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DCIT-3 (3) (2) , Mumbai Versus M/s. Tulip Hotels Pvt. Ltd.

2016 (5) TMI 957 - ITAT MUMBAI

Rectification of mistakes - Procedure of Appellate Tribunal - Whether on a proper interpretation of sub-section (4) of section 255 the order proposed by the Learned AM while giving effect to the opinion of the majority consequent to the opinion expressed by the learned Third Member, can be said to be a valid or lawful order passed in accordance with the said provision?

Held that:- The presence or absence of the “consent” of the parties will not change the decision rendered by the Spe .....

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ing rectification within the meaning and scope of the provisions of sec. 254(2) of the Act. Accordingly, we are of the view that the said observations do not require any modification in terms of sec. 254(2) of the Act, as the appeals have been disposed of by the Special bench strictly in accordance with the provisions of sec. 255(4) of the Act. Hence we are of the view that the order passed by the Special Bench does not require rectification in terms of provisions of sec. 254(2) of the Act nor i .....

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hence, even if the Revenue had argued against the same during the course of hearing before the Special Bench, the said contentions could not have been taken cognizance of by the Special bench. Accordingly, we are of the view that this contention of the revenue also does not give rise to any mistake apparent from record.

The power given to the Tribunal u/s 254(2) of the Act is confined to the correction of mistakes apparent from record and the Tribunal is not entitled to review its ow .....

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Joginder Singh(JM) and B.R.Baskaran (AM) For The Assessee : Shri Arvind Sonde For The Department : Shri Manjunatha Swamy ORDER Per B.R. Baskaran, AM :- Both these miscellaneous applications have been filed by the revenue with the prayer to recall the common order dated 30-03-2012 passed by the Special Bench in order to rectify apparent mistakes of facts that have crept therein and accordingly to modify the conclusion. 2. A special bench was constituted by the Hon ble President of the Tribunal t .....

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g further, we feel it pertinent to discuss about the back ground relating to the constitution of special bench for the purpose of deciding the question referred above. The assessee filed appeals before the Tribunal challenging the orders passed by Ld CIT(A) for assessment years 2004-05 and 2005-06. Since there was difference of opinion between the members constituting the division bench hearing those appeals, a reference was made to the Hon ble President under section 255(4) of the Income tax Ac .....

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ich they differ, and the case shall be referred by the President of the Appellate Tribunal for hearing on such point or points by one or more of the other members of the Appellate Tribunal, and such point or points shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who have heard the case, including those who first heard it. Accordingly, the Hon ble Third member expressed his views on the points referred to him, vide his order dated 27-11-2009, and .....

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in February 2010. However, the Ld. Accountant Member observed that it is not possible to give effect to the order of the Ld. Third Member as the order of the Hon ble Third Member is contrary to his own expressed opinion and has also not considered various points of difference arising from the proposed orders of the members of the bench. There is also difficulty in forming the majority of opinion. The difficulty, it appears has arisen partly because of the question framed being too general witho .....

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1. Whether on the facts and in the circumstances of the case, the additional evidence which had not been filed before AO, can be admitted by the tribunal in deciding the issue of cash credit and if so whether the tribunal can decide the issue based on fresh evidence or the issue is required to be restored to the file of the AO for fresh adjudication after examining the detailed evidence and after necessary inquiries and opportunities to the assessee. 2. Whether on the facts and circumstances of .....

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can be said that the assessee had not claimed any expenditure in relation to the payment made to Cox & Kinds and Tulip Star Hotels Ltd and whether the claim of expenditure can be allowed considering the facts and circumstances of the case . 10. The Ld. Judicial Member has expressed his disagreement with the course adopted by the Ld. Accountant Member and in a note dated 23.2.2010 has proposed the following question to be referred to the Special Bench or Larger bench to resolve the controver .....

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2010, chose to refer the matter again to the Hon ble President with further questions relating to merits/power. However, the Hon ble Judicial Member took the view that such course of action is not permissible at that stage and accordingly he framed the question referred above. 6. Since the difference of opinion between the members constituting the division bench arose at the stage of implementation of the order passed by the Hon ble Third Member, the same was found to be related to the interpre .....

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ome tax Act, the order proposed by the Learned AM while giving effect to the opinion of the majority consequent to the opinion expressed by the learned Third Member, can be said to be a valid or lawful order passed in accordance with the said provision. 7. The Special bench delivered its decision on 30-03-2012 and the operative portion of the order reads as under:- 55. For the reasons as discussed above we hold that on a difference of opinion among the two Members of the Tribunal, the Ld. Third .....

