TaxTMI 
TaxTMI 
2023 (7) TMI 1082
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....hang Seat Co. Ltd., in ITA No. 1643/CHNY/2019 & IT(TP)A No. 101/CHNY/2018, wherein we discussing the facts held as under:- "2. When these two appeals were called for hearing, the ld.CIT-DR, Dr. S. Palanikumar along with ld. Senior DR, Shri P. Sajit Kumar raised preliminary objection on ''conflict of interest'' in case these two appeals will be argued by Shri Dinesh Inbavadivu belonging to M/s. V. Ramachandran Advocates. The ld.CIT-DR referred to one letter F. No. CIT-DR/D/ITAT/RTI Matter/2023-24 dated 26.04.2023 whereby they have raised this issue in connection with RTI appeal before Central Information Commissioner(in short 'CIC') [appeal filed by Dr. S. Palanikumar] was fixed for hearing on 19.04.2023 at 1.15 p.m., in the premises of NIC Studio, District Informatics Officer, Collectorate, 62, Rajaji Salai, Chennai. The contention of the ld.CIT-DR is that since Shri Manoj Kumar Aggarwal, who is Accountant Member and also CPIO, Income Tax Appellate Tribunal (in short 'ITAT') RTI Cell, Chennai engaged one Shri Dinesh Inbavadivu, Advocate and one more Advocate Shri Arjun to represent him in the proceedings before CIC in regard to appeal filed ....
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....ot be presenting their clients cases before the members of the ITAT, who are again their clients b). It is a case of 'conflict of interest' and it will jeopardize the interest of revenue in Income tax appeal proceedings before ITAT, Chennai. c). To maintain the neutrality and impartiality it is brought on record that the above-mentioned advocates cannot represent their clients before ITAT, Chennai from date of appointment of these counsels by ITAT, Chennai. Yours sincerely, Sd/- (S. Palanikumar) Commissioner of Income-tax (DR) D' Bench, ITAT, Chennai Copy submitted to, 1. Chief Commissioner of Income Tax-1, Chennai for kind information 2. CIT-DR, ITAT-1, 2 and 3, Chennai for kind information 3. Sr. AR, ITAT-1,2,3 and 4, Chennai for kind information 2.1. The ld.CIT-DR before us argued, on the issue of ''conflict of interest'', that in the present case Shri Dinesh Inbavadivu and Shri Arjun are the advocates appearing on behalf of their clients in Income-tax appeals pending in ITAT and they are representing their assessee on day to day basis against R....
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.... 7 Appellate tribunal code of ethics for the members issued by the then President ITAT 20-06-2008 7 8 Copy of order of CIC dated 19-04-2023 8 2.2. The ld.CIT-DR argued that it is evident from the email dated 18.04.2023 of Shri I. Dinesh, wherein he claimed that he has been authorized to appear on behalf of CPIO ITAT, RTI Cell, Chennai Benches before CIC. This one document is sufficient, according to him, that he is the counsel for ITAT, Chennai Benches and hence, representation of appeals of his assessees cases will be direct case of 'conflict of interest' for the Revenue. He stated that Shri I.Dinesh also filed a detailed written submission before CIC on behalf of CPIO, ITAT, Chennai Benches. He argued that there is no dispute that Shri I.Dinesh and Shri Arjun appeared before CIC on 19.04.2023 along with the CPIO, ITAT Chennai Benches and only these two advocates have argued the case on behalf of CPIO, ITAT, Chennai. He stated that when the appellant and his other colleague Shri P. Sajit Kumar, Senior AR, entered the court of CIC at Chennai on 19.04.2023 at 1.18 p.m., the hearing already commenced and both Shri I.Dinesh and Shri Arjun were found ....
