9911796707
TMI Blog2012 (6) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... osited 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 led to the utter violation of the principles of natural justice. This contention was not countenanced at the first appellate stage. When the matter came up before the Tribunal, the assessee leveled charges of bias against the Assessing Officer, who had passed a thoroughly elaborate assessment order jettisoning the assessee's stand. A request was made to the tribunal, on behalf of both the sides, that firstly the decision be rendered on the preliminary issue as to whether there was observance or violation of principles of natural justice while passing the assessment order. It was requested that the case may be heard on merits after the decision on this preliminary issue. Accordingly, the appeal was taken up by the Tribunal only on the preliminary issue. Vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 with the following observations : - "The appeals by any standard are heavy appeals. The stakes involved run into crores of rupees. Having regard to the High court directions in Writ Petition No. 707 of 1995, the matter is likely to take considerable length of time. The documents as well as the evidences secured are voluminous. The hearing of the appeals is also likely to take considerable length of time. Having regard to the antecedent history of this case, the matter also is likely to be prolonged. Therefore, having regard to all the above factors, I feel that instead of constituting a Division Bench to hear this case, it is better to constitute a special Bench of Three Members to hear and dispose of these appeals and to continue the conduct of further proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 earlier special bench in this case. Neither we have any authority nor inclination to express our independent view on this issue. 8. In order to find out the ultimate majority view, we need to visit the orders passed by the three ld. Members of the original Special Bench, one by one. HIGHLIGHTS OF ORDER OF FIRST MEMBER OF SPECIAL BENCH:- 9. On going through his order, it is found as an uncontroverted fact that the assessee filed a statement in a tabular form before the Hon'ble High Court regarding the material used against the assessee without providing it adequate opportunity to rebut the same. It consisted of 34 items listed. Out of those 34 items, the assessee's counsel required disclosure of 31 items only as the remaining 3 items were found to be irrelevant. The ld. fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 disclosed is sufficient and is in accordance with law. Shri Toprani drew our attention to the prayer and relief sought by the assessee in the writ petition. He contended that their Lordships did not grant relief as prayed for by the petitioner. Therefore, it cannot be said that prayer of the assessee has been accepted." It was contended on behalf of the Revenue before the earlier Special Bench that the information was furnished to the assessee vide the letter dated 23-02-1988 of the assessing authority. The ld. first Member of the Special Bench did not accept the Revenue's contention that writing this letter dated 23-02-1988 to the assessee was sufficient compliance of the undertaking given before the Hon'ble High Court. On page 32, the ld. first Member of the Special Bench has given his decision on 31 item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 it to disclose the material to the assessee." HIGHLIGHTS OF ORDER OF SECOND MEMBER OF S.B. 10. The ld. second Member of the Special Bench opened his order by observing that : "I have read the order of my learned brother Shri Vimal Gandhi. I am not inclined to agree with his order proposed. My reasons briefly are stated as follows". Thereafter, he recorded in para-2 that : "Whether the whole material (documents or statements etc.) should be disclosed or whether only the gist of the material should be disclosed to the assessee, firstly, is not decided by the order of the Bombay High Court." Thereafter, he went on record that the Revenue filed a paper book on 13-03-1997 before the Tribunal disclosing the notices and other communications addressed to the assessee calling upon its explanation with regard to number of matters de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in that regard would have been passed. He, therefore, observed that : "Under the circumstances, it is highly undesirable to record a finding that the revenue must make full disclosure of the material as committed. " Thereafter, he recorded the following observations on page 65 of the order : "Therefore, the order of the High Court should be read harmoniously and each portion of the order should be given effect to unless and until one direction is found diametrically opposite to the other. A harmonious reading of these sentences quoted above would make me feel that the intention of the High Court was that whatever material which was sought to be disclosed by the department, which it feels not disclosed earlier, should be disclosed to the assessee and not that the Tribunal independently is expected to go through the whole material and decide even at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficient 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 of the High Court's order. In my opinion, it does not give us authority to pronounce upon the adequacy or otherwise of the material with regard to the 31 items as was done in paras 18 to 21 of my ld. brother's order. Therefore, according to me, we have to simply appraise the Hon'ble High Court as to why there was no possibility of disclosing any material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 disclosed and which was to be relied upon by the department." He, therefore, observed that : "this part of the order of the Hon'ble High Court was to be implemented by the department and the Tribunal had no role to play at this stage". It was thereafter observed by him that the direction to tribunal was in respect of the cross-examination of the witnesses on the basis of the submission of Shri Rana. He noted that the Special Bench did not, at the time of hearing, go into the question of cross examination of the witnesses but chose to hear the parties on the first aspect. Thereafter, he recorded in para-10 of his order that : 'One course open to the Tribunal (in March, 1997) was to ask the parties to seek further directions from the Hon'ble High court about disclosure of material but this was not done and, as already stated, parties were heard on each of the individual items." Thereafter, he went on to note that whereas the ld. first Member of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the High Court's order. In my opinion, it does not give us authority to pronounce upon the adequacy or otherwise of the material with regard to the 31 items as was done in paras 18 to 21 of my ld. brother's order. " 14.1 Immediately after recording the above extracted portion from the order of the ld. second Member of the Special Bench, in para-12 of his order, the ld. third Member of the Special Bench expressed his concurrence with the aforequoted portion of the order of the ld. second Member of the Special Bench in following manner:- "12. I am in agreement with the aforesaid views expressed by the Hon'ble President although in my opinion reiterating my earlier observation in paras 9 & 10 above, the Tribunal need not have taken upon itself the task of perusing the material, hearing the parties and issuing any sort of directions even if these were sought by the parites. A harmonious reading of the High Court order leaves no doubt that the material was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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 their letter dated 14-07-2011. The case was posted for hearing before the Division Bench. Both the sides requested that a Special Bench be constituted to hear the case as the matter was earlier heard by the Special Bench but no confirmatory order could be passed. That is how this Special Bench has been constituted by the Hon'ble President. 16. Under such circumstances it is manifest that firstly we need to give a logical conclusion to the proceedings of the earlier special bench and then proceed further to decide the appeals in entirety. It has been noticed above that both the sides are at variance in reading the majority conclusion drawn by the three ld. members of the earlier special bench. This has led us to tread through the orders of the three ld. Members of the earlier special bench threadbare. After going through such orders and having heard the rival parties in this regard, we summarize, what we deem as the conclusions drawn by the three members, as under:- (a) The ld. first Member of the Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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