TMI Blog2011 (8) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... nal and not waiting till the matter is finally decided by the High court eases the situation. The mere fact that a superior authority is seized of an issue identical to the one before the lower authority, there cannot be any impediment on the powers of the lower authority in disposing off the matters involving such issue as per prevailing law. Decided against the Assessee. - ITA No. 4977/Mum/2009: - - - Dated:- 10-8-2011 - D. Manmohan, R.S. Syal, N.V. Vasudevan, JJ. Sanjiv Dutt for the Appellant S.E. Dastur and Niraj Seth for the Respondent ORDER R.S. Syal, J. 1. The Hon'ble President of the Income Tax Appellate Tribunal, on a reference made by the Division Bench, has constituted this Special Bench by posting the following question for our consideration and decision:- Whether in the facts and circumstances of the case, the Assessing Officer was right in adding the amount of liabilities being reflected in the negative net worth ascertained by the auditors of the assessee to the sale consideration for determining the capital gains on account of slump sale? 2. The factual matrix of the case leading to the recommendati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such recommendation, the Hon'ble President constituted this Special Bench for giving opinion on the question extracted above. 4. The hearing of the Special bench was fixed for 27.07.2011 with notice to the parties. On receipt of notice, the assessee vide its application dated 20th July, 2011 addressed to the Hon'ble President submitted that the Goa Bench of the Hon'ble Bombay High Court has admitted an appeal involving same issue in the case of Zuari Industries Ltd. (supra). It was requested that the reference made to the Special Bench be withdrawn as in certain other cases in the past the reference to the Special bench was withdrawn when the Hon'ble High Court had taken steps to decide the issue. The said application of the assessee was disposed off by the Hon'ble President with the remarks: Place before the Special Bench for consideration . 5. At the time of hearing, Shri S.E.Dastur, the learned Senior Counsel for the assessee raised the same preliminary objection to the effect that the reference to the Special Bench be withdrawn as the Hon'ble Bombay High Court has admitted identical question of law in the case of Zuari Industries Ltd. (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 (SC)] in which it was held that the President of the tribunal has ample power to refer a case to Larger Bench when the Members of the Bench doubt an earlier decision of another Bench. For the same proposition he relied on the judgment of the Hon'ble Gujarat High Court in the case of Affection Investments Ltd. vs. ACIT [(2010) 326 ITR 255 (Guj.)] in which it has been held that a subsequent Bench has no right or jurisdiction to record a decision entirely contrary to one reached by another co-ordinate Bench on the same set of facts and circumstances. The only course open to the co-ordinate Bench in such circumstances, as per the Hon'ble High Court, is to make reference to the President of the Tribunal as provided in section 255(3) to constitute a Special Bench to resolve the controversy. It was also argued that the act of the President of the Tribunal constituting a Special Bench is an administrative act and if any party is aggrieved against such administrative decision, then the proper way out is to approach some higher judicial forum. It was, therefore, requested that the preliminary objection raised by the assessee be rejected. 7. We have heard the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same lines is the judgment of the Hon'ble Gujarat High Court in Affection Investments Ltd. (supra). In this case the Tribunal recorded that the facts before it were identical to another case. Thereafter the Tribunal took a different view for various reasons stated in the order. The Hon'ble High Court held that: Once the Tribunal had come to the conclusion that the fact situation was identical to the one obtaining in a decided matter, no co-ordinate Bench of the Tribunal has any right or jurisdiction to record a contrary decision, entirely contrary to the one reached by another co-ordinate Bench of the same Tribunal on same set of facts and circumstances. The Hon'ble High Court further observed that the only course open to the subsequent co-ordinate Bench would be to make a reference to the President of the Tribunal as provided in section 255(3) of the Income tax Act, 1961 to constitute a Special Bench to resolve the controversy. 10. The Hon'ble jurisdictional High Court in the case of CIT vs. Goodlass Nerolac Paints Ltd. [(1991) 188 ITR 1 (Bom.)] has also held that a subsequent Bench of the Tribunal should not come to a conclusion totally contradicto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act as a speed breaker on the thinking process and flow of thoughts. The Members have freedom to doubt the correctness of an earlier decision in deserving cases from their own point of view. If after due application of mind the subsequent Bench comes to the conclusion that it cannot agree with the earlier view, it should not straight away proceed to record a conflicting decision. In such a situation the subsequent Bench is empowered or rather duty bound to make a reference to the President on the point they perceive to be an error of law in the earlier decision. The Larger Bench is then made up to consider the correctness of the earlier decision on the facts and circumstances of the case before it. The decision thus arrived at by the larger wisdom becomes a binding precedent for all other Benches across the country unless there is a contrary judgment of the Hon'ble jurisdictional High Court on the point. After such order, no Division Bench can or should question the correctness of view taken by the Special Bench. 13. The learned Counsel for the assessee has raised objection to the continuation of the Special Bench on the ground that similar question of law has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed three judgments including that of the Hon'ble Supreme Court and that of the Hon'ble jurisdictional High Court do not permit subsequent Bench of the Tribunal to take a contrary view from the one expressed by an earlier Bench. Contemplate a situation in which an earlier Bench decides an issue in favour of one party, be it the Revenue or the assessee and the aggrieved party appeals against the said Tribunal order which is admitted by the Hon'ble High Court. Suppose similar issue comes up before a subsequent Bench which finds itself unable to endorse the view taken by the earlier Bench. The only course open to the subsequent Bench, as per the afore-stated three judgments, is to make a reference to the President for the constitution of a Special Bench instead of recording a contrary decision at its own. On the constitution of the Special Bench if an argument is taken that since the substantial question of law has been admitted by the Hon'ble High Court against the earlier order of the Tribunal and hence such reference be withdrawn, there would be a deadlock. The subsequent Bench would land itself in a quagmire, being neither in a position to swallow the earlier view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 