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....iled. It shows the close proximity of these advocates with ITAT Chennai. Neither CPIO nor First Appellate Authority has cited this reason in their proceedings dated 14.3.2022 and 15.12.2022 at the time of rejecting the RTI application and appeal. It was brought to the notice only by Sri. Dinesh Inbavadivu in his written submission filed on 18.04.2023 with CIC just one day prior to the date of hearing. This proves the 'conflict of interest' once again. He further stated that the issue of 'conflict of interest' is a fallout of this RTI proceedings where ITAT authorized the private advocates on behalf of Chennai ITAT benches who are regularly representing various assessees against Revenue before the same ITAT. As these counsels represented ITAT before CIC, the issue of 'conflict of interest' was brought to the notice of Asst. Registrar, ITAT. The email dated 18.04.2023 addressed by Sri. Dinesh Inbavadivu is evident that he has been authorized to appear on behalf ITAT Chennai benches. The ld.CIT-DR stated that he was afraid that if ITAT, Chennai once again proceeds to decide this issue of 'conflict of interest' raised, this will again violate principles ....
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.... almost fifteen days wherever Sh I Dinesh is representing. The ld.counsel drew our attention to the procedure of filing Reference Application before the Tribunal and he cited an instance of ITAT Cochin Bench, wherein the Ld.DR has filed an application before the Tribunal. The moot question was whether that Misc. Application, filed by DR, can be entertained or not. The ITAT, Cochin Bench had answered this in the case of DCIT vs. Saraj Trading Corporation, 73 TTJ 741 (2001). In that case, according to the AR of the assessee, as per sub-section (2) of section 254 of the Act is to the effect that the ITAT may, at any time within four years from the date of the order, with a view to rectify any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the AO. Therefore the Representative of the assessee contended that the Misc. Application is to be filed either by the assessee or by the AO as the case may be and since, in this case the Misc.Petition is filed by the Ld. Departmental Representative, the same is not maintainable. After considering the submissions of both sid....
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.... Shri I Dinesh appeared for any matter for any Member or Vice-President of the Tribunal as a party in the proceedings as an individual, then possibly there may be bias, because he has represented the Members in their individual capacity, but in this case it is not so. In this case, Shri Dinesh has defended the Tribunal as an institution. There is a clear distinction between administrative functions and judicial functions of the Tribunal. The ld.counsel further stated that proceedings before the CIC is purely on administrative side and is nothing to do with the quasi-judicial functions. Therefore, since the engagement of Shri I Dinesh before the CIC by the ITAT purely comes under administrative side and nothing to do with quasi-judicial function which Shri I Dinesh has defended. The ld.counsel also drew our attention to the procedures followed by the Hon'ble High Court for instance, as per their cause lists, wherein is mentioned that xxxx Vs. Registrar General of High Court, wherein Senior Advocate Shri Karthik Ranganathan is appearing on behalf of the Registrar General and defending the Registry. In case, if Shri K.Ranganathan appears for the Registrar General for administrativ....
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.... authority. Whether it can be stated that CIT-DR is an income-tax authority and he cannot act an appellate authority? The roles are totally different. Under the RTI Act, information procedure is purely administrative side and nothing to do with the quasi-judicial power. Getting information or not getting information is not going to affect the powers or function or remedies under the Act. Therefore, it is a frivolous petition filed by the Ld CIT-Dr. 3.4. The learned counsel refers to Office Memorandum dated 16.01.2015 issued by Ministry of Law & Justice as stated in the written submissions of Ld.CIT-DR to say that engagement of the counsel Shri I Dinesh itself is wrong. But, Shri I Dinesh went before CIC and succeeded. The Ld.counsel reiterated last sentence of the said Office Memorandum wherein it is mentioned as "except in exceptional circumstances warranting emergent action in public interest". Therefore, exigency of the situation warranted immediate engagement of Shri I Dinesh as counsel, and ITAT has nominated as counsel on the administrative side in the public interest, because four days in advance only hearing notice of CIC was received, for which it cannot be cited ....
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....s not in a position to inflict further damage , the ends of justice will be met if he is fined a sum of Rs. 2,000/-as punishment for contempt. We order accordingly." Therefore, the Ld.counsel for the assessee submitted that contempt proceedings can be initiated by this Tribunal against the Ld. CIT-DR both on judicial as well as administrative side, because these proceedings arose on administrative side and in fitness of things, contempt proceedings may be initiated against the Ld. CIT-DR for filing of such frivolous Misc. Application. 3.6. The learned counsel for the assessee also refers 'Independent functioning of Tribunal' wherein it is stated that to begin with Finance Department of the Government of India (Central Board of Revenue), was initially in-charge of the ITAT. However from 30.05.1942 in deference of public opinion, the ITAT was put in the charge of Legislative Department, the predecessor of Ministry of Law & Justice. As stated by the then Secretary of Ministry of Law, Shri R.S.Gae, the ITAT is functioning as an independent authority without any interference by any Ministry or Department of Govt. of India in discharge of functions entrusted to ....
