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DIFFERENCE OF OPINION THIRD MEMBER CANNOT SIT IN APPEAL OVER ENTIRE MATTER AND TAKE DECISION INDEPENDENTLY

Income Tax - By: - Mr.M. GOVINDARAJAN - Dated:- 3-11-2017 - Difference in opinion Section 255 of the Income Tax Act, 1961( Act for short) provides the procedure of Income Tax Appellate Tribunal. Section 255(4) provides that if the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be ref .....

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s shall be considered by one or more Members of the Tribunal as constituted by the President of the Appellate Tribunal and such point or points shall be decided according to the opinion of majority of Members, who have heard the case including those who first heard it. Issue The issue to be decided in this case is whether the third Member to whom the reference is made to decide the case on the difference of opinion arised between the two Members can sit in appeal over the entire matter and take .....

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d the attention of system of accounting by learned Commissioner of Income Tax (Appeals) from mercantile to cash in the computation of the assessee s income from the Golden Key Scheme , the Tribunal with reference to its powers under section 254 (1) of the Income Tax Act, 1961, could adjudicate the issue/ If the answer to the question above is in the affirmative whether on the facts and circumstances of the case and in law, system of accounting to be adopted by the assessee should be cash or merc .....

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due to the delayed remittance of collections made by their agent M/s Sahara India in respect of Golden Key Scheme ? Whether in law as also according to the principles of natural justice, the dissenting Member could refer to certain case law of different High Courts (no dispute about Supreme Court case law) not cited by either side during the hearing of the Appeals? Whether if adoption of mercantile system is upheld, the questions of discounting and application pro rata in respect of deduction t .....

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cally and some, in a vague manner. The matter went to the Regular Bench. The Regular Bench found it difficult to decide appeals on the basis of majority opinion of Members in the light of section 255 (4) and consequently heard the matter and decided the appeals. Against this order the Revenue filed appeal before the High Court. After hearing both the parties the High Court found that one substantial question of law, arisen in this appeal is - Whether it was open to Third Member, to whom certain .....

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case two Members differed in their views and formulated seven points. A single Member was constituted to hear those points. The High Court held that such member has no other option but to answer those points and thereafter the decision of the Tribunal has to be given by the Regular Bench in the light of the opinion. It was not open to the Third Member to sit in appeal over the matter and decide some questions and leave some questions unanswered in his own way. The Third Member ought to have try .....

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both are aggrieved by an order of the Commissioner (Appeals) it is incumbent upon the Tribunal to adjudicate issued raised before it and pass such order thereon as it thinks fit.The High Court observed that this question was answered in the affirmative. For the second question the Third Member rendered his opinion as there is no need of changing entire system of accounting adopted by the assessee as the entries in accounts are correct and complete on the basis of which correct income chargeable .....

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ave not looked into the relevant circumstances and should re-decide ground of appeal after giving opportunity to both the sides. The High Court observed that the Third Member, it appeared forgot his position that he was not sitting in appeal over the opinion rendered by two Members of the Tribunal since jurisdiction of Third Member was co-ordinate and it was his duty to hear the two sides and decide question referred for its opinion in one or other way and not to make comments in the manner in w .....

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