Court grants interim relief, emphasizes fairness in quasi-judicial bodies.

The Court granted interim relief to the petitioner in a case challenging the constitution of a Special Bench by the President of the Income Tax Appellate Tribunal under Section 255(3) of the Income Tax Act, 1961. The Court emphasized the importance of fairness in quasi-judicial bodies and the need for reasoned administrative decisions. The matter was expedited for a final hearing, with directions scheduled before the assigned Bench to address procedural irregularities and ensure a fair process.

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Issues:
Challenge to order under Section 255(3) of the Income Tax Act, 1961 regarding constitution of a special bench by the President of Income Tax Appellate Tribunal.

Detailed Analysis:

1. Constitution of Special Bench:
The petition under Article 226 of the Constitution challenges the order dated 05th March 2013 passed under Section 255(3) of the Income Tax Act, 1961. The President of the Tribunal constituted a special bench consisting of three members to hear and decide the entire appeal. The petitioner had filed its Return of Income for the assessment year 2008-2009, declaring a loss of Rs. 19.91 crores. The Assessing Officer determined the petitioner's income at Rs. 272.65 crores, leading to an appeal to the CIT(A) and then to the Tribunal. The Central Board of Direct Taxes (CBDT) sought the constitution of a special bench in the interest of revenue, resulting in a series of communications and hearings before the Division Bench of the Tribunal.

2. Tribunal's Decision and Recommendations:
The Tribunal, in its order dated 19th December 2012, held that there was no need to constitute a Special Bench due to the complexity of facts and law, large revenue impact, or effect on proceedings before CBI. However, considering political sensitivity, it recommended hearing the appeal before an appropriate bench outside the State of Andhra Pradesh. Subsequently, the Vice President of the Tribunal recommended referring the appeal to a Special Bench based on the complexity of issues involved. The President then constituted a Special Bench at Hyderabad, contrary to the Division Bench's suggestion.

3. Fairness and Procedural Concerns:
The fairness of the proceeding was questioned as the CBDT approached the President directly for the constitution of a Special Bench instead of following proper procedures. The timing and manner of exercising the power under Section 255(3) were debated, emphasizing the need for fairness in quasi-judicial bodies like the Tribunal. Concerns were raised regarding the lack of notice to the other party, propriety in decision-making, and the requirement for reasons in administrative orders affecting parties' rights.

4. Judicial Review and Interim Relief:
The Court considered the necessity of judicial review in administrative decisions impacting legal proceedings. The respondents argued that the Division Bench had heard the petitioner, but the decision was made by the President based on one side's submission. The Court highlighted the importance of reasoned administrative orders and the obligation to consider all aspects before constituting a Special Bench. As the petitioner made a strong prima facie case, interim relief was granted.

5. Conclusion and Directions:
The final hearing was expedited at the parties' request, with the respondents waiving service. The petition was scheduled for directions before the assigned Bench, where a date for the final hearing would be considered. The detailed analysis of the proceedings highlighted procedural irregularities, fairness concerns, and the importance of reasoned administrative decisions in quasi-judicial bodies like the Tribunal.

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