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e has expressed his inability to give effect to the opinion of the majority and proceeded to frame three new questions to be referred to the Hon ble President, ITAT again for resolving the controversy cannot be said to be a valid or lawful order passed in accordance with the provisions of section 255(4) of the Act and, hence, the said order dated 18-02- 2010 proposed by the Ld Accountant member is not sustainable in law. Accordingly, we answer the question referred to us in negative, i.e., in fa .....

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05 and 2005-06 with the following observations:- 56. At the time of hearing, with the consent of the parties and in the interest of justice, it has been decided by the Hon ble President to finally dispose of the appeals on the basis of majority view. Therefore, based on the opinion of the majority, the ground wise decision of the appeals for the assessment years 2004-05 and 2005-06 is as under: Accordingly the Special bench disposed of the appeals by deciding all the issues on the basis of major .....

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nces of the case. 3. As per the Hon'ble Special Bench, the Hon'ble President of the ITAT, on a reference made by a Division Bench, constituted the special Bench vide order dated 14.05.2010 and the following question was referred to Hon'ble Bench for consideration and decision: "Whether on a proper interpretation of sub-section (4) of section 255 of the Income Tax Act, the order proposed by the learned AM while giving effect to the opinion of the majority consequent to the opinio .....

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ng before regular bench has made following apparent errors of facts: (i) the question framed, for consideration and decision of the Hon'ble Special Bench is erroneous inasmuch as in recording that "the order proposed by the Ld. Accountant Member", whereas there was no such order passed by the Ld. Accountant Member and only an opinion was expressed by him, and this fact has been brought into the notice of the Hon'ble Bench by the Ld. DR, as also finding place in Para 21 of the o .....

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brought on the record by the Ld. Accountant Member in Para 2.1 of his order in response to the stay petition filed by the assessee, which was heard together. (iii) in Para 37, on the second issue of addition on account of reimbursement of expenses, by referring to/endorsing the observation of the Ld. Third Member that "when no deduction was claimed, the question of any disallowance does not arise" without appreciating the fact that the Ld. Third Member omitted to consider the audit re .....

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rder). (iv) in Para 38, by recording that as per Ld. Accountant Member the Ld. TM is required to restore the additional evidences filed before him/tribunal to the file of the AO for fresh adjudication after examining the said evidence and after providing reasonable opportunity of being heard to the assessee", which is contrary to the fact that the Ld. Third Member was himself of opinion that the addition evidences filed by the assessee was required to be restored to the AO for fresh conside .....

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to the Assessing Officer for examination of additional evidences and thereafter re- adjudication. Admittedly, it has not been done by the ITAT in this case. ……….. Further, the above observation/finding of the Ld. Third Member was brought into the notice of the Hon'ble Bench by the Ld. Departmental Representative, as also finding place in Para 21 of the order. (v) in Para 51, by recording that 'the additional evidence, after providing opportunity, was considered by bo .....

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idences remained unexamined and even if for the sake of arguments these were considered, these did not explain the cash credit satisfactorily. Apparently he did not consider the additional evidence as no order was based admitting the same". (vi) in Para 51 & 52, by above recording of "after providing opportunity", as the same is contrary to the fact that no such opportunity was provided to the Department. The Ld. Third Member has expressly admitted this fact in Para 5 of his o .....

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he onus lay upon him." The fact that no such opportunity was provided to the Department was also specifically argued/pointed out by the Ld. DR, finding place in Para 21, 22, 24, 25, 26 &27 of the order. (vii) in Para 56, by recording that "with the consent of the parties and in the interests of justice, it has been decided by the Hon'ble President to finally dispose of the appeals on the basis of majority view." which is contrary to the fact that the department had never g .....

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ion the paragraph next to paragraph 5 has been numbered as paragraph 8) 10. Since the Miscellaneous petitions have been filed against the orders passed by a Special bench, the Hon ble President constituted a bench of equal strength to hear these petitions. During the course of hearing of Miscellaneous petitions on 20.11.2015, the bench directed the revenue to file an affidavit with regard to the averments made in para 5(vii) of the petition. We notice that the affidavit was initially filed by th .....

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. I say that I am competent to file this affidavit and have also perused all the records available in my office in connection with the case and accordingly, I am conversant with the facts of the case and able to depose to the same. I say that I am filing this affidavit in response to the below mentioned query raised by the Hon ble Special bench during the hearing on 20.11.2015: Substantiate the claim of DR as pleaded in para 5(vii) of the application by way of affidavit and also elaborate which .....

