TaxTMI 
TaxTMI 
2016 (5) TMI 957
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....ision." These miscellaneous petitions are filed against the order dated 30-03- 2012 passed by the Special bench. 3. Before proceeding further, we feel it pertinent to discuss about the back ground relating to the constitution of special bench for the purpose of deciding the question referred above. The assessee filed appeals before the Tribunal challenging the orders passed by Ld CIT(A) for assessment years 2004-05 and 2005-06. Since there was difference of opinion between the members constituting the division bench hearing those appeals, a reference was made to the Hon'ble President under section 255(4) of the Income tax Act, 1961 for referring the points of difference to a Third Member. The provisions of sec. 255(4) of the Act deals with the manner of referring the matters to the Third member and manner in which the issues should be decided. The said section reads as under:- "255(4) - If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the Presiden....
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..... 2. Whether on the facts and circumstances of the case, as highlighted in the proposed order of the AM and particularly the fact that the assessee produced no evidence to show that the foreign remittances credited in the accounts of the assessee had been made out of funds belonging to the creditor, the cash credit can be taken as explained satisfactorily only on the ground that the assessee was doing business and owned several properties. 3. Whether considering the finding of the AO and the auditor's note and all other relevant material it can be said that the assessee had not claimed any expenditure in relation to the payment made to Cox & Kinds and Tulip Star Hotels Ltd and whether the claim of expenditure can be allowed considering the facts and circumstances of the case". 10. The Ld. Judicial Member has expressed his disagreement with the course adopted by the Ld. Accountant Member and in a note dated 23.2.2010 has proposed the following question to be referred to the Special Bench or Larger bench to resolve the controversy. "Whether on the facts and circumstances of the case, the Members of the Bench, could comment on the order of the Third Member, instead of passi....
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....e effect to the opinion of the majority and proceeded to frame three new questions to be referred to the Hon'ble President, ITAT again for resolving the controversy cannot be said to be a valid or lawful order passed in accordance with the provisions of section 255(4) of the Act and, hence, the said order dated 18-02- 2010 proposed by the Ld Accountant member is not sustainable in law. Accordingly, we answer the question referred to us in negative, i.e., in favour of the assessee." Thus, the Special bench held that the order passed by the Hon'ble Accountant member cannot be said to be a valid or lawful order in terms of sec. 255(4) of the Act. 8. It may be noticed that the then President of ITAT was part of the Special Bench and it can be noticed that he took a decision that the same special bench shall dispose of the appeals on the basis of majority view. Hence the Special Bench proceeded to dispose of the appeals pertaining to assessment years 2004-05 and 2005-06 with the following observations:- "56. At the time of hearing, with the consent of the parties and in the interest of justice, it has been decided by the Hon'ble President to finally dispose of the appeals on the bas....
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....y opinion, as far as the first question referred to the Third Member is concerned, the Ld. Third Member, in Para 5 of his order, himself observed that the additional evidences filed by the assessee were required to be restored to the AO for fresh consideration. The fact that no majority opinion was arrived in this case was also brought on the record by the Ld. Accountant Member in Para 2.1 of his order in response to the stay petition filed by the assessee, which was heard together. (iii) in Para 37, on the second issue of addition on account of reimbursement of expenses, by referring to/endorsing the observation of the Ld. Third Member that "when no deduction was claimed, the question of any disallowance does not arise" without appreciating the fact that the Ld. Third Member omitted to consider the audit report that the assessee had declared the income on the net basis and the expenses had therefore been claimed and once the income had been shown on net basis, the expenses could not be expected to appear in the P/L account. The above omission of fact by the Ld. Third Member was specifically brought on record and into the notice of the Hon'ble Special Bench by the Ld. Account....
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....me is contrary to the fact that no such opportunity was provided to the Department. The Ld. Third Member has expressly admitted this fact in Para 5 of his order that no opportunity for examination of the additional evidences were provided to the AO/Department. The Ld. third member also not provided any opportunity as evident from recording made in Para 5 of his order, as under: "............ In the above circumstances, I am left with no alternative but to consider all the evidences, including additional evidence considered by the Ld. Members of the ITAT and then arrive at the conclusion whether the assessee is able to discharge the onus lay upon him." The fact that no such opportunity was provided to the Department was also specifically argued/pointed out by the Ld. DR, finding place in Para 21, 22, 24, 25, 26 &27 of the order. (vii) in Para 56, by recording that "with the consent of the parties and in the interests of justice, it has been decided by the Hon'ble President to finally dispose of the appeals on the basis of majority view." which is contrary to the fact that the department had never given any such consent and the ld. DR had argued against the constitution of th....
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....f the President of special bench of Hon'ble ITAT of disposing the appeal on the basis of majority view was a decision without the consent of Department and an argument was made against the constitution of the special bench, which was not even considered." 11. Supporting the miscellaneous petitions filed by the revenue, the Ld D.R submitted that the revenue did not give its consent to the Special Bench for disposing the appeals. He further submitted that the order of the Tribunal may give a meaning that the revenue has consented to the decision given by the Special bench on the basis of majority view and it may hamper its right to prefer appeal against the order of the special bench. He further submitted that the Ld D.R had argued against the constitution of special bench itself and the said arguments were not considered. He further submitted that the Tribunal has got a duty to consider all the case laws on the subject, even if they have not been quoted before it, while disposing of the appeals. He submitted that nonconsideration of various important case laws available on the impugned matter has resulted in a mistake apparent from record. He further submitted that the revenue has ....
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....dicial member, the Hon'ble President formed a Special Bench to decide the following question. "Whether on a proper interpretation of sub-section (4) of section 255 of the Income tax Act, the order proposed by the Learned AM while giving effect to the opinion of the majority consequent to the opinion expressed by the learned Third Member, can be said to be a valid or lawful order passed in accordance with the said provision." 14. A careful perusal of the above said question would show that the same does not relate to the merits of the grounds raised in appeals pending before the Tribunal. The Special bench has examined the above question before it from paras 1 to 55 of the order. The observations made by the Special bench upto paragraph 55 of the order relate to the question posed before it and we have already noticed that the same was not related to the grounds raised in the appeals that were pending before the Tribunal, but related to the legality of the order passed by the Hon'ble Accountant Member u/s 255(4) of the Act. In the miscellaneous petition, the revenue is alleging that certain mistakes have crept in, in paragraph 37, 38, 51 and 52 of the order (referred to in parag....
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.... bench with regard to the "consent" given by the parties, though the miscellaneous applications have been opposed by the assessee. Be that as it may, a careful perusal of the observations made by the Special Bench in paragraph 56 of the order would show that the consent referred to is the consent obtained by the then Hon'ble President (who was incidentally one of the Members constituting the Bench) whereby he decided that the Special bench itself shall finally dispose of the appeals on the basis of majority view. At the cost of repetition, we extract below paragraph 56 of the order below:- "56. At the time of hearing, with the consent of the parties and in the interest of justice, it has been decided by the Hon'ble President to finally dispose of the appeals on the basis of majority view....." Accordingly, as per the decision taken by the Hon'ble President in the interest of justice, the Special bench proceeded to dispose of the appeals in accordance with the provisions of sec. 255(4) of the Act. Thus, the order dated 30.03.2012 passed by the Special bench disposing the appeals on the basis of majority view does not hinge on any 'consent' before it, but on the decision of th....