2016 (8) TMI 1232 - HC - Income Tax

Coordinate-bench precedent must be followed unless recognized exceptions apply; departures require recorded reasons or larger-bench reference

Hatkesh Co. Op. Hsg. Society Ltd. Versus Ass. Commissioner of Income Tax Circle 21 (1), Mumbai

HC held the Tribunal's order unsustainable and allowed the appeal in favor of the assessee. The Court ruled that a subsequent Tribunal bench must follow ... Tribunal justification in taking a view contrary to the decision of the coordinate bench of the Tribunal in appellants own case on identical facts without making a reference to the larger bench - application of principle of mutuality in respect of transfer fees and TDR premium received by the Assessee from its members - Held that:- When an identical issue, which had earlier arisen before the Coordinate Bench of the Tribunal on identical facts and a view has been taken on the issue then judicial discipline would demand that a subsequent bench of the Tribunal hearing the same issue should follow the view taken by its earlier Coordinate Bench. If the earlier order does not fall within the exception which affects its binding character before a coordinate bench of the Tribunal, then it has to follow it. However, if the Tribunal has a view different then the view taken by its Coordinate Bench on an identical issue, then the order taking such a different view must record its reasons as to why it does not follow the earlier order of the Tribunal on an identical issue, which could only be on one of the well settled exceptions which affect the binding nature of the earlier order. It is made clear that in case a subsequent bench of the Tribunal does not agree with the reasons indicated in a binding decision of a coordinate bench, then for reason to be recorded, it must request the President of the Tribunal to constitute a larger bench to decide the difference of view on the issue. In the present facts, the impugned order of the Tribunal is not legally sustainable. - Decided in favour of Assessee Issues:Challenging common order of Income Tax Appellate Tribunal for multiple Assessment Years. Substantial question of law regarding Tribunal's justification for differing view without reference to larger bench.Analysis:The judgment pertains to multiple appeals challenging a common order of the Income Tax Appellate Tribunal (Tribunal) for various Assessment Years. The primary issue revolves around whether the Tribunal was justified in taking a view contrary to a decision of a Coordinate Bench without making a reference to a larger bench. The Counsel for both parties requested the appeals be disposed of at the admission stage due to the narrow compass of the issue.The impugned order of the Tribunal referenced the appellant's submission that the issue in question was covered by a Coordinate Bench's order in their own case for certain Assessment Years. This order considered the application of the principle of mutuality regarding transfer fees and TDR premium received by the Assessee from its members. The Tribunal's order sought to take a different view from the Coordinate Bench's order, relying on a decision of the High Court. The judgment emphasizes the importance of judicial discipline, stating that a subsequent bench should generally follow the view taken by an earlier Coordinate Bench on the same issue, unless there are specific exceptions like changes in law. The impugned order was criticized for not providing reasons for departing from the earlier decision and was deemed legally unsustainable.Consequently, the High Court set aside the impugned order and remanded the appeal to the Tribunal for fresh disposal. The Court clarified that it did not assess the merits of the appeal, leaving all contentions open for further arguments before the Tribunal. The substantial question was answered in favor of the Appellant Assessee, and the appeals were disposed of without any order as to costs.