Tulip Hotels Pvt. Ltd vs. DCIT (ITAT Mumbai Special Bench)

S. 255(4): Bench cannot refuse to give effect to Third Member’s opinion

The Tribunal had to consider whether certain amounts could be assessed as cash credits u/s 68 and whether certain expenditure incurred by the assessee could be allowed as a deduction. The Judicial Member decided both issues in favour of the assessee while the Accountant Member decided both issues in favour of the department. The Third Member agreed with the opinion of the JM and decided both issues in favour of the assessee. At the stage of giving effect to the opinion of the Third Member, the JM passed an order in conformity with that of the Third Member. However, the AM observed that it is not possible to give effect to the order of the Third Member on the ground that the order of the Third Member was contrary to his own expressed opinion and that he had not considered various points of differences arising from the dissenting orders. He accordingly framed certain new questions on the merits of the dispute and directed that the matter be referred back to the President. The JM did not agree and raised the issue whether the Members of a Bench could comment on the order of the Third Member instead of merely passing a confirmatory order in terms of s. 255(4). This was referred to the Special Bench. HELD by the Special Bench:

After the Accountant Member passed the order formulating the questions for reference to the Third Member, he became functus officio. The opinion expressed by the Third Member was very much binding on the AM and he was bound to follow the opinion of the Third Member in its true letter and spirit. It was necessary for judicial propriety and discipline that the Member who is in minority must accept as binding opinion of the Third Member. The AM had no power to formulate new questions at the stage of giving effect to the opinion of the majority and his action was not sustainable in law.