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Jagati Publications Ltd vs. ITAT (Bombay High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL: ,
DATE: November 10, 2014 (Date of pronouncement)
DATE: November 28, 2014 (Date of publication)
AY: 2008-09
FILE: Click here to download the file in pdf format
CITATION:
S. 255(3): Action of ITAT President in forming Special Bench lacking in propriety

During the pendency of the assessee’s appeal before the Division Bench of the Tribunal, the CBDT addressed a letter to the President of the Tribunal and sought the constitution of a Special Bench u/s 255(3) for hearing the appeal. The President referred the issue to the Vice President who in turn referred it to the Division Bench. The Division Bench expressed the view that a Special Bench was not necessary though it opined that as the case was sensitive, the case should be heard by a Bench outside Hyderabad. The Vice President expressed the view that the appeal deserved to be referred to a Special Bench, which was accepted by the President. He directed that the appeal would be heard by a Bench constituted of Members who are not stationed at Hyderabad. On a Writ Petition filed by the assessee HELD allowing the Petition:

The manner in which the entire proceeding has been conducted for the purposes of the constitution of the Special Bench of the Tribunal appears to have been unfair to the petitioner. Though the appeal was before the Division Bench, the CBDT chose not to file an application to the Division Bench to refer the appeal to the President for constitution of a Larger Bench of the Tribunal but adopted a back door method of approaching the President of the Tribunal to constitute the Special Bench and that too in the interests of the Revenue. Though the President has the power in terms of s. 255(3) to constitute a Special Bench, this power cannot be exercised when a Division Bench is seized of the appeal. If this power can be exercised at any time then what would stop the President from exercising such power even in respect of appeals finally heard and where orders are awaited. S. 255(3) does not put any such limitation and/or condition for exercise of the power by the President only because it is expected that such power given to the head of the Tribunal will be exercised to aid the judicial process. It is expected and/or taken as a given that the President of quasi judicial body such as the Tribunal would act with fairness. In fact, fairness is the stock in trade of authorities deciding disputes between the parties. We also find this practice of the President entertaining and acting upon letters of CBDT and the Vice President entertaining the Counsel (likely to appear for Revenue) ex parte in respect of an appeal already siezed of by a Division Bench of the Tribunal to be wanting in propriety. This application could well have been made to the Division Bench which could then make a reference to the President for constitution of the Special Bench. Even if the CBDT, who is a party to the proceedings were to approach the Vice President in respect of a pending proceeding, the same should have been done only after notice to the other side. Similarly, in case the President wanted to act upon the letter of the CBDT the least he could have done was to call for a response from the other side in view of the appeal being siezed of by the Division Bench. This would be the most elementary requirement in a country wedded to the Rule of Law. Also, though a litigant cannot choose its forum, the department has forgotten that the CBDT, i.e. the Income-tax department is a party to the litigation before the Division Bench of the Tribunal and it chooses to have an appeal shifted to a Special Bench of the Tribunal not in the interest of justice but in the interest of the revenue. The order constituting the Special Bench is an administrative order which requires application of law and should indicate in brief that mind has been applied to the law. An administrative order must also be passed to promote the Rule of Law and cannot be on a mere whim and fancy as it can be a cause for civil consequences/prejudice to the parties. This is more particularly so in view of the Division Bench being seized of the appeal and the contest between the parties with regard to the constitution of the Special Bench. The President in these facts is prima facie obliged to give some reasons indicating why he is constituting the Special Bench of Tribunal.

5 comments on “Jagati Publications Ltd vs. ITAT (Bombay High Court)
  1. vswami says:

    OFFHAND
    “Though the appeal was before the Division Bench, the CBDT chose not to file an application to the Division Bench to refer the appeal to the President for constitution of a Larger Bench of the Tribunal but adopted a back door method of approaching the President of the Tribunal to constitute the Special Bench and that too in the interests of the Revenue.”

    The underlying implications of the above quoted observation, as may be guessed, is sure to have caused many eye brows to be raised with remorse, short of anguish, in knowledgeable and right thinking law and other circles. Perhaps, even the impliedly suggested alternative of the CBDT applying to the Division Bench first, for its intended purpose, might call for an in-depth examination in terms of the attendant ‘propriety ‘. For, after all, the Revenue is merely the other party before the appellate forum , with no special status, just as taxpayer; hence in the eyes of the law cannot , as viewed, legitimately seek to or be accorded a better treatment in comparison to tax payer ; and that too when such an approach is made on the sole ground of “the interests of the Revenue” . As presumably not so specifically covered, it might be ideal to have the procedural rules suitably modified in order to bring out clarity once for all; and not only on this particular aspect , but also on all such similar ones which have arisen or expected to arise, coming the way of proper administration and adjudication.

    Over to duly equipped law experts for an incisive consideration and enlightenment, to the end of a useful outcome.

  2. High court is right, per tribunal Act there seems no such provision s in existence, when so how 255 of IT Act applies that shows thorough arbitrariness due to pressure on the president. poor man what he would do?

    Law is based on rule of law as laid under constitution. here taxation clearly falls under Art 265, what does that mean CBDT? you are no arbiter of law but just an instrumentality, like a department under ministry of finance , none other than parliament can take decision by due process as settled by constitution of india . this clearly shows governance is going to dogs, sorry,

  3. High court is right, per tribunal Act there seems no such provision s in existence, when so how 255 of IT Act applies that shows thorough arbitrariness due to pressure on the president. poor man what he would do?

    Law is based on rule of law as laid under constitution. here taxation clearly falls under Art 265, what does that mean CBDT? you are no arbiter of law but just an instrumentality, like a department under ministry of finance , none other than parliament can take decision by due process as settled by constitution of india . this clearly shows governance is going to dogs, sorry,

  4. this situation is ministry of finance through CBDT playing with fire, this play may soon setting aside very tribunals Acts 1985 or even declaring constitutional amendment like the fate what schedule IX faced under CJI Mr. Sabharwal in January 2007 that even partially set aside under ultra vires doctrine… may be oresent governments wants such action of judicial activism by honorable S C, i think, as things move out of control.

  5. this situation is ministry of finance through CBDT playing with fire, this play may soon setting aside very tribunals Acts 1985 or even declaring constitutional amendment like the fate what schedule IX faced under CJI Mr. Sabharwal in January 2007 that even partially set aside under ultra vires doctrine… may be oresent governments wants such action of judicial activism by honorable S C, i think, as things move out of control.

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