TMI Blog2012 (6) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals of the captioned assessee in relation to assessment years 1984-85, 1985-86 and 1986-87. 2. We are taking up the factual matrix for the A.Y. 1985-86 so that the controversy in this batch of appeals could be properly appreciated. This case has a chequered history. As against the returned income of Rs. 3.84 crore, the Assessing Officer passed the assessment order u/s. 143(3) read with sec. 145(2) determining the total income at Rs. 27.96 crore. Following his view taken in earlier years, the AO held that the assessee earned huge unaccounted premium on sale of its popular brand of cigarettes. This premium was held to be collected through a chain of wholesale dealers and wholesale buyers along with retailers, which amount was claimed to have been deposited in fictitious bank accounts operated on behalf of the company. It was further held that a part of such unaccounted premium was utilized in meeting advertising and other expenses not recorded in the books of account. The assessee argued before the ld. CIT(A) that the material collected by the Revenue in the course of various searches and surveys connected with the dispute in question was used without confronting it, which le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. From the above verdict of the Hon'ble Bombay High Court dated 31-07-1995, it is manifest that it contains two directions. The first is regarding the disclosure of material to the assessee and the second about cross examination of witnesses. It is pertinent to mention that the assessee filed a statement in affidavit before the Hon'ble High Court claiming material in respect of 34 items having been used by the Revenue against it without providing opportunity to rebut it. 4. As per chronology of the events, the assessee approached the then Hon'ble President of the Tribunal through a petition dated 20-10-1995 once again alleging bias. This time the target was none other than the ld. Judicial Member who happened to be the author of the tribunal order rejecting the assessee's contention of violation of the principles of natural justice and also dissenting with the other Member in the matter of grant of stay to the assessee. In order to allay the apprehension of bias, the Hon'ble President, having regard to the assessee's said application dated 20-10-1995 and the verdict of the Hon'ble Bombay High Court dated 31-07-1995, constituted a Special Bench vide his order dated 20.06.1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the duty of the present Special Bench to pick up the thread of the proceedings from where it was left by the earlier special bench in this case. In that view of the matter, we are obliged to first give effect to the separate orders of the three ld. members of the earlier Special Bench by passing a confirmatory order and then continue the proceedings thereafter. When this exercise was taken up, both the sides presented diametrically opposite views of the conclusions they perceived as the correct interpretation of the orders passed by the three ld. members of the earlier special bench. It was claimed on behalf of the assessee that a fair reading of these orders indicated that the majority view gives a direction to the Revenue to confront the assessee with the complete material in respect of 31 items. In the oppugnation, the ld. DR submitted that the majority view was not to disclose any further material. At this juncture we want to make it patent that as far as the issue of disclosure of material to the assessee is concerned, in the present order our limited endeavor is only to pass confirmatory order by giving effect to the views already canvassed by the three ld. members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Thus, from the above recording, it is clear that the earlier Special Bench in this case heard the parties only on the question of material to be disclosed in accordance with the undertaking given by the Revenue before the Hon'ble High Court. It neither dealt with the merits of the case nor the question of cross examination of witnesses. In para-2, it has been recorded by the ld. first Member of the Special Bench that "the revenue unexpectedly took the stand that they have no further material to disclose to the assessee . On page 21 of his order, the ld. first Member of the Special Bench has recorded the contention advanced on behalf of the Revenue that it was not necessary to supply the entire material and full text of the statements and thus the disclosure of the gist of the material was sufficient compliance of the directions of the Hon'ble High Court. He also took note of the stand point of the ld. DR before the Bench that : 'Sufficiency of material or manner of disclosure is not provided in the directions of the Hon'ble Court. It was claimed that basis of information has already been disclosed vide different letters referred to in the affidavit of A.O. The information disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch has held that the AO has not made disclosure of material and information relied upon in the assessment order. He held that the Revenue must now confront the assessee with the material and basis of various conclusions as demanded by the assessee in written affidavit filed before the Hon'ble High Court (other than the material already disclosed or not relied upon now). He further held that it was not sufficient to disclose gist of the material but full and proper disclosure should be made to satisfy the principles of natural justice. The ultimate conclusion drawn by the ld. first Member of Special Bench as recorded on page 37 is as under : "In the light of above discussion, we hold that the revenue is not justified in taking refuse behind untenable technical objections after having made a clear and unequivocal concession before the Hon'ble High Court. If there was any merit in the revenue's contention now advanced, the same would have been urged before the Hon'ble High Court where it did not chose to do so. There is no justification on the part of the revenue in shifting its stand. On the facts of the case we reject all objections raised on behalf of the revenue and direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material made by the department to the assessee has not been sufficient, it may direct the undersigned to disclose the same in terms of Hon'ble High Court's direction reading : "The Tribunal is accordingly directed to disclose the material which is not yet disclosed and which may be relied upon (by the department) before the Tribunal and .. 