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....recruited to the Tribunal from the officers of the Income Tax Department is secured by so arranging things that they cannot look forward to anything from the Income tax Department or the Ministry of Finance they cannot go back to higher posts in that Department. Their promotion and tenure of office are not controlled by the Ministry of Finance. These are in the hands of the Ministry of Law." 3.7. The learned counsel also drew our attention to the 115th report of Law Commission while examining the necessity and expediency of setting up National Tax Court vis-a-vis a Tribunal under Article 323B complimented working of the Tribunal in the following words:- "There is near unanimity of opinion that Income Tax Appellate Tribunal has immensely justified its existence and largely vindicated the trust reposed in it. It has, therefore, to be retained with its regional jurisdiction. It would be the fact finding authority." Learned counsel submitted that instead of finding of facts merely on suspicion, Misc. Application has been filed by the ld.CIT-DR without any facts and his arguing on the same point for tenth time. The ld.counsel has concluded his argument by sayi....
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....uthority." The learned counsel submitted that the above conduct rules are no way concerned and irrelevant with the Misc. Application filed by the Ld.CIT Dr. The CIT-DR has only violated conduct rules by filing this Misc. Application. The ld.counsel also submitted that the CIT-DR has raised the issues of 'conflict of interest', dual representation, adverse interests, personal interests, business relationships, previous involvement and extrajudicial activities only on assumption of bias, which is not so in this application. 4. Another Senior Counsel Shri S Sridhar Advocate also interjected for the reason that ld.CIT-DR, Dr. S. Palanikumar and ld. Senior DR Shri P. Sajit Kumar, is objecting to appearance of Shri Arjun, Advocate. He submitted that his name is N. Arjun Raj, Chartered Accountant and he is not advocate as alleged by revenue. He referred to various correspondence filed by Revenue before the Benches on various dates in different cases. He submitted that the 'conflict of interest' alleged by Dr. S. Palanikumar, CIT-DR Chennai 'D' Bench on Shri N. Arjun Raj, CA appearing on behalf of his clients and further on behalf of the Counsel on....
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....aking appearance by N. Arjun Raj C.A. by Dr. S. Palanikumar is a serious issue to be noticed by this Bench by providing appropriate solution/decision and the obstruction of the judicial proceedings and discharging the professional function by N. Arjun Raj as an officer of this Court to defend his client is a criminal offence punishable in terms of Sections 186, 166, 228, 499 and other related provisions of The Indian Penal Code 1860.The Chartered Accountants Act, 1949 is an act of Parliament and Shri N. Arjun Raj is holding the Certificate of Practise under the said Central Act. Therefore, he has every right to appear before this Bench as he is entitled to legally and the objections are accordingly baseless, absurd, mis-directed, motivated and not sustainable both on facts and in law. Moreover, Shri N. Arjun Raj, even on the presumption, is one of the Counsels represented CPIO, ITAT before the CIC under the RTI Act, the said professional function undertaken by him is only limited to the said matter and therefore, the presumption of 'conflict of interest' based on the wrong further presumption of Shri N. Arjun Raj, CA holding General POA (Retainer) on behalf of the ITAT is f....
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....order to be passed on this preliminary untenable objection before the CBDT for information and appropriate action. 5. In reply, the learned CIT-DR, Dr. S. Palani Kumar argued on the point of possibility of bias submitted that it is a simple letter, he has handed over to the Asst. Registrar, ITAT to bring the issue to the notice of the Bench. He submitted that he has received one mail from Shri I Dinesh saying that he received hearing notice of CIC dated 29.03.2023 and the CIC has posted the case for hearing by mentioning appellant's name and CPIO's name. On 29.03.2023 when he has received the notice( stated by DR S Palanikumar but not fact. Fact is that the notice is dated 29.03.2023 but received on 10.04.2023), it required to file some written submissions in support of that case and accordingly he has filed and a copy was served on the CPIO on 15.04.2023 in connection with RTI matter. On 18.04.2023 there was e-mail received from Shri I Dinesh at 11.39 saying that written submissions filed along with reference and the above appeal was posted for hearing before CIC on 19.04.2023 and Shri I Dinesh has been authorized to appear on behalf of ITAT, Chennai and written s....
