Facts of the Case

1. Ex-parte assessment order for FY 2015-16 was issued by the UPVAT Authority on 31.03.2019.
2. Assessee filed the appeal on merits against said order as well as filed an application to set aside the assessment order.
3. On 31.12.2019, assessee withdrawn its appeal under impression that assessing authority will allow the application to set aside the assessment order. First appellate authority accordingly allowed withdrawal of the appeal.
4. On 19.01.2021, the application for re-opening of assessment order was rejected by the assessing authority.
5. Thereafter, recovery proceedings were initiated against the assessee.

Question for consideration

1. Whether first appellate authority can re-store the appeal earlier withdrawn on 31.12.2019?
2. Whether second appeal can be filed against the withdrawal order dated 31.12.2019?
3. Whether appeal be filed against order dated 19.01.2021, rejecting the application to set aside the assessment order?

Our Analysis

• Once appeal is withdrawn without permission to file afresh, assessee is precluded from instituting any fresh suit

1. Though the Code of Civil Procedure is not applicable on tax laws, the reference to pari materia provisions always renders needed assistance to arrive at appropriate remedy.
2. As per Order 23 Rule 1 of the CPC, once a suit is withdrawn without the liberty to institute fresh suit in respect of the subject matter of such suit, same cannot be filed in any court.
3. However, there are various decision given in tax matters by various courts, which provides that if the withdrawal was pursuaded or it was taken under coercion or undue influence, the appeal can be re-stored in the original files.
4. In the present case, since the appeal was withdrawn under inducement by the assessing authority to re-open the application to set aside assessment order, the assessee can file a second appeal with a prayer to re-store the first appeal in the files of first appellate authority.

• File appeal against order dated 19.01.2021 rejecting the application to set aside the assessment order

5. The assessee can validly prefer the appeal against order rejecting to set aside the ex-parte assessment order.

• Stay on Recovery

6. In our view, filing of application to set aside the aseessment order does not automatically lead to stay on demand. For claiming the stay, assessee need to approach the appellate authorities by way of filing appeal on merits.

Our Action

1. First appeal filed against the order dated 19.01.2021 rejecting the application to set aside the assessment order.
2. Second appeal was filed before UPVAT Tribunal against withdrawal order dated 31.12.2019 with a prayer to re-store the first appeal on merits as the withdrawal thereof was pursuaded by the assessing authority under an impression to allow the application to set aside the assessment order dated 31.03.2019. A stay application was also filed along with the second appeal.

Orders

1. First appeal was allowed i.e., the assessment order was directed to be re-opened.
2. Since the assessment order was re-opened, the second appeal on merits became infructuous and was accordingly withdrawn.

Benefits to the assessee

1. Recovery proceedings became infructuous as the assessment order was set aside.
2. Generally, the appellate authorities allows the stay application subject to pre-deposit of 20%-30%. Since the first appellate authority issued order before date of hearing on stay application, the situation of ordering pre-deposit did not arise.