The ACIT,(OSD)-1, Circle-4,, Ahmedabad v. Meghmalhar Finstock Pvt.Ltd., Ahmedabad

ITA 1829/AHD/2011 | 1996-1997
Pronouncement Date: 24-04-2015 | Result: Allowed

Appeal Details

RSA Number 182920514 RSA 2011
Bench Ahmedabad
Appeal Number ITA 1829/AHD/2011
Duration Of Justice 3 year(s) 9 month(s) 5 day(s)
Appellant The ACIT,(OSD)-1, Circle-4,, Ahmedabad
Respondent Meghmalhar Finstock Pvt.Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 24-04-2015
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 24-04-2015
Date Of Final Hearing 22-04-2015
Next Hearing Date 22-04-2015
Assessment Year 1996-1997
Appeal Filed On 19-07-2011
Judgment Text
I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 ASSISTANT COMMISSIONER OF INCOME TAX (OSD-1) CENTRAL CIRCLE 4 AHMEDABAD ........... ........APPELLANT VS. MEGH MALHAR FINSTOCK PVT LTD .RESPONDENT AMBUJA TOWER OPP MEMNAGAR FIRE STATION AHMEDABAD APPEARANCES BY: SUBHASH BAINS FOR THE APPELLANT TUSHAR P HEMANI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : APRIL 22 2015 DATE OF PRONOUNCING THE ORDER : APRIL 24 2015 O R D E R PER S S GODARA JM: 1. WHEN THESE APPEALS WERE ORIGINALLY HEARD BY THE TRIBUNAL THERE WAS A DIFFERENCE BETWEEN THE JUDICIAL MEMBER AND THE ACCO UNTANT MEMBER THEN CONSTITUTING THIS DIVISION BENCH. TO COME OUT OF TH IS CUL-DE-SAC THE FOLLOWING QUESTION WAS REFERRED FOR THE ESTEEMED OPINION OF A THIRD MEMBER TO BE NOMINATED BY HONBLE PRESIDENT OF THIS TRIBUNAL UN DER SECTION 255(4) OF THE INCOME TAX ACT 1961: WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT? I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 2 OF 9 2. IT WAS IN THIS BACKDROP THAT HONBLE SHRI I P BA NSAL JUDICIAL MEMBER WAS FINALLY NOMINATED AS A THIRD MEMBER AND VIDE HIS ORDER DATED 16 TH JULY 2014 CONCLUDED AS FOLLOWS: .I CONCUR WITH THE VIEW TAKEN BY HONBLE ACCOUNTA NT MEMBER THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE DELETIO N OF PENALTY WAS NOT JUSTIFIED. THEREFORE MY ANSWER TO THE QUESTION IS THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LEAR NED CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED UNDER SE CTION 271(1)(C) OF THE ACT. 3. THE OPINION SO EXPRESSED BY THE HONBLE THIRD M EMBER AS ALSO THE RESPECTIVE SEPARATE ORDERS PASSED BY THEN JUDICIAL MEMBER AND THE THEN ACCOUNTANT MEMBER CONSTITUTING THIS DIVISION BENCH ARE NOW PLACED BEFORE US FOR GIVING EFFECT TO THE MAJORITY OPINION. HOWEVER CERTAIN OBJECTIONS WERE RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE URGIN G US TO ADJOURN THE MATTER OR REFER THE MATTER TO HONBLE PRESIDENT FOR CONSTITUT ION OF A SPECIAL BENCH. VIDE OUR ORDER OF EVEN DATE IN THE CASES OF JUPITER COR PORATION SERVICES LIMITED VS DCIT AND SULOCHANA GUPTA VS DCIT WE HAVE GIVING E FFECT TO THE MAJORITY OPINION AND DEALING WITH THE SAME OBJECTIONS RAISED BY THE ASSESSEE HELD AS FOLLOWS: 4. SHRI TUSHAR P HEMANI LEARNED COUNSEL FOR THE AS SESSEE SEEKS ADJOURNMENT ON THE GROUND THAT THE QUANTUM PROCEEDI NGS ARE PENDING BEFORE HONBLE GUJARAT HIGH COURT AND ARE LIKELY TO COME UP FOR FINAL HEARING SOON. WHEN WE EXPRESSED OUR DISINCLINATION TO ACCEPT HIS REQUEST FOR ADJOURNMENT HE MADE ELABORATE SUBMISSIONS ON W HY THE THIRD MEMBER EFFECT EVEN ON MERITS CANNOT GIVEN IN THIS CASE A T THIS STAGE. IT IS SUBMITTED THAT IT IS A FIT CASE IN WHICH EVEN THE THIRD MEMBE R EFFECT PROCEEDINGS SHOULD BE REFERRED TO A SPECIAL BENCH OF THREE OR M EMBERS SINCE THE LEARNED THIRD MEMBER IN HIS OPINION HAS DISREGARDED THE D IVISION BENCH ORDERS. OUR ATTENTION IS INVITED TO A RECENT