Nanubhai D. Desai vs. ACIT (ITAT Ahmedabad – Special Bench)

(Majority view) Special Bench has no jurisdiction to consider whether an ex-Member of the ITAT can practice before it. (Dissenting view) Special Bench is duty bound to answer the question. On merits, Ex-Member cannot be disbarred from practice before it

Shri. Deepak R. Shah was appointed an Accountant Member of the ITAT on 29.11.2001 and was confirmed on 29.11.2003. He resigned on 01.04.2010. Rule 13-E in the ITAT Members (Recruitment and Conditions of Services) Rules, 1963 was inserted vide notification dated 03.06.2009 to provide that a retired ITAT Member is not permitted to practice before it. Mr. Shah was appointed the Authorized Representative of the assessee. He filed a Writ Petition in the Gujarat High Court to challenge the vires/ validity of the said Notification. A Special Bench was also constituted to consider the question whether Mr. Shah was eligible to appear before the Tribunal. The Writ Petition was withdrawn with a direction that the issue would be considered by the Special Bench. Before the Special Bench, Mr. Shah claimed that the said Notification did not apply to him, inter alia, because it was contrary to s. 288 of the Act, it could not alter his terms of appointment, it applied only to a case of “retirement” and not “resignation” etc. On the preliminary issue as to whether the Tribunal could go into an issue which was essentially one dealing with the service conditions of ITAT Members, Mr. Shah relied on Concept Creations 120 ITD 19 (SB) (Del) where it was held that the question could be gone into. However, held by the Special Bench by a majority (Mr. N. S. Saini, AM, dissenting):

Per Mukul Shrawat, JM (for himself & G. C. Gupta, VP): There is a cardinal Rule that nemo debet esse judex in propria causa (no one should be a judge in his own cause). Though in Concept Creations 120 ITD 19 (SB) (Del) it was held that the Special Bench was competent to go into the said question, the position has now been altered in view of the (interim) order of the Allahabad High Court in Dinesh Chandra Agarwal vs. UOI where it was held that the judgment rendered in the case of Concept Creations “was beyond its pale of tax appeals as contained in the Income Tax Act, vide sections 253 and 254 thereof”. Hence the view taken by the Special Bench in Concept Creations about the competence of the Tribunal to hear service related issues now stands reversed. Once an authority higher than the Tribunal has expressed an opinion on some issue, then the Tribunal is no longer at liberty to rely upon its earlier decision, may be a decision of the Special Bench. The Tribunal being a subordinate Court, is expected to follow in letter and spirit an order of the High Court unless reversed by the Apex Court or by an order of the Jurisdictional High Court taking a contradictory view. Hence, the decision of the Special Bench in Concept Creation is no more good law and the present legal position is that the Tribunal has no inherent jurisdiction to decide the question as to whether an ex-Member of the Tribunal can appear and practice before the Income Tax Tribunal Benches. The question referred to us is alieni juris hence forbidden to adjudicate.

Per N.S. SAINI, Accountant Member, dissenting:

(i) The Special Bench has jurisdiction to decide the question referred to it inasmuch as the same was referred on the directions of the Jurisdictional High Court and therefore, we are duty bound to follow the directions given by the High Court and decide the question referred to it. As the President has reconstituted the Special Bench and referred the above question to be decided by this Special Bench on the direction of the High Court dated 11.02.2014 which has been passed after the interim order dated 19.01.2012 of the Allahabad High Court, this Special Bench of the Tribunal is duty bound to decide the referred question as no material was brought before us that the aforesaid direction of the Jurisdictional High Court was varied subsequently by the Gujarat High Court or Supreme Court;

(ii) A rule which is in the nature of subordinate legislature cannot override an Act of Parliament unless the Act of Parliament specifically provides so. In the instant case, s. 288 of the Income Tax Act, 1961 nowhere provides that the provisions of that section shall be subject to any rule made by any authority. Therefore, Rule 13E of the ITAT (Recruitment and Conditions of Service) Rules, 1963 cannot override the provisions of s. 288 of the Act. If a person violates a rule which has been made under ITAT (Recruitment and Conditions of Service) Rules, 1963, consequences of such violation prescribed by the law shall follow but the same cannot be held as overriding the provisions of an Act passed by Parliament;

(iii) Further, though the power of the Tribunal u/s 253 is to adjudicate the issues arising out of orders passed by the lower authorities and pass such orders thereon as it deems fit, but at the same time, the Tribunal has inherent and incidental power to regulate the proceedings which are conducted before it such as Rule 17A of the Rules which prescribes the dress code of the representatives. To say that the Bench of the Tribunal has no jurisdiction to decide this incidental matter because it is not arising out of the orders of the lower authorities is preposterous;

(iv) In other words if the Tribunal cannot adjudicate whether an ex-Member of the Tribunal can appear before it as an Authorized Representative or not, the natural consequence is that the Tribunal also cannot debar an ex-Member of the Tribunal from appearing as an Authorized Representative;

(v) Consequently, the answer to the question referred to the Special Bench is that Shri Deepak R. Shah cannot be debarred by the Tribunal from practising before the Tribunal Benches.