Sanchayita Lahkar

The High Court of Kerala Single Bench of Justice Ziyad Rahman A.A. delivered a judgment on 30 May 2025, wherein it quashed an order issued by the National Faceless Appeal Centre. The impugned order had rejected a taxpayer's appeal solely due to his non-appearance, without addressing the merits of the case or the issues raised in the appeal.

The Court directed the appellate authority to reconsider the appeal in compliance with the statutory mandate under Section 250(6) of the Income Tax Act, 1961. The judge found that the challenged order failed to fulfil the legislative requirement of stating the "points for determination, the decision thereon and the reasons for the decision."

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The direction was issued with a time-bound mandate that the reconsideration be completed within three months from the receipt of a copy of the judgment. The Court made it clear that there exists no statutory provision allowing for the dismissal of an appeal solely on the ground of non-appearance. Consequently, the Court concluded that the original appellate order was invalid and required reconsideration on the merits.

The petitioner, a 64-year-old former employee of ICICI Bank, had opted for voluntary retirement during the assessment year 2004–05. As part of the retirement scheme, he received compensation amounting to Rs. 4,52,814. In the income tax return filed for the relevant year, the petitioner claimed relief of Rs. 24,353 under Section 89(1) of the Income Tax Act, 1961.

Subsequently, the petitioner filed a rectification application, seeking exemption of the received compensation under Section 10(10C) of the Income Tax Act. The application for rectification was rejected by the assessing officer. The petitioner, thereafter, approached the Principal Commissioner of Income Tax (the second respondent) with a revision petition challenging the rejection. The revision authority dismissed the petition and advised the petitioner to pursue appellate remedies.

Following the rejection, the petitioner filed an appeal before the Commissioner of Income Tax (Appeals), functioning under the National Faceless Appeal Centre (the first respondent). This appeal culminated in the issuance of Ext.P1 dated 27 June 2022, wherein the appeal was dismissed. The order primarily cited the petitioner's repeated non-appearance despite several notices and opportunities for hearing.

Challenging the said order, the petitioner approached the High Court of Kerala via the present writ petition, contending that the appellate authority had failed to discharge its statutory obligation under Section 250(6) of the Income Tax Act. It was argued that the appellate order did not address any of the issues raised in the memorandum of appeal and merely recorded the non-appearance of the appellant as the basis for dismissal.

The petitioner argued that Section 250(6) mandates that an appellate order must be in writing and must include the points for determination, the decision on those points, and the reasons for the decision. According to the petitioner, the appellate authority failed to satisfy these requirements.

The petitioner was represented by Advocate Sanjana R. Nair. On behalf of the respondents, Standing Counsel Jose Joseph appeared and submitted that the petitioner was issued several notices and was given repeated opportunities to be heard. The counsel submitted that the appeal was dismissed due to the petitioner's non-response and failure to attend the scheduled hearings. He further contended that Ext.P1 included reasons for the dismissal and was compliant with Section 250(6).

Justice Ziyad Rahman A.A. noted that "the 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." In evaluating the submissions and the contents of Ext.P1, the Court examined whether the order met the conditions laid out under Section 250(6).

The Court recorded that Ext.P1 included reasons related solely to procedural issues such as non-appearance, rather than addressing the substantive grounds raised in the appeal. The Court observed: "none of the reasons which formed the basis of the rejection of the appeal were related to the merits of the contentions raised by the petitioner in the appeal."

The Court then interpreted the meaning and intent of Section 250(6) by stating: "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."

Referring to the phrase "points for determination," the Court stated: "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 held that the appellate authority had a legal duty to examine and decide upon the issues raised in the memorandum of appeal.

The Court stated that Section 250 does not contain any provision permitting rejection of an appeal merely due to non-appearance. The judgment recorded: "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." It was further observed: "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)."

The Court concluded its observations by affirming that Ext.P1 did not meet the statutory standards and hence could not be sustained. It remarked: "Ext.P1 order cannot be treated as an order passed in tune with the statutory requirements and therefore, it requires reconsideration."

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The High Court disposed of the writ petition by issuing specific directions. Referring to the impugned order, the Court held: "Therefore, I am of the view that, Ext.P1 order cannot be treated as an order passed in tune with the statutory requirements and therefore, it requires reconsideration."

"In such circumstances, 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."

The Court further mandated a timeline for completion of the reconsideration process. It ordered:

"The same shall be done within a period of three months from the date of receipt of a copy of this judgment."

Advocates Representing the Parties:

For the Petitioner: Advocate Sanjana R. Nair

For the Respondents: Standing Counsel Jose Joseph

Case Title: Anandan N. v. Commissioner of Income Tax (Appeals) & Ors.

Neutral Citation: 2025: KER:37940

Case Number: WP(C) No. 11709 of 2023

Bench: Justice Ziyad Rahman A.A.

[Read/Download order]