Jurisdictional prerequisite and majority rule in split tribunal references: the third Member cannot invent a new assessment figure.

The text explains that under Section 5A(7) of the Indian Income-tax Act, a reference to the President of the Appellate Tribunal is valid only if the Members who differed first state the precise point or points of disagreement; that formulation is a jurisdictional prerequisite, not a mere procedural step. It also states that where the Members differ on the quantum of assessment, the third Member must choose one of the rival figures already proposed and cannot invent a fresh intermediate assessment. The discussion treats both requirements as essential to the competence of the reference and to the working of the statutory majority scheme.

---

---

Issues: (i) whether a reference to the President of the Appellate Tribunal was valid when the two Members who first heard the appeal did not state the point or points on which they differed; (ii) whether the President could lawfully determine a third figure of assessment where the two original Members had taken different views on the quantum of addition.

Issue (i): whether a reference to the President of the Appellate Tribunal was valid when the two Members who first heard the appeal did not state the point or points on which they differed.

Analysis: Section 5A(7) of the Indian Income-tax Act required the Members, when equally divided, to state the point or points of difference before reference to the President. That requirement was treated as a condition precedent to the exercise of the special jurisdiction conferred by the provision. The omission to formulate the point of difference was held not to be a mere procedural irregularity but a defect going to the competence of the reference itself.

Conclusion: The reference to the President was incompetent and the President lacked jurisdiction to hear it.

Issue (ii): whether the President could lawfully determine a third figure of assessment where the two original Members had taken different views on the quantum of addition.

Analysis: The statutory scheme required the point of difference to be decided according to the opinion of the majority of the Members who heard the case. On a difference as to quantum of assessment, the President or third Member had to agree with one of the rival figures adopted by the original Members. A fresh intermediate figure could not be introduced, because that would leave no majority supporting any single assessment and would defeat the working of the provision.

Conclusion: The President had no power to adopt a third figure of assessment, and the direction making that adjustment was invalid.

Final Conclusion: The questions referred were answered against the validity of the President's order, the assessment could not be completed on that basis, and the matter was sent back to the Appellate Tribunal for disposal according to law.

Ratio Decidendi: Under Section 5A(7) of the Indian Income-tax Act, the formulation of the precise point of difference is a jurisdictional prerequisite, and in a split on quantum the third Member must concur with one of the rival views rather than introduce an independent assessment figure.

---