2018 (5) TMI 593 - HC - Income Tax

Court corrects Tribunal, emphasizes need for judicial orders for hearings, sets aside opinion, directs proper procedure for additional documents.

The Court found the Tribunal's opinion on the administrative nature of early hearing orders to be incorrect and emphasized the need for judicial orders ... Rectification application - admission of additional documents - Held that:- The Tribunal’s observation in the impugned order made in the course of the rectification application i.e. that an order, allowing an application for early hearing, is merely administrative, is clearly incorrect. See Olympia Paper And Stationery Stores. Versus ACIT [1997 (3) TMI 157 - ITAT MADRAS-A] As far as the placing on record of the additional documents is concerned, there is considerable controversy as to whether in fact a statement was made on 22.11.2017, as is urged by the Revenue and contested on behalf of the assessee. The assessee also relies upon an affidavit filed by its counsel in this regard. This Court is of the opinion that irrespective of what is apparent even if the documents were produced and in the possession of the ITAT, the question of their being part of the record of the lower appellate authority or the AO did not arise. The proper procedure prescribed by law in this case has to be followed. This naturally means that the Revenue has to move a formal application under Rule 29 of the ITAT Procedure Rules to justify the bringing on record of these additional documents in its possession. Issues:Challenge to validity of Tribunal's order under Section 254(2) of the Income Tax Act, 1961 - Entertaining additional documents not part of the record - Early hearing without appropriate notice - Tribunal's opinion on administrative nature of early hearing order - Justification for fixing early hearing date - Correct procedure for bringing additional documents on record.Analysis:1. The two petitions challenge the Tribunal's order under Section 254(2) of the Income Tax Act, 1961, alleging that the Tribunal entertained additional documents not part of the record in an unusual manner. The petitioner argues that early hearings for certain assessment years were conducted without proper notice. It is contended that the Tribunal's opinion on the administrative nature of early hearing orders contradicts its own ruling in a previous case. The petitioner emphasizes the importance of following the correct procedure for permitting additional documents to be brought on record under Rule 29.2. The Revenue contests the factual submissions, asserting that the assessee's counsel had agreed to produce the additional documents and justifying the early hearing based on the advanced stage of the appeal for a particular assessment year. The Revenue argues that the reference to these documents was found in other records already part of the case file.3. The Court, after considering the arguments, finds that the Tribunal's view on the administrative nature of early hearing orders is incorrect. Citing a previous ruling, the Court emphasizes that judicial orders, not administrative ones, should be passed for expeditious hearings. The Court sets aside the Tribunal's opinion on this matter.4. Regarding the additional documents, the Court notes the controversy surrounding their production and possession. The Court emphasizes that the proper procedure, including a formal application under Rule 29, must be followed for bringing these documents on record. The Court sets aside the impugned order and allows the Revenue to file appropriate applications for bringing the documents on record and seeking early hearing.5. The Court directs the ITAT to consider these applications on their merits and pass appropriate orders in accordance with the law. The writ petitions are disposed of accordingly, along with all pending applications.