TMI Blog2011 (7) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee are directed against the common order dated 31.1.2011 passed by learned CIT(A), Visakhapatnam for the years cited (Supra). 2. (a) The assessee is challenging the order of Learned CIT(A) on various issues with the plea that all the issues raised by the assessee were decided by the Jurisdictional ITAT in the assessee s own case, vide its order dated 08-01-2010 in ITA Nos.272 to 274/Vizag/2005. (b) The assessee has also raised following ground seeking cost for not following the order of the Jurisdictional ITAT: The learned CIT (Appeals) has committed contempt of the Hon'ble ITAT Vizag Bench by his decision in not following the order of the jurisdictional Bench of ITAT in the same assessee s case on the same issues and thereby it is prayed that exemplary cost should be awarded in terms of subsection (2B) of section 254 of Income tax Act, 1961 for forcing this assessee to file this appeal . 3. The facts relating to the case are stated in brief. The assessee is a trust formed in January 1994 by two trade associations viz., M/s Visakhapatnam Stevedores Association and M/s Customs clearance and Forwarding Agents Association, with an objective of regulating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to its interest. To err is human. Any authority, howsoever senior, may commit mistake and, therefore, nobody is infallible. If registration u/s 12A is erroneously granted by the concerned Commissioner, without appreciating that the true import of the declared predominant object is commercial and not charitable in nature, as could be found out during the course of the assessment proceedings, it would be a travesty of justice to accept the non-charitable objects coupled with lack of any charitable activity as charitable in nature and confer the benefit of exemption u/s 11 of the Act. In this view of the matter, the then Commissioner of Income-tax, Visakhapatnam, who had granted registration to the appellant trust may have committed an error in overlooking the business nature of the dominant objective of the appellant trust. But justice cannot be sacrificed on the altar of technicalities, and, hence, the action of the assessing officer, in refusing exemption to the appellant on the ground, interalia, of the predominant object being non-charitable in nature is, hereby, strongly, upheld. (iii) It appears that at the time of hearing of the quantum appeals of the appellant for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me tax Appellate Tribunal in the judicial hierarchy of our country. The Hon'ble Supreme Court, in the case of Ajay Gandhi Vs. B.Singh (2004) (265 ITR 451), has discussed about the status of the Income tax Appellate Tribunal as under: The Appellate Tribunal constituted under the Act is not an income tax authority. It is the ultimate fact-finding authority under the Act and only a reference to the High Court or this Court on a question of law from its order can be made (see Udhavdas Kewalram V CIT (1967) 66 ITR 462 (Supreme Court)) . The position of the Appellate Tribunal is the same as of a court of appeal under the Civil Procedure Code and its powers are identical with the powers enjoyed by the appellate court there under (see New India Life Assurance Co. Ltd Vs. CIT (1957)(31 ITR 844 (Bom)) . The Income tax Appellate Tribunal exercises judicial functions and has the trappings of a court. 5.1 In the case of ITAT Vs. V.K.Agarwal (235 ITR 175 (S.C)), the respondent (Ex-Law Secretary, Ministry of Law and Justice, Government of India) initially raised a technical objection about the status of the Income tax Appellate Tribunal. The observations made by Hon'ble Supreme Court in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted before us by learned senior counsel for the first respondent that although this court may have jurisdiction to punish for contempt, that jurisdiction should not be exercised in the present case. The appropriate authority to take action would be the High Court. We do not see much force in this submission. The Income tax Appellate Tribunal, although it may have Benches in different parts of the country, is a national Tribunal and its functioning affects the entire country and all its Benches. Appeals also lie ultimately to this court from the decisions and references made by the Tribunal. The mere fact that by this court taking suo motu cognizance of the contempt, the first respondent would not be able to appeal to any other court, cannot be a ground for not exercising the power to punish for contempt of a national Tribunal. 5.2 Since the Income tax Appellate Tribunal is exercising judicial functions, it is now settled that it has all powers of Court, i.e. it can issue summons and exercise all the powers vested in the Income tax authorities under section 131 of the Income tax Act. Hence any proceeding before the Income tax Appellate Tribunal shall be deemed to be judicial proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the said case, which is given in the book of Sampath Iyengar s Law of Income tax 10th edition (at page 212), for the purpose of obtaining clarity on the impugned issue: The learned Additional Solicitor General submits that the learned judges have erred in passing severe strictures (1990) 47 ELT 231 (Bom) against the two Assistant Collectors who had dealt with the matter. He submitted that these officers had given reasons for classifying the goods under heading 39.19 and not 85.46 and could do no more. He submitted that they acted bona fide in the interests of Revenue in not accepting a claim which, they felt, was not tenable. