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C.I.T., Allahabad v. Indo Traders Corp. Mirzapur - INCOME TAX REFERENCE No. 72 of 1989 [2005] RD-AH 754 (16 March 2005)


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Court No. 37

I.T. R. No. 72 of 1989

Kishan Lal, Bareilly Vs.. The C.I. T. Lucknow.

Hon'ble R.K.Agrawal, J.

Hon'ble Prakash Krishna, J.

The Income Tax Appellate Tribunal, New Delhi has referred the following question of law under Section 256 (2) of the Income Tax Act, 1961, hereinafter referred to as the Act in respect of R.A. No. 445 to 454 (Del)/1985 and R.A. No. 1251(Del)/1985 for opinion to this Court.

1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in disposing of the appeals in an exparte manner by hearing the Departmental Representative only on 16/1/1985 thereby denying the applicant's valuable right of being heard?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the income from property 87 Civil Lines, Bareilly, and the income from furniture hiring etc. belong to and was assessable in the hands of the applicant- individual and not in the hands of applicant's HUF particularly when the Notary had confirmed the execution of Declaration on 31/3/1968 and the Tribunal had in the wealth tax cases of the applicant also held that the property and the business were the ownership of applicant's HUF?

3. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the estimates of sales made by the Appellate Assistant Commissioner and application of net rate of 16% thereon to arrive at the net income from applicant's business in the business of furniture carried on under the name of M/s. Jagat Furniture House in the assessment years.?

4. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in rejecting the Misc. Application dated 27/5/1985by refusing to recall its consolidated order dated 29/1/1985 particularly when the assessee had proved reasonable cause for not appearing before the Hon'ble Tribunal on 16/1/1985.?"

The reference relates to the assessment years 1970-71 to 1979-80.

We have heard Sri Vikram Gulati, learned counsel for the applicant/assessee and Sri A.N. Mahajan, learned Standing Counsel for the Revenue.

We are taking up the question referred to us in R.A. No. 1251 (Del.)/1985 first as suggested by the learned counsel for the applicant. The facts giving rise to the aforesaid question are as follows :-

Before the Tribunal hearing of the appeals were taken up on 2nd January, 1985 by the Bench consisting of Sri S.P. Kapoor and Sri B. Gupta, the learned Members. As the arguments could not be concluded on that date and certain clarification was noted and the hearing was adjourned for 16th January, 1985. It may be mentioned that on 2nd January, 1985 the applicant was represented by his counsel Sri Dinesh Kumar Agrawal. However, on 16th January, 1985 no body appeared on behalf of the applicant and the Tribunal heard the departmental representative on behalf of the Revenue and decided all the appeals exparte. It had allowed the appeals filed by the Revenue in part and had rejected the cross objections and appeals filed by the application. Thereafter an application dated 7th May, 1985 was filed by the applicant before the Tribunal seeking recall of the order dated 29th January, 1985 passed by it and to hear and decide the appeals on the cross objections. The said application was rejected by the Tribunal vide order dated 13th August, 1985. It may be mentioned here that in the application for recall  the applicant has specifically stated that under some misapprehension his counsel Sri Dinesh Kumar Agrawal, Advocate, who had got information from his another client namely, M/s Goyal Associates, Dhampur, whose appeal was also fixed before the same Bench of the Tribunal on 16th January, 1985 that the Tribunal would not be sitting on that date and, therefore, he felt that the applicant's appeal and the cross objections would also not be taken up on 16th January, 1985. It was further stated in the application that in fact the applicant had got a berth in Ist Class reserved from Bareilly to New Delhi in 157 Up for 15.1.1985 notwithstanding the fact that his wife was seriously ill and she ultimately expired. On 18th January, 1985, and as the  information was received by Sri Dinesh Kumar Agrawal, as a prudent man it was decided that there was no need to proceed to Delhi and the reservation was got cancelled. In these circumstances neither the applicant nor his counsel could appear on 16.1.1985 before the Tribunal. Along with the application a certificate issued by Sri Dinesh Kumar Agrawal and the medical certificate was also filed. The applicant had also enclosed confirmatory certificate issued by the Station Master, Railway Station Bareilly on his application dated 21st March, 1985 certifying the reservation of one berth in Ist Class compartment from Bareilly to New Delhi by 157 Up and its cancellation on 15th January, 1985 at 6.00 p.m. The Tribunal vide its order dated 13th August, 1985 did not advert to the certificate issued by the Railway authorities and also disbelieved the certificate given by the counsel Sri Dinesh Kumar Agrawal on the ground that he was not a counsel in the case of M/s Goyal Associates of Dhampur, which was represented by some other counsel. The whole approach of the Tribunal has resulted in miscarriage of justice. It has to be remembered that the Tribunal has been created under the Act for deciding the disputes between the parties in accordance with law on merits. In the present case the Tribunal ought to have taken a humanitarian approach on the application for recall filed by the applicant, specially when the applicant had proved by documentary evidence that he had got a berth reserved in the train for attending the hearing of the appeal on 16.1.1985 and subsequently on the information given by his counsel that the Bench would not be sitting, even though the said information was given under some misapprehension he got the reservation cancelled. This shows bonafide of the applicant. Further the Tribunal had misdirected itself in disbelieving the certificate issued by the applicant's counsel Sri Dinesh Kumar Agrawal on the ground that he was not the counsel in the case of M/s Goyal Associates of Dhampur. It is  well settled practice that the counsel keep on changing and it is not necessary that the same counsel who had filed appeal before the Tribunal would also argue the same. It is at the discretion of the litigant to engage another counsel at the time of hearing of the appeal, which right can not be taken away. It might have been that the applicant's counsel Sri Dinesh Kumar Agrawal had been engaged to appear and argue in the appeal of M/s Goyal Associates, Dharmpur fixed before the Bench of the Tribunal at Delhi on 16.1.1985. As the information was passed on that the said Bench would not be sitting  the case of M/s Goyal Associates, Dhampur would not be taken up, as a prudent man Mr. Dinesh Kumar Agrawal has advised his client for not proceeding to Delhi, the steps taken by the applicant can not be said to be wholly without any cause. It was the act of a prudent man and, therefore, the applicant was prevented by sufficient cause for not attending the hearing fixed for 16.1.1985 before the Tribunal. Even though on 16.1.1985 there was no application for adjournment on behalf of the applicant before the Tribunal and the Tribunal was justified in proceeding with the hearing of the appeal, but when an application had subsequently been filed giving reasons for not appearing on the date fixed i.e. 16th January, 1985 it was incumbent upon the Tribunal to consider the same sympathetically, if the reasons mentioned therein are bonafide and the applicant was prevented by sufficient cause from appearing on that date. In these circumstances the Tribunal ought to have recalled its order dated  29th January, 1985 and hear the appeal de novo and in not doing so a miscarriage of justice has resulted, which ought to be avoided at all costs.

In view of foregoing discussion, we answer the aforesaid question in the negative i.e. in favour of the assessee and against the Revenue. In view of our answer to the aforementioned question of law, it is not necessary for us to give our opinion to other three questions of law referred to us arising out of RA No., 445 to 454 (Del)/1985, which have been rendered academic and are returned unanswered. However, the parties shall bear their own costs.

Dt. 16.03.2005



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