10.1 Having regard to the above discussion and letter filed by the Department clearly stating that the entire material was fully disclosed and there was nothing further to be disclosed, the ld. second Member of the Special Bench recorded his conclusion on page 64 of the order as under : "In the facts and circumstances, in our opinion, in order to comply with the type of directions given by the Hon'ble High Court, it is not desirable for the Tribunal to decide or pronounce upon at this stage what further material the department has to disclose and whether the disclosure of any material already made is sufficient or not. 10.2 In para-16, it has been observed by him that if the intention of the Hon'ble High Court had been that the material regarding all the 31 points was to be furnished to the assessee, then a specific order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is better to await further orders, if any, to be passed by the High Court on this matter. 10.6 Thereafter, the ld. second Member of the Special Bench referred to in para 18 of his order about the paragraphs 18 to 22 of the order proposed by the ld. first Member of the Special Bench, on whose reading, he observed that the ld. first Member of the Special Bench " had accepted all the arguments advanced by Shri S.E. Dastur with regard to all the 31 items used by the revenue while assessing the assessee company for the asst. year 1985-86. At the end of para-18, he expressed dissent to each of the findings given by him as discussed in paragraphs 18 to 22 of the order of the ld. first Member of the Special Bench. He summed up his conclusion in para-19 as under : "19. I am of the opinion that firstly the Hon'ble High Court did not give any direction to the Tribunal to decide whether sufficient material was supplied with reference to all the 31 items mentioned in the Writ Petition. I have already indicated in prior paras that the Hon'ble High Court intended to dispose off the matter before them only in view of the concession made by Shri Rana, the then learned standing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first and the second Members of the Special Bench as also the material and record which he deemed fit to consider and thereafter pass an order giving reasons in accordance with law. The natural corollary, with the setting aside of the order of the ld. third Member of the Special Bench, which follows is that the confirmatory order passed by the Bench on 24.08.1998 automatically came to be set to naught at that stage because it was this order against which the Revenue had approached the Hon'ble High Court. 14. In conformity with the direction of the Hon'ble High Court, the ld. third Member of the Special Bench passed his order once again on 31-05-1999 reproducing the observations of Their Lordships in their verdict dated 31-07-1995 on Writ Petition filed by the assessee against the original order passed by the Division Bench holding that there was no violation of principles of natural justice. He understood the directions of the Hon'ble High Court in the manner: " that the material was to be disclosed by the department as it was in their possession and there being a categorical statement made by Mr. Rana for the department that they will disclose material if not already disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the Tribunal independently is expected to go through the whole material and decide even at this interim stage, as to what material was liable to be disclosed to the assessee. .. . "19. I am of the opinion that firstly the Hon'ble High Court did not give any direction to the Tribunal to decide whether sufficient material was supplied with reference to all the 31 items mentioned in the Writ Petition. I have already indicated in prior paras that the Hon'ble High Court intended to dispose off the matter before them only in view of the concession made by Shri Rana, the then learned standing counsel of the revenue. The Hon'ble High Court at the time of passing its order was led to believe that the revenue is going to disclose some material, if not already disclosed. Now, the revenue wants to say that sufficient material is already disclosed and there is nothing more to be disclosed further. In those circumstances, it is not our province to go into the question whether sufficient material is already disclosed with regard to the 31 items or not and also record our findings on each of those items. We are hedged and conditioned by the scope o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and the Tribunal, in my opinion, need not unnecessarily burden the Hon'ble High Court in seeking such directions. 14.3 Thereafter, he summed up his conclusion in para-15 as follows: "15. To conclude , I have already stated in clear terms that the department was to disclose the material to the assessee if not already disclosed as per the directions of the Hon'ble High Court but respectfully accepting that the direction was to the Tribunal all that the Tribunal was required to do was to direct the Assessing Officer to comply with the directions of the Hon'ble High Court and which is what I do by the present order. I agree with the conclusions of the Hon'ble President that there was no need to go into each of the 31 items and direct disclosure of the same to the assessee in any particular manner. 15. This second order passed by the ld. third Member of the Special Bench on 31-05-199 was forwarded directly to the Hon'ble High Court by the Registry of the tribunal without sending its copies to the parties. It appears that there were no further directions from the Hon'ble High Court in this regard. The Revenue revived the matter with the tribunal vide t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure should be made by the Assessing Officer to the assessee. According to him, the manner and the extent of disclosure ought to have been decided mutually by the assessee and the Revenue and in case of any conflict, the matter could have been taken by them to the Hon'ble High Court for further directions. He agreed with the conclusion drawn by the ld. second Member of the Special Bench that there was no need to go into each of the 31 items and direct disclosure of the same to the assessee in any particular manner. At the same time, he also desisted from explicitly concurring with the ld. second Member on the question of the tribunal seeking clarification from the Hon'ble High Court in this regard. 17. Having regard to the majority of the three Members' view of the earlier Special Bench, we proceed to pass the confirmatory order. The only issue which was argued before the earlier special bench was as to whether the tribunal should give direction to the AO for disclosing complete material in respect of 31 items ? The majority view is in favor of the Revenue and against the assessee. As such, in so far as the tribunal is concerned, it cannot issue any direction to the AO to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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