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt of Tribunal s order. Similar views have been expressed in Sales tax matters in Rajendra Mills ltd Vs. Jt. CIT (1971) 28 STC 483 (mad), Senthil Raj Metals Vs. GTO (1990) 79 STC 38 (Mad). 6.2 The jurisdictional Hon'ble Andhra Pradesh High Court, in the case of State of Andhra Pradesh Vs. Commercial Tax officer and another (169 ITR 564) had an occasion to discuss about the binding nature of the decision of High Court. It held that the Tribunals functioning within the jurisdiction of a particular High Court in respect of whom the High Court has the power of superintendence under article 227 are bound to follow the decisions of the High Court unless, on an appeal to the Supreme Court, the operation of the judgment is suspended. It further held that it is not permissible for the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal has been filed in the Supreme Court which is pending or that steps are being taken to file an appeal. The Jurisdictional High Court, at page 571, has made a reference to the decision of Hon'ble Bombay High Court in the case of Subramanian, ITO Vs. Siemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appeal against the judgment of this Court and the special leave petition is pending in the Supreme Court; (c) that the Department has not accepted the decision of this Court and is taking steps to file an appeal before the Supreme Court. We have noticed observations to the above effect in the orders passed by the Commercial Tax Authorities, including the Head of the Department, Commissioner of Commercial Taxes, Income-Tax Officers, including the Head of the Department, the Commissioner of Income-tax, Central Excise and Customs Authorities, including the Collector of Central Excise and Customs and a host of other authorities. The question for consideration is whether the authorities below can refuse to follow the judgments of this court on the above grounds . It is clear from the judicial pronouncements above referred to that the authorities and the tribunals functioning within the jurisdiction of this court in respect of whom this court has the power of superintendence under article 227 are bound to follow the decisions of this court unless, on an appeal, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d I hereby do so . 6.5 The Hon'ble Bombay High Court in the case of Bank of Baroda Vs. H.C. Shrivatsava and Another (256 ITR 385) has also dealt with the impugned issue and the relevant observations are extracted below: At this juncture, we cannot resist observing that the judgment delivered by the Income-tax Tribunal was very much binding on the Assessing Officer. The Assessing Officer was bound to follow the judgments in its true letter and spirit. It was necessary for judicial unit and discipline that all the authorities below the Tribunal must accept as binding the judgments of the Tribunal. The Assessing Officer being an inferior officer vis- -vis the Tribunal, was bound by the judgment of the Tribunal and the Assessing Officer should not have tried to distinguish the same on untenable grounds. In this behalf, it will not be out of place to mention that in the hierarchical system of courts which exists in our country, it is necessary for each lower tier including the High Court, to accept loyally the decisions of the higher tiers . It is inevitable in a hierarchical system of courts that there are decisions of the supreme Appellate Tribunal which do not attract the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is possible that the law of judicial discipline discussed above may be lost sight of by some tax officials. Hence, it would be beneficial to all if the same is brought to the notice of all tax officials in periodic intervals so that this kind of unpleasant happenings can be avoided. Accordingly, we direct the learned CIT (Departmental Representative) to bring this order to the notice of the Chief Commissioner and Central Board of Direct Taxes so that they, being the authorities having superintendence over the tax authorities, may take appropriate steps to enlighten all the officials in order to ensure enforcement of judicial discipline in them, which would avoid considerable harassment, if any, to the assessee public. 12. The assessee has sought appropriate costs in terms of sub-section (2B) of sec. 254 of the Act. However, we notice that the said sub-section was introduced only to discourage filing of frivolous appeals. Hence, in our view, we cannot invoke the said sub-section in the instant case. However, the assessee is free to take proper steps for initiating contempt proceeding against the concerned Learned CIT(A). 13. In the instant cases, the appeals have been preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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