255(3) consisting of three or more members for the disposal of any particular case. 18. Thus it can be noticed that the constitution of the special bench eases the situation in a case where the subsequent bench finds itself unable to endorse the view taken by the earlier bench on the point. The order of the Special Bench helps in providing consistency qua different benches of the tribunal until the matter receives consideration of the higher judicial forums. It is further pertinent to note that the practice, similar to the constitution of special bench by the tribunal to resolve a possible conflict in the views amongst various benches of the tribunal and not waiting till the matter is finally decided by the High court, is also uniformly followed by the High Courts as well. Whenever a view is taken on a point by a Bench of a High Court and the subsequent Bench of the same High Court finds it difficult to accept the same, the practice is to refer the matter to the Chief Justice of the concerned High Court for constitution of a Larger Bench. Notwithstanding the fact that SLP against the judgment of its earlier Bench has been admitted by the Hon'ble Supreme Court, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of same strength, the controversy is referred to a Larger Bench. It can be noticed from the judgment of the Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Textile Processors [(2007) 212 CTR (SC) 432] that when the question of penalty came up before it, an earlier judgment in the case of Dilip N.Shroff vs. JCIT and Anr. [(2007) 291 ITR 519 (SC)] was cited in which the view was taken in assessee's favour. Finding it difficult to approve the earlier view in Dilip N. Shroff (supra), the matter was placed before the Larger Bench to take a final decision, which has since been decided in Union of India and Ors. vs. Dharmendra Textile Processors and Ors. [(2008) 306 ITR 277 (SC)]. 21. In the name of precedents, the ld. Sr. AR in support of his objection, apart from relying on certain administrative orders passed by the Hon'ble President, has relied on the solitary case of Harsha A Bhogle (supra). That case rested on the facts in which the tribunal decided the issue against the assessee in his own case in the earlier year. When the subsequent year came up for hearing, the assessee came out with a request that a special bench be formulated on the subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult to accept and adopt the view taken by the earlier bench, the only course open to it is to make a reference for the constitution of the Special Bench. Our view is fortified by the Special Bench order in the case of Daks Copy Services Pvt. Ltd. vs. ITO [(1989) 30 ITD 223 (Bom.) (SB)]. In that case the point in question was decided against the assessee in an earlier year. When the subsequent year of that assessee came up before the next Bench, it was noticed that a contrary view was also available. In order to resolve this conflict a Larger Bench of three Members was formed. In that case also a preliminary objection was raised on behalf of the Revenue that since the point in controversy was already decided against the assessee by the Tribunal in an earlier year and such matter was pending before the Hon'ble High Court, the same view should be followed in the subsequent assessment years as well and as such there was no need for a Special Bench. Repelling this contention, the Special Bench held that when the subsequent Bench was not convinced with the earlier view, the constitution of the Larger Bench for resolving the conflicting decisions of the benches of the Tribunal was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view likely to be taken against it. Now it is pressing that the reference to the special bench be withdrawn and the case be heard by the Division Bench so that the earlier view in the case of Zuari Industries Ltd. (supra) may be pressed in to service once again. We are unable to find a solution to the likely problem to arise if the assessee's contention is accepted and the special bench is deconstituted and again the DB finds itself unable to agree with the earlier view. Will the assessee in that case again request the DB to make a reference for the constitution of Special Bench and on such constitution will again request to dismantle it? Law does not permit a person to both approbate and reprobate. When the Special Bench has actually been constituted at the plea of the assessee, now the assessee can not turn around and argue that the Special Bench be deconstituted. We do not approve such a vacillating stand of the assessee. 26. It is beyond our comprehension as to what difference it makes to the assessee when his case is heard by the Division Bench or the Special Bench. The hearing by the special bench inter alia, is only to regularize the working of the tribunal aimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the High Court under section 260A or in appeal before the Supreme Court under section 261]. (2) Where a declaration under sub-section (1) is furnished to any appellate authority, the appellate authority shall call for a report from the [Assessing] Officer on the correctness of the claim made by the assessee and, where the [Assessing] Officer makes a request to the appellate authority to give him an opportunity of being heard in the matter, the appellate authority shall allow him such opportunity. (3) The [Assessing] Officer or the appellate authority, as the case may be, may, by order in writing,:- (i) admit the claim of the assessee if he or it is satisfied that the question of law arising in the relevant case is identical with the question of law in the other case; or (ii) reject the claim if he or it is not so satisfied. (4) Where a claim is admitted under sub-section (3), - (a) the [Assessing] Officer or, as the case may be, the appellate authority may make an order disposing of the relevant case without awaiting the final decision on the question of law in the other case; and (b) the assessee shall not be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (4), it becomes vivid that the Tribunal is not supposed to stop hearing of subsequent case simply on the ground that the decision rendered by it in the earlier year involving the same question of law is awaiting consideration by the Hon'ble High Court. Albeit section 158A is activated at the instance of the assessee to circumvent the situation of approaching the High Court against the order of the tribunal in the subsequent case as well involving similar question decided adversely by the tribunal in its own earlier case which is pending before the Hon'ble High Court, the underlying rationale is discernible that the functioning of the tribunal should not close down merely on the ground that the similar question of law is under consideration of the Hon'ble High Court in the same case or an other case. If the contention raised by the learned A.R. is accepted that the Tribunal should desist from hearing the matter in special bench on the substantial question of law which is awaiting adjudication by the Hon'ble High Court, then the provisions of section 158A shall become redundant. The very presence of this section in the Act amply demonstrates that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
