TMI Blog2008 (4) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... to call for the records relating to the order passed by the Third Member, namely, the second respondent in ITA No.2943/MDS/1993 for the Assessment year 1990-91 on 3.12.99 and quash the same as being ultra vires the provisions of Sec.255(4) of the Income Tax Act (hereinafter referred to as the I.T. Act) and also opposed to the principles of natural justice and consequently issue a Mandamus directing the present incumbent President of ITAT within a reasonable time as this Court may deem fit to refer the matter to a 3rd Member including himself or any other member nominated by him and request such 3rd Member or other members of the ITAT to decide on which of the point or points they agree which have already been referred to by the two differing Members as per the questions formulated by them under Section 255(4) on 22.10.97 and dispose of the matter within such time. 2. W.P.No.2281 of 2008 is filed by the petitioner seeking the relief of issuance of writ of certiorari to call for the records comprised in the proceedings of respondents 1 and 2 bearing P.A.N.No.AAACD8639F dated 21.1.2008 and quash the same as illegal and unconstitutional. 3. W.P.No.2282 of 2008 is filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A sum of Rs.3,34,13,072/- was paid to the Customs department at the time of filing the return on 31.12.1990. On that fact the allowed deduction of the said amount under Section 43-B of the Act and disallowed the balance amount of Rs.1,24,94,666/- and included the same to the income of the assessee. Thus, the Assessing Officer has determined the total income at Rs.1,03,46,480/- by his order dated 31.3.1993. Aggrieved by that order, the assessee filed an appeal to the Commissioner of Income Tax (Appeals). The C.I.T(A) dismissed the appeal, confirming the order of the Assessing Officer. Aggrieved by that order, the assessee filed an appeal before the Income Tax Appellate Tribunal, where difference of opinion arose between the Judicial Member and the Accountant Member. The Judicial Member was of the view that the assessing officer was wrong in taking the aid of Section 43B of the Act and adding the balance customs duty of Rs.1,24,97,664/- to the total income. The Accountant member has taken a view that the assessee admitted the amount of Rs.4,59,10,736/- as customs duty, which formed part of value of the closing stock of Rs.15,82,96,112/-. The Judicial Member stated the diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of difference of opinion between the Judicial Member and the Accountant Member. He has to consider only the difference of opinion stated by the Members. So, the Third member is wrong in formulating the questions on his own and deciding the case as against the assessee. It is therefore, submitted that the order passed by the Third Member is illegal and without justification and the same should be quashed. Learned counsel also submitted that since the Third Member exceeded his jurisdiction, the order passed by him has to be set aside with a direction to the Third Member to reconsider the matter afresh and also further direction to the Third Member to consider only the difference of opinion stated by the respective Members. 12. Learned counsel appearing for the Revenue submitted that even though the Third Member re-framed the difference of opinion, the sum and substance of the issue involved is the same, therefore, the order of the Third member is in conformity with law and the same should be affirmed. She further stated that in view of the framing the new issues by the Third Member, she has no objection to remand the matter with a direction to the Third member to consider only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. The Third Member in para 2 of the order has held as follows: "2.When there is difference of opinion even while identifying the differences between the Members of the Division Bench, what is to be done was earlier decided by me as a Third member in a case now found reported in (1999) 238 ITR 103 (ITAT -Section). At page 125 of the reported decision, after extracting the provision of Section 255(4) of the Income Tax Act, I held that in such a case the solution should be found out as follows: "It would show that the point or points of difference shall be referred by the President to a third Member. Suppose, if there is no unanimity even in identifying the point or points of difference among the differing Members, just like in this case, then I feel it is the duty of the President to identify the real points of difference and refer them to a Third Member whom he may appoint under the powers given to him under Section 255(4)." Then, I identified the real differing points between the differing Members and formulated them for decision of the Third Member, similarly following the said precedent, which was not either dis-approved or set aside by the Hon'ble High Court or Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to giving of a decision on the point on which the members had differed and which has been formulated them as a question for the decision of a third member. In this case, the third member has proceeded on the basis that the question referred by the two members of the Tribunal is wide enough to enable the assessee to raise additional points and, therefore, the additional points pressed by the assessee should be considered. Even so, we are of the view that the third member should have pronounced his opinion on the point of difference as also on the additional points raised by the assessee. But without doing so, the third member has remitted the matter to the original two members of the Tribunal for a fresh decision. We are of the view that the third member, who is functioning under Section 255(4) of the Act does not have such a power as to direct the two members of the Tribunal who had differed on the point referred to the third member, to decide a particular point or act in a particular manner. Such a power vests only with an appellate or revisional authorities, if there are any. The power of the third member to whom the points of difference have been referred cannot act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two members of the original Tribunal. In this case, as already stated, without giving his decision on any of the points the third member has merely remitted the matter to the two members of the Tribunal for a fresh consideration on all the points. We do not see how the third member to which the point of dispute is referred under S.255(4) can claim to have any larger power than the two members who originally constituted the Tribunal. The third member has no higher power or jurisdiction than the members who originally constituted the Tribunal, and therefore, the remit order directing them to rehear the matter will be clearly outside the jurisdiction of the third member. Hence, we cannot sustain legally the order of the third member, in this case, remitting the matter to the two members of the original Tribunal without expressing any opinion on the question which he had to consider." 16. Similar view was also taken by the Allahabad High Court, in the case of JAN MOHAMMED VS. COMMISSIONER OF INCOME TAX (1953) 023 ITR 0015, and considered the scope of provision of 5A(7) of the Act, corresponding to Section 255(4) of the new Act, wherein it was held that the third member c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall nominate the Member of the Tribunal to hear the matter and give his opinion on the points. 18. With this observation, the W.P.No.7060 of 2000 is disposed of. No costs. Consequently, WMP No.10483 of 2000 is closed. W.P.Nos.2281, 2282 3135 of 2008: 19. In W.P.No.2281 of 2008, the petitioner has challenged only the summon issued by the first respondent under Section 131 of the Income Tax Act, 1961. In W.P.Nos.2282 and 3135 of 2008, the petitioner has challenged notice issued under Section 226(3) of the Income Tax Act, 1961 dated 21.01.2008. In W.P.Nos.2282 and 3135 of 2008, the respondent served notice under Section 226 (3) of the Act on the bankers of the petitioner viz., The Manager, Indian Overseas Bank, L. B. Road, Thiruvanmiyur Branch, Chennai-41 and the Manager, State Bank of India, Securities and Services Division, Chennai Main Branch, No.84, Rajaji Salai, Chennai-600 001, directing them to pay a sum of Rs.170.84 lakhs towards the tax arrears of the petitioner relating to the assessment years 1981-82, 1984-85, 1991-92 and 1992-93. 20. We have gone through the affidavit filed in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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