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2015 (5) TMI 511 - ITAT AHMEDABAD

2015 (5) TMI 511 - ITAT AHMEDABAD - TMI - Penalty under section 271(1)(c) - CIT(A) deleted penalty levy - whether the Tribunal while complying with the provisions of section 255(4) of the Act can consider the judgment of the Hon'ble High Court in the case of ABG Heavy Industries [2010 (2) TMI 108 - BOMBAY HIGH COURT]? - grievance with the majority view - Held that:- In the light of the clear directions given by the Hon'ble Bombay High Court in the appeals filed by the assessee for the im .....

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nd to follow the directions and we do accordingly.

In case anyone has grievances with the majority view, the aggrieved party can seek appropriate remedy against the same. That situation will come only when the majority view is implemented and a formal order is passed on the appeal. However, just because one of the parties before us has a grievance with the majority view, notwithstanding the merits of such grievance, even if any, we must not delay the judicial process of giving effect .....

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ssessee, we hold that the majority view is that CIT(A) was not justified in deleting the penalties, imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961, of ₹ 46,64,350 for the assessment year 1995-96, ₹ 2,88,42,796 for the assessment year 1996-97 and of ₹ 34,78,593 for the assessment year 1997-98. The relief so granted by the CIT(A) thus stands vacated and the penalty orders passed by the Assessing Officer stands restored. - Decided against assessee. - I .....

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Hon ble President of this Tribunal, under section 255(4) of the Income Tax Act, 1961: Whether, under the facts and circumstances of the case, learned CIT(A) was justified in deleting the penalty under section 271(1)(c) of the Act? 2. It was in this backdrop that Hon ble Shri I P Bansal, Judicial Member, was finally nominated as a Third Member, and, vide his order dated 16th July 2014, concluded as follows: …….I concur with the view taken by Hon ble Accountant Member that on the fa .....

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d before us for giving effect to the majority opinion. However, certain objections were raised by the learned counsel of the assessee urging us to adjourn the matter or refer the matter to Hon ble President for constitution of a special bench. Vide our order of even date, in the cases of Jupiter Corporation Services Limited Vs DCIT and Sulochana Gupta Vs DCIT, we have, giving effect to the majority opinion and dealing with the same objections raised by the assessee, held as follows: 4. Shri Tush .....

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erred to a special bench of three or members since the learned Third Member, in his opinion, has disregarded the division bench orders. Our attention is invited to a recent judgment of the Hon ble jurisdictional High Court, in the case of CIT Vs Vallabhdas Vithaldas [(2015) 56 taxmann.com 300 (Guj)] wherein it is held that the decisions of the division benches must bind the single member benches. Learned counsel then points out that a third member decision cannot be equated with a special bench .....

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as on now the opinion expressed by the Third Member is nothing more than an opinion but our giving effect to such an opinion will result into an order of the Tribunal coming into existence but then this order will be directly contrary to the decision of Hon ble jurisdictional High Court. Our attention is also invited to the judicial precedents in the cases of Sayaji Iron & Engg Co Ltd Vs CIT [(2002) 253 ITR 749 (Guj)], Union of India Vs Paras Laminates Pvt Ltd [(1990) 186 ITR 722(SC)], Prad .....

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like this Tribunal to disregard a decision of the Hon ble high Court that it has not taken into account an earlier decision on the same issue. We are thus urged to desist from such an exercise and from passing an order which is wholly unsustainable in law and in complete disregard to binding judicial precedents. It is learned counsel s prayer that the matter should be referred to Hon ble President for constitution of a special bench to resolve this issue. 5. Shri Subhash Bains, learned Commissio .....

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as Third Member has been changed once and that, even almost one year after the Third Member opinion is expressed, the disposal of these appeals is being avoided due to dilatory tactics employed by the assessee. It is not the case that the decisions of the coordinate benches have not been followed without any reasons, according to the learned Commissioner (DR), but the learned Third Member, in a very erudite and detailed order, has given specific reasons as to why these decisions donot hold good .....

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her forums. He submits that the two out of three Members have already given their views in favour of the stand of the Assessing Officer and all that we are required to do at this stage is to give effect to the majority views. 6. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. As Shri Hemani rightly points out, the legal position as it exists now, post Vallabhdas Vithaldas decision (supra) .....

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be seen that the law of precedent heavily relies on the collective decision making process where multiple legal minds are simultaneously applied assisted by legal research and presentation of legal arguments. When such materials and legal contentions are processed by several judges, the decision that is rendered even if not unanimous has the advantage of input from larger number of legally trained minds. In the present case, unlike a case of larger Bench where three or more judges would be simu .....