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.... administrative issue and he has nothing to do with this appeal. 6. The Bench intervened and observed that 'if this is an administrative issue why the Ld.CIT-DR has raised it before the Bench. In case it is raised, bench is duty bound to decide this issue. 7. At this juncture, the learned counsel brought to the notice of the Bench stating that one application made by the other DR, in other Bench, that in a case before CIC filed by a colleague officer against ITAT with respect to an application submitted under RTI Act, the officer on 19.04.2023 accompanied the colleague officer to the venue fixed for hearing through video conferencing just to have an experience as to how the proceedings before CIC are conducted. When a colleague officer can go along with DR, then why not Shri Arjun could go along with Shri I Dinesh. But, the ld.CIT-DR stated that the crux of the issue was "in two of the appeals, arguments of the DR was not recorded" and therefore, video recording footage was sought for. In that case, first CPIO had taken one decision and therefore, we went to CIC because the CPIO has given a reply that entire judicial proceedings were not recorded. For this pur....
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....sented the case of ITAT Chennai, RTI Cell before the CIC and ITAT engaged him in administrative/institutional capacity. The Ld.DR stated that they are not computers but are human beings. The Bench observed that if the CIT-DR don't want the appearance of Shri I Dinesh, as an Advocate before ITAT, it is better they can approach the Bar Council of India. In reply, the Ld.DR submitted that he is requesting the bench to take a call. If the CPIO has given vakalath to Shri I Dinesh, then the CPIO has to recuse himself. If CPIO has authorized Shri I Dinesh, then the CPIO should recuse himself from hearing wherever Shri I Dinesh is appearing before ITAT. He argued that because of vakalath has been given by the CPIO, ITAT to Shri Dinesh, some sort of relationship has happened, so, the concerned Member has to recuse himself from hearing Shri I Dinesh in the ITAT and it is purely conscious issue. He also argued that since the administrative issue is pending, not to continue with hearing of Shri I Dinesh in order to prevent any further damage. 10.1. The Bench posed a query to the Ld.DR as to whether CPIO has given vakalath in his personal case in individual capacity or as CPIO in d....
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....C in the RTI proceedings initiated by Dr S. Palanikumar. It is totally denied by APIO/CPIO of ITAT that Shri N Arjun Raj [who is not an advocate by profession but he is Chartered Accountant by profession appearing before ITAT regularly for his assessees] was engaged by ITAT to argue on behalf of CPIO, ITAT Chennai. This is totally false and contumacious argument and beyond facts on record. Hence as far as the objection of Dr S Palanikumar is concerned the same is rejected as totally false and without any basis and beyond facts on record. 11.1. Now the question arises, whether application dated 26.04.2023 objecting appearance, before Tribunal, of Shri I. Dinesh belonging to Sri Ramachandran Advocates and others of his group and Shri N Arjun Raj(Chartered Accountant not an Advocate) of Sriram Advocates is a direct case of 'conflict of interest' as they appear before ITAT in their clients cases. The allegation of Dr. S. Palanikumar, CIT-DR is that as the said counsels have been appointed by CPIO, ITAT and they have represented CPIO, ITAT before CIC, there is a direct case of 'conflict of interest' as they being counsel of the ITAT, Chennai cannot present their....
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....ining informed consent from clients after fully disclosing the nature and implications of the conflict. Hence the lawyers are bound by Bar Council of India rules i.e., rule 49 to 52 and also TamilNadu Civil Rules of practice. Apart from this, there can be 'conflict of interest' viz-a-viz judges. A 'conflict of interest' occurs when an individual, as a judge, is in a position where their personal, financial, previous involvement and extra judicial activities could potentially influence their judgment or decision making abilities in an unfair or biased manner but in the present case before us none of the situation is prevalent either from lawyers representing their cases or the Members of Tribunal conducting the Benches. In the instant case, Shri I. Dinesh as authorized representative of APIO, ITAT Chennai represented ITAT before CIC and he also represents his clients before ITAT Benches. It is not the case of the Ld.CIT-DR that there is any financial interest, personal interest between the client or any of the Member constituting the Bench neither it is the case of the Ld.CIT-DR that any of the Member of ITAT constituting the Bench has represented the client during t....