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Hon ble ITAT of disposing the appeal on the basis of majority view was a decision without the consent of Department and an argument was made against the constitution of the special bench, which was not even considered. 11. Supporting the miscellaneous petitions filed by the revenue, the Ld D.R submitted that the revenue did not give its consent to the Special Bench for disposing the appeals. He further submitted that the order of the Tribunal may give a meaning that the revenue has consented to .....

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deration of various important case laws available on the impugned matter has resulted in a mistake apparent from record. He further submitted that the revenue has pointed out various types of mistakes in paragraph 5(ii) to 5(vi) of the petition, which affect the outcome of the grounds raised in the appeals before the Tribunal. Accordingly he contended that the order of the special bench should be recalled. 12. On the contrary, the Ld A.R submitted that Special bench was constituted by the Hon bl .....

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ce with the provisions of sec. 255(4) of the Act, as per the decision of the Hon ble President who was part of the Special Bench. He submitted that the provisions of sec. 255(4) are very clear in stating that the points of difference shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who have heard the case. He submitted that the Special bench has disposed of the appeals on the basis of opinion of the majority of the members and hence no fault can .....

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of the appeals by examining certain fresh set of questions framed by him. The Ld Judicial member did not agree with the said order, since he was of the view that the course adopted by the Ld Accountant Member was not in accordance with the provisions of sec. 255(4) of the Act. Accordingly he framed question with regard to the validity of the course adopted by the Ld Accountant Member and referred the same to the Hon ble President by way of a note. After considering the order passed by the Hon b .....

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l perusal of the above said question would show that the same does not relate to the merits of the grounds raised in appeals pending before the Tribunal. The Special bench has examined the above question before it from paras 1 to 55 of the order. The observations made by the Special bench upto paragraph 55 of the order relate to the question posed before it and we have already noticed that the same was not related to the grounds raised in the appeals that were pending before the Tribunal, but re .....

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eals that were pending before the Tribunal. Hence, the said observations do not affect the grounds raised in the appeals and accordingly the argument taken by the ld. DR that the alleged mistakes pointed out in the paragraphs referred above as affecting the appeals is misplaced. Accordingly, we do not find any merit in them. 15. The revenue has pointed out in paragraph 5(i) of its petition that the order dated 18-02-2010 passed by the Hon ble Accountant Member cannot be considered to be an order .....

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, has also given an affidavit in support of this contention and the relevant portion of the affidavit reads as under:- …..With regard to the above mentioned query of the Hon ble Special bench, it is hereby submitted that the department has not given any consent for disposing the appeal on the basis of majority view and hence, in the para 56 of the order of the ITAT dated 30.03.2012 it is falsely mentioned with the consent of parties…. , whereas, the decision of the President of spe .....

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;ble Members are not before us. We also notice that the affidavit filed by the assessee does not throw light or clarify the observations made by the Special bench with regard to the consent given by the parties, though the miscellaneous applications have been opposed by the assessee. Be that as it may, a careful perusal of the observations made by the Special Bench in paragraph 56 of the order would show that the consent referred to is the consent obtained by the then Hon'ble President (who .....

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aken by the Hon ble President in the interest of justice, the Special bench proceeded to dispose of the appeals in accordance with the provisions of sec. 255(4) of the Act. Thus, the order dated 30.03.2012 passed by the Special bench disposing the appeals on the basis of majority view does not hinge on any consent before it, but on the decision of the then Hon'ble President, which is stated to be on a consent; and, in any case, it does not suffer from a mistake within the scope and ambit of .....

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ce with the mandate of the provisions of sec. 255(4) of the Act and for that purpose, in real terms, the consent of the parties is not required at all. Further, it is nobody s case that the Special Bench did not dispose of the appeals in accordance with the majority view of the members who heard the appeals. Even in the miscellaneous petitions, there is no allegation that the majority view of the members was not followed in disposing of the various grounds urged in the appeals. Viewed from this .....

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f the view that the order passed by the Special bench cannot be held to be suffering from mistakes, warranting rectification within the meaning and scope of the provisions of sec. 254(2) of the Act. Accordingly, we are of the view that the said observations do not require any modification in terms of sec. 254(2) of the Act, as the appeals have been disposed of by the Special bench strictly in accordance with the provisions of sec. 255(4) of the Act. Hence we are of the view that the order passed .....

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