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ces, I feel bound by the decisions of the later Division Benches on the point which arises directly in the present reference 8. Viewed thus, a larger bench decision binds the bench of a lesser strength because of the plurality in the decision making process and because of the collective application of mind. In simple words, as held by Their Lordships, what three minds do together, even when the result is not unanimous, is treated as intellectually superior to what two minds do together, and, by .....

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benches differ or when majority view is not possible as a result of a single member bench, such as in a situation in which one of the dissenting members has not stated his views on an aspect which is crucial and on which the other member has expressed his views, it is possible to constitute third member benches of more than one members. That precisely could be the reason as to why even while nominating the Third Member under section 255(4), Hon ble President of this Tribunal has the power of re .....

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that Hon ble Delhi High Court had, in the case of P C Puri Vs CIT [(1985) 151 ITR 584 (Del)], expressed a contrary view on this issue which held the field till we had the benefit of guidance from Hon ble jurisdictional High Court. The approach adopted by the learned Third Member was quite in consonance with the legal position so prevailing at that point of time. For the sake of completeness of discussion, we set out the views so taken by Hon ble Delhi High Court and leave it at that:- There is .....

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two others who first heard the case. Whether the three judges sit at the same time or at different times-two at one time, and the third hearing the matter later on a difference of opinion-does not make much difference. As has happened in this case, the two judges have differed. So the case has come to me, the third judge. The two judges have expressed their opinion. I am now called upon to give my opinion. The opinion of the majority will prevail. All that happens is that the third is segregated .....

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of a difference of opinion, the matter has to be referred to a third judge. (see sec. 98, CPC). In my opinion, the reference was correctly made to me as the third judge. 9. However, before we address ourselves to the correctness of fundamental factual assumption underlying the contentions advanced by the learned counsel, that the decision of the learned Third Member is unsustainable in law inasmuch as it is contrary to the decisions of the division benches directly on the issue before the learn .....

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mp; Sons Belgaum Constructions Pvt Ltd Vs ACIT (ITA Nos, 1408 and 1409/PN/2003; order dated 28th February 2013), a coordinate bench of this Tribunal was in seisin of a situation in which by the time the division bench was called upon to give effect to the three member third member bench decision {reported as B T Patil & Sons Belgaum Constructions Pvt Ltd Vs ACIT [1 ITR (Tribunal) 703]}, the division bench also had the benefit of guidance from Hon ble jurisdictional High Court on that issue, .....

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ssed an order granting deduction to the said assessee u/s. 80IA(4) of the Act. The said jurisdictional order is contrary to the opinion given by the Third Member of the Tribunal. Meanwhile the appeal filed by the assessee against the order of the Tribunal dismissing the appeals of the assessee in limine, before the Hon'ble Bombay High Court came up for hearing on 24/01/2013. In the course of hearing before the Hon'ble Bombay High Court the Counsel of the assessee brought to the notice of .....

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effect to the opinion of the Third Member as per the provisions of section 255(4) of the Act. 5. The Hon'ble Bombay High Court permitted the Counsel of the assessee to withdraw the said appeals. While passing the order the Hon'ble High Court has kept all the contentions open and further directed the Tribunal to consider the decision of the ABG Heavy Industries and other decisions while passing their order giving effect to the opinion of the Third Member as per the provisions of section 2 .....

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2 ITR page 323. All contentions are kept open. 3. The appeal is dismissed of in above terms. 6. The issue before us is whether the Tribunal while complying with the provisions of section 255(4) of the Act can consider the judgment of the Hon'ble High Court in the case of ABG Heavy Industries. In light of the clear directions given by the Hon'ble Bombay High Court in the appeals filed by the assessee for the impugned assessment years inter alia directed the Tribunal to consider the said d .....

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ich specific directions were issued by the Hon ble High Court to take into account the subsequent judicial developments by way of adjudication on the issue in appeal by Hon ble Courts above. The division bench has, taking note of these directions and indicating their limitations in the light of these directions, have specifically observed that the Tribunal is bound to follow the directions and we do so accordingly . If the division bench had the powers to take note of the subsequent judicial dev .....

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rse of giving third member effect. No other judicial precedent, supporting the stand of the assessee, has been brought to our notice. In view of these discussions, and as Shri Bains rights contends, at the time of giving effect to the majority view, it cannot normally be open to the Tribunal to go beyond the exercise of giving effect to the majority views, howsoever mechanical it may seem. In the case of dissenting situations on the division bench, the process of judicial adjudication is complet .....

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we may hasten to add that all that the Tribunal does, remains, and shall always remain, subject to the directions of the Hon ble Courts above, and, notwithstanding our humble understanding about the scope of work at this stage of proceedings under the scheme of the Income Tax Act, any directions from the Hon ble Courts above, as in the case of B T Patil (supra), are to be loyally and unhesitatingly followed by us. That is a different situation altogether but then merely because such directions .....

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