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....he other facet is that the Tribunal is not the appropriate judicial forum to raise this issue. The reason for this is that the Tribunal is not to disqualify the lawyer or the law firm as a regulatory measure and it would not be a disciplinary body but there are appropriate forums for punishing professional misconduct, if any committed by lawyer. Hence, ld.CIT-DR raising this issue has himself tried to obstruct Shri I.Dinesh and his firm M/s. V.Ramachandran Advocates from appearing before ITAT. Here the simple litigation was before CIC where the order of CPIO is to be defended by the CPIO/APIO of ITAT, Chennai Benches, RTI Cell and for this purpose, ITAT have engaged advocate Shri I. Dinesh of Shri V. Ramachandran Advocates and which was successfully defended by him. APIO after taking due permissions from the Competent Authority i.e., President of ITAT has appointed Shri I. Dinesh as counsel to argue before CIC in RTI appeal filed by one Dr S. Palanikumar. 11.6.1. The personal Capacity of Ld. CIT-DR Dr. S. Palanikumar and not official. It is not known whether Dr. S. Palanikumar has filed this appeal before CIC in his individual capacity or as CIT-Dr. It is neither explained....
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.... From the above functions of Departmental Representative, it is very clear that the role of the Departmental Representative is to represent the case and does not have any authority to append his signature in his official capacity to file additional grounds of appeal or miscellaneous application. The AO is authorized to file appeal, additional ground, any application or miscellaneous application and for that he has to seek permission from the competent authority. Hence in our view, the ld.CIT-DR has no locus standi to file this impugned application and further argue the same. It seems that ld.CIT-DR is acting in his individual or personal capacity as an aggrieved party for the reasons known to him. Hence, for this reason also this petition is dismissed as not-maintainable. 11.8. One more fact is noted here, that on 19.04.2023 Dr. S. Palanikumar, Ld.CIT-DR filed adjournment petitions en bloc in Bench 'D', which is his assigned Bench by the Department, for the reasons stated that he is assigned another official duty and hence, all the appeals fixed on 19.04.2023 before 'D' bench and assigned to him be adjourned. But it is noted that and fact brought before the....
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....Senior DR, Shri P. Sajit Kumar tried for almost 15 to 20 days to block the judicial proceedings by blocking Shri I.Dinesh, Advocate of V. Ramachandran Advocates and Shri N.Arjun Raj, Chartered Accountant of Sriram Associates. They took up this issue on judicial side of the functioning of the Tribunal by raising this issue before the benches. Hence, we decided to take up the matter on judicial side of the functioning of the Tribunal. Hence, this plea of ld.CIT-DR also rejected. 11.10. The present application dated 19.04.2023 by ld.CIT-DR is pitted as preliminary objection to cases to be represented by the Shri I.Dinesh and others and is a quintessential example of obstruction of justice. While it is a undisputed fact that Shri I.Dinesh has been appointed to represent ITAT, duly authorised by the President of the Tribunal through the registry, in discharging his administrative function, the present application is preferred to obstruct the judicial function of the Bench in disposing off the appeals. By this application the functioning of the bench has been disrupted and obstructed. We are of the view that it is imperative and it is compelling that functioning of the bench sho....
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....nd conducts open court hearing and affords opportunities to the Counsels of both sides to represent their cases. The Tribunal before delivering its order/judgment, considers the facts on record and arguments advanced by both the Counsels and pass the orders accordingly. Although in some cases, there can be a mistake apparent from records and for that a remedy is provided in the Act itself. But in any case, the DRs. cannot file letters or petition in personal capacity which will hinder the justice delivery system. Since, DR S Palanikumar LD CIT DR is representing the AO, we expect him to be conversant with open Court crafts and procedures, which should not hindering the justice delivery system. We, therefore, deprecate this kind of behaviour of Dr. S.Palani Kumar and advise the Revenue to give proper training to him before he is posted in any judicial forum. Since, he has obstructed judicial functioning of the Tribunal by filing frivolous application and letters, we are of the considered view that it is a fit case for imposing a cost, but we are refraining ourselves from imposing any cost as income tax department will take everything into consideration. We further direct the Registr....
