193 ITR 213 (Ker.) 7. Shah Sohonie Co. v. State of Rajasthan [1994] 208 ITR 321 (Raj.) 8. Surajmull Ghanshyamdas v. Samadarshan Sur AIR 1969 Cal. 109 9. Textile Machinery Corpn. Ltd v. Board of Revenue [1981] 48 STC 426 (Cal.) 10. Income-tax Laws by Sampat Iyengar VIII th Edn., 56, 53. 4. We find sufficient force in Mr. Ranka's very lucid, logical and learned arguments. 5. Sections 254 and 256 of the Act read as under : " 254 (1) The Appellate Tribunal may, after givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny such requisition, the Appellate Tribunal shall state the case and refer it accordingly. (3) Where in the exercise of its powers under sub-section (2), the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives notice of such refusal withdraw his application, and, if he does so, the fee paid shall be refunded." 6. A comparable study of the two sections, viz., sections 254 and 256 show that whereas in the language of section 254(1) the words' after giving both the parties to the appeal an opportunity of being heard' have been used, no such words have been used in the language of section 256. The reason for the absence of those words or other words conveying the same sense and casting duty on the Tribunal to hear the parties to the application under section 256 seems to be that once such an application has been presented before the Tribunal by either of the parties, the same can be disposed off in any of the three ways contemplated in the three sub-sections of section 256. On reading sub-section(1) along with the proviso thereunder it comes out that an application wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state the case it cannot dispose the application otherwise than on merits. It is required to hold that no question of law arises out of its order under section 254(1) and if one arises it is not fit for reference for one or the other reason like the question being of academic interest only as the law thereupon is well-settled by the statute itself or by the judicial pronouncement by the jurisdictional High Court or the apex court, whose decision is the law of the land under Article 41 of the Constitution of India. In any case the Tribunal is required to dispose off the application under section 256 on its own merits and not to dismiss it for absence of the applicant. The question arises whether in the disposal of the application under sub-section (2) of section 256, the applicant has a right of being heard. The right given to an applicant to move the High Court under section 256(2) for the same relief which has been refused to him by the Tribunal by not stating the case may suggest that in the presence of that right, it was not considered necessary by the Legislature to use the same words as were used in the language of section 254(1) with regard to the right of parties of being h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that Rule 19 specifically provides that the Tribunal shall notify to the parties specifying the date and place of hearing of the appeal and send a copy of the memorandum of appeal to the respondent either before or with such a notice. Sub-rule (2) of Rule 19 speaks over the extent of effect of the notice. The Rule 20 again provides that the date and place of hearing of the appeal shall be fixed with reference to the current business of the Tribunal and the time necessary for the service of the notice of appeal, so as to allow the parties sufficient time to appear and be heard in support of or against the appeal. Reading both these rules together it becomes quite clear that it is obligatory on the part of the Tribunal to notify to the parties specifying the date and place of hearing of the appeal and also to effect service of the notice of appeal upon them and to allow sufficient time to them to appear and be heard in support of or against the appeal. A right of a party in an appeal of being heard, is therefore, statutorily recognises in rules 19 and 20 which are applicable to the applications under section 256(1), whose procedure is governed by Rule 37 of the Rules, 1963. Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the default of the applicant. Rules 19 20 read with Rule 37 of the Rules, 1963 seem to support that conclusion and carry out the purpose of those substantive provisions of the Act. We, therefore, hold that before disposing off an application under section 256(1), it is obligatory on the part of the Tribunal to allow proper opportunity of being heard to the parties and for that purpose to serve a notice of hearing upon them as required by rule 19(1) of the Rules, 1963. 13. In the instant case, it is an undisputed position that the notice of hearing sent to the applicant was returned by the postal authorities with the remark 'left'. The ld. D.R. contended that the service of the notice was sufficient but Mr. Ranka, on the basis of several authorities and provisions under different laws, submitted that the service of the notice effected in the manner it has been done in the present case was not proper service of such notice. Section 282 of the Act says that a notice or requisition under the Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure. This section, therefore, requires that a notice or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the General Clauses Act, 1897 in favour of the service of the posted letter on the addressee. This view finds support from the Calcutta High Court decisions in the cases of Textile Machinery Corpn. Ltd. and Surajmull Ghanshyamdas. Since in the present case, the postman had returned the notices sent by the Tribunal to the applicant with the endorsement 'left', no effective service of the notice on the applicant took place. Once the service of the notice of hearing is held to have not been effected as per requirement of Rules 19 20 of the Rules, 1963, the Tribunal has no jurisdiction to decide the appeal for the absence of the applicant. Where the service of notice was not found in accordance with the law it cannot be said that the assessee had been given a proper opportunity to put forward his case as required by Rule 20 of the Rules, 1963. The question, therefore, arises whether the application of the applicant dismissed for his absence may be restored for hearing. If so, under what provisions of law ? 16. In the case of M.K. Mohammed Kunhi, the Supreme Court observed that section 254 of the IT Act, 1961, which confers on the Appellate Tribunal powers of the widest amplitude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings." 18. The decisions in Jaipur Mineral Development Syndicate's case, Poonam Chand Manmal Trust's case and Shah Sohonie Co.'s case all mentioned above, advance the same proposition laid down by the Supreme Court in L. Hirday Narain's case. In the case of K.R. Venkitaperumal Raja, the Kerala High Court observed that equity is the life of a legal fiction and the fiction should be limited to the purpose for which it is created. Section 64(1) of the Kerala Agricultural Income-tax Act, 1950, created a legal fiction for definite purpose, namely, for the service of a notice on a person. If the registered letter was received back through the post office stating that it could not be delivered to the addressee or the addressee was dead when the letter was taken, the presumption stood rebutted and the presumption afforded by section 64(1)(c) regarding due service of notice would not be available. 19. Judged in the light of the proposition of law laid down by apex court on the subject, the answer to the question posed by us above becomes quite simple. In the instant case, the service of the notice was not proper and, therefore, no opportunity of being heard was given to the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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