TaxTMI 
TaxTMI 
2011 (7) TMI 726
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....y cost should be awarded in terms of subsection (2B) of section 254 of Income tax Act, 1961 for forcing this assessee to file this appeal". 3. The facts relating to the case are stated in brief. The assessee is a trust formed in January 1994 by two trade associations viz., M/s Visakhapatnam Stevedores Association and M/s Customs clearance and Forwarding Agents Association, with an objective of regulating the employment of private workers in the dock works in Visakhapatnam port. The assessee was granted registration under section 12A of the Act by the then Learned CIT, Visakhapatnam from the date of its inception and there is no dispute that the said registration is still in force. The assessing officer, for the reasons stated in the assessment order of the years under consideration, declined to grant exemption under section 11 to the income of the Act despite the fact that the assessee is having registration granted by Learned CIT under section 12A of the Act. It is pertinent to mention here that the Assessing Officer had denied exemption under section 11 to the assessee on identical reasons for the assessment years 1999-2000 to 2004-05 also and his orders were sustained by Learne....
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.... the dominant objective of the appellant trust. But justice cannot be sacrificed on the altar of technicalities, and, hence, the action of the assessing officer, in refusing exemption to the appellant on the ground, interalia, of the predominant object being non-charitable in nature is, hereby, strongly, upheld. (iii) It appears that at the time of hearing of the quantum appeals of the appellant for the assessment years 1999-2000 to 2004-05 before the honourable Tribunal, the department representative has not been able to advance the arguments relating to the issue in a comprehensive and effective manner so as to plead that the jurisdictional Commissioner who granted registration u/s 12A to the appellant trust had indeed failed to apply his mind properly to the objects professed by the appellant trust and had, thus, erroneously granted registration to the appellant trust as a charitable trust." Thus, it can be seen that the Learned CIT(A) has failed to give any concrete decision on the issue of denying exemption to the assessee under section 11 of the Act. However, in the concluding paragraph of his order, the Learned CIT(A) has made following observations: "Therefore, it....
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....1957)(31 ITR 844 (Bom)).... The Income tax Appellate Tribunal exercises judicial functions and has the trappings of a court." 5.1 In the case of ITAT Vs. V.K.Agarwal (235 ITR 175 (S.C)), the respondent (Ex-Law Secretary, Ministry of Law and Justice, Government of India) initially raised a technical objection about the status of the Income tax Appellate Tribunal. The observations made by Hon'ble Supreme Court in this regard (at page 182) are extracted below: "Before examining the conduct of the first respondent, we would like to deal with the technical objections which were raised before us on behalf of the first respondent. The first respondent had initially contended that the Income tax Appellate Tribunal was not a court, and was also not a court subordinate to the Supreme Court. Hence, the Supreme Court had no jurisdiction to issue a suo motu notice of contempt in respect of a matter pertaining to the Income tax Appellate Tribunal. However, subsequently, learned senior counsel for the first respondent conceded that the Income tax Appellate Tribunal did perform judicial functions and was a court subordinate to the High Court. Hence there is no need to examine any further, the co....
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....the power to punish for contempt of a national Tribunal." 5.2 Since the Income tax Appellate Tribunal is exercising judicial functions, it is now settled that it has all powers of Court, i.e. it can issue summons and exercise all the powers vested in the Income tax authorities under section 131 of the Income tax Act. Hence any proceeding before the Income tax Appellate Tribunal shall be deemed to be judicial proceedings. 6. Next we shall dwell upon the judicial rulings about the binding nature of orders passed by the Income tax Appellate Tribunal. The Hon'ble MP High Court in the case Agarwal Warehousing and Leasing Ltd. Vs. CIT (257 ITR 235) has held that the orders passed by the tribunal are binding on all the tax authorities functioning under the jurisdiction of the tribunal. While so holding, it followed the decision of the Hon'ble Supreme Court in the case of UoI Vs. Kamlakshi Finance Corporation Ltd (AIR 1992 Supreme Court 711, 712) 55 ELT 433 (S.C) which has ruled as under: "It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of appellate auth....
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....erhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35E confers adequate powers on the department in this regard. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or ....
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....the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal has been filed in the Supreme Court which is pending or that steps are being taken to file an appeal. The Jurisdictional High Court, at page 571, has made a reference to the decision of Hon'ble Bombay High Court in the case of Subramanian, ITO Vs. Siemens India Ltd (1985) (156 ITR 11) and the relevant observations are extracted below: "Reference may also be invited to the decision of the Bombay High Court in Subramanian, ITO Vs. Siemens India Ltd (1985)(156 ITR 11). The question that arose for consideration in this case is whether the Income tax officer is bound by the decision of a single judge or a Division bench of the court within whose jurisdiction he is operating even if an appeal has been preferred against such decision and is pending. The following observations of the Bombay High Court may be extracted (p 12): "So far as the legal position is concerned, the Income tax officer would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is funct....
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....... "It is clear from the judicial pronouncements above referred to that the authorities and the tribunals functioning within the jurisdiction of this court in respect of whom this court has the power of superintendence under article 227 are bound to follow the decisions of this court unless, on an appeal, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decision of this court or to refuse to follow the decisions of this court on the pretext that an appeal is filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the tribunal refuses to follow any decision of this court on the above grounds, it would be clearly guilty of committing contempt of this court and it liable to be proceeded against". 6.4 The Hon'ble Calcutta High Court considered the issue of hierarchical discipline in the case of Voest-Alpine Ind. GMBH vs. ITO & Others (246 ITR 745). In that case the Income Tax Officer while assessing the income of identical nature did not follow the decision rendered by Tribunal in an earlier year in which it was held that the income of the foreign company is ....
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....tinguish the same on untenable grounds. In this behalf, it will not be out of place to mention that "in the hierarchical system of courts" which exists in our country, "it is necessary for each lower tier" including the High Court, "to accept loyally the decisions of the higher tiers". "It is inevitable in a hierarchical system of courts that there are decisions of the supreme Appellate Tribunal which do not attract the unanimous approval of all members of the judiciary. But the judicial system only works if someone is allowed to have the last word, and that last word once spoken is loyally accepted". The better wisdom of the court below must yield to the higher wisdom of the court above as held by the Supreme Court in the matter of Asst. CCE v. Dunlop India Ltd (1985) 154 ITR 172". 7. It appears to be the impression/misunderstanding of some of the tax officials that the orders of ITAT interpreting the law cannot be binding as it is a fact finding authority. However, from the foregoing discussions, one can understand that that the decision of the higher authority in the judicial hierarchy is binding on all the lower authorities below the line. Hence the learned CIT(A) and the asse....