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....evidence for all services rendered and has not shown whether these services were received. The TPO noted the vital finding in para 3 as under:- 3. Assessee has paid lumpsum payment of fee in USD 1,50,000 under heads viz., promotional activity, infrastructural facilities assistance and reimbursement of travel expenses. (a) However, the assessee has not submitted any contemporaneous documentary evidences separately for all the services to show that these services were actually received. Hence the assessee has also not proved that the services are not duplicate or stewardship services. In an uncontrolled environment any assessee company/taxpayer for availing the services would produce the documentary evidences to substantiate its claim of receipt of services and benefits accrued. (b)The assessee has not substantiated the actual need for the services. Also, the assessee has its own well organized management structure with experienced personnel managing different departments. (c) No documentary evidences of how and when these services were requisitioned from the AE were submitted by the assessee, also not able to substantiate for what purpose the said....
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.... of their network so as to facilitate this business. The appellant stated that it had need for the services of AE, these services were regularly given and consumed and had immensely benefited which is evidenced by the growth achieved as well as profits from the Year 2012 onwards. The appellant relied on the decision of the ITAT Hyderabad In the case of TNS India Private Limited Vs Dy, Commissioner of Income Tax (ITA No. 604 and 419/HYD/2014) wherein it observed that the role of Management Services in a business needs to be compared with that off an Anaesthetist in an operation conducted by a surgeon. Further the Tribunal stated that there may be an evidence of an operation in the form of scar etc. however the role of an anaesthetist before the operation and after gaining consciousness will be difficult to prove. The very fact that the patient was alive will be a proof of the services rendered by an Anaesthetist and the same way the success achieved by the company in such a short time of commencing the business of International Freight Forwarding is the evidence for the services of the AE. Considering the above, I am of the view that the need for utilising the serv....
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..... Although, the assessee refers to number of e-mail correspondence between few employees of the assessee and its AE, but on perusal of e-mail samples filed by the assessee, what we could notice is these e-mails are general in nature and further with reference to daily production of products manufactured by the assessee in respect of sales to different regions. Further, none of e-mail correspondence filed by the assessee depicts any evidence of rendering any kind of managerial or technical services to justify claim of the assessee that it has received managerial services from its AE. Therefore, we are of the considered view, that the assessee has made periodical payment to its AE in the guise of managerial fee without any justification for such payment and further without any evidence on record to suggest that services were actually rendered" The ld.CIT-DR stated that the following decisions have been ruled in favour of the revenue:- (i) The Hon'ble ITAT Chennai in the case of M/s Infac India Pvt. Ltd. vs DCIT (2015) 64 Taxmann.com 437 (ii) Hon'ble ITAT Bangalore in the case of Volvo India P Ltd vs DCIT (2018) 89 Taxmann.com 79 (iii) Hon'ble....
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.... as SLP filed by the revenue u/s.261 of the IT Act, 1961 against the same is pending before the Hon'ble Supreme Court of India. 3.2 The ld. CIT(A) ought to have appreciated the fact that, the AO has treated that the profits from operations of CFS is not eligible for the deduction u/s. 80IA as it is not an infrastructure facility. As per the provisions of pre-amended section 80IA of the Act infrastructure facilities include any other public facility as may be notified by the Board. Further, the AO relied upon the Board's Notification No. 10682 dt 01.09.1988 wherein the CFS was specifically categorized as any other public facility which is also eligible for claiming deduction u/s. 80IA. However, the term inland port' was existing separately in the section 80IA of the Act prior to amendment by the Finance Act 2001. After the amendment, the term any other public facility was deleted from the definition of Infrastructure facility. Hence, from 01.04.2002 onwards income from CFS is no-more eligible for deduction u/s.80IA of the IT Act, 1961. 11. At the outset, it is noticed that the Revenue in its ground has accepted that the issue is covered by the decision of Hon....