JUDGMENT OF TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS VALLABHDAS VITHALDAS [(2015) 56 TAXMANN.COM 300 (GUJ)] WHEREIN IT IS HELD THAT THE DECISIONS OF THE I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 3 OF 9 DIVISION BENCHES MUST BIND THE SINGLE MEMBER BENCHE S. LEARNED COUNSEL THEN POINTS OUT THAT A THIRD MEMBER DECISION CANNOT BE EQUATED WITH A SPECIAL BENCH DECISION OF THREE MEMBERS WHICH MAY NOT BE FETTERED BY THE DIVISION BENCH RULINGS AND THEREFORE LEARNED THI RD MEMBER WAS CLEARLY IN ERROR IN DISREGARDING THE EARLIER DIVISION BENCHES DIRECTLY ON THE ISSUE IN FAVOUR OF THE ASSESSEE. IN CASE LEARNED THIRD MEMBE R HAD ANY DOUBTS ON THE CORRECTNESS OF THE DIVISION BENCH DECISIONS ACCORD ING TO THE LEARNED COUNSEL ALL HE COULD HAVE DONE WAS TO REFER THE MA TTER FOR CONSTITUTION OF A SPECIAL BENCH OF THREE OR MORE MEMBERS. HE FURTHER SUBMITS THAT AS ON NOW THE OPINION EXPRESSED BY THE THIRD MEMBER IS NOTHIN G MORE THAN AN OPINION BUT OUR GIVING EFFECT TO SUCH AN OPINION WILL RESUL T INTO AN ORDER OF THE TRIBUNAL COMING INTO EXISTENCE BUT THEN THIS ORDER WILL BE DIRECTLY CONTRARY TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COUR T. OUR ATTENTION IS ALSO INVITED TO THE JUDICIAL PRECEDENTS IN THE CASES OF SAYAJI IRON & ENGG CO LTD VS CIT [(2002) 253 ITR 749 (GUJ)] UNION OF INDIA VS PARAS LAMINATES PVT LTD [(1990) 186 ITR 722(SC)] PRADIP CHNDAR PARIJA VS PRAMOD CHANDRA PATNAIK [(2002) 254 ITR 99 (SC)] AGARWAL WAREHOUSING AND LEASING LTD VS CIT [(2002) 257 ITR 235 (MP)] AND CIT VS L G RAMAMURTHI & ORS [(1977) 110 ITR 453 (MADRAS)] . LEARNED COUNSEL FAIRLY ADMITS THAT THE IN THE THIRD MEMBER ORDER T HE JUDICIAL PRECEDENT IN THE CASE OF SAYAJI IRON (SUPRA) HAS BEEN DEALT WITH AND DISTINGUISHED BUT NOT ONLY HE SUBMITS THAT THE THIRD MEMBER DECISION WAS ERRONEOUS ON MERITS HE ALSO SUBMITS THAT IT IS NOT OPEN TO A LO WER FORUM LIKE THIS TRIBUNAL TO DISREGARD A DECISION OF THE HONBLE HIG H COURT THAT IT HAS NOT TAKEN INTO ACCOUNT AN EARLIER DECISION ON THE SAME ISSUE. WE ARE THUS URGED TO DESIST FROM SUCH AN EXERCISE AND FROM PASSING AN ORDER WHICH IS WHOLLY UNSUSTAINABLE IN LAW AND IN COMPLETE DISREGARD TO B INDING JUDICIAL PRECEDENTS. IT IS LEARNED COUNSELS PRAYER THAT T HE MATTER SHOULD BE REFERRED TO HONBLE PRESIDENT FOR CONSTITUTION OF A SPECIAL BENCH TO RESOLVE THIS ISSUE. 5. SHRI SUBHASH BAINS LEARNED COMMISSIONER (DR) V EHEMENTLY OPPOSES THESE SUBMISSIONS ADVANCED BY THE ASSESSEE. HE SUB MITS THAT THE VALUABLE TIME OF THE BENCH IS BEING WASTED AGAIN AND AGAIN E VEN BY CAUSING DELAY IN GIVING EFFECT TO THE THIRD MEMBER DECISION. HE URGE S US TO REJECT THE REQUEST FOR YET ANOTHER REFERENCE TO HONBLE PRESIDENT FOR CONSTITUTION OF A SPECIAL BENCH AND SUBMITS THAT IN THIS CASE THE PROCEEDING S ARE BEING DRAGGED WITHOUT ANY VALID REASON. IT IS POINTED OUT THAT TH IS IS A CASE IN WHICH HONBLE MEMBER NOMINATED AS THIRD MEMBER HAS BEEN C HANGED ONCE AND THAT EVEN ALMOST ONE YEAR AFTER THE THIRD MEMBER O PINION IS EXPRESSED THE DISPOSAL OF THESE APPEALS IS BEING AVOIDED DUE TO D ILATORY TACTICS EMPLOYED BY THE ASSESSEE. IT IS NOT THE CASE THAT THE DECIS IONS OF THE COORDINATE BENCHES HAVE NOT BEEN FOLLOWED WITHOUT ANY REASONS ACCORDING TO THE LEARNED COMMISSIONER (DR) BUT THE LEARNED THIRD ME MBER IN A VERY ERUDITE AND DETAILED ORDER HAS GIVEN SPECIFIC REAS ONS AS TO WHY THESE DECISIONS DONOT HOLD GOOD IN THE PRESENT CASE. LEAR NED COMMISSIONER (DR) SUBMITS THAT AS TO WHETHER OR NOT THE REASONING OF THE THIRD MEMBER IS CORRECT IS SOMETHING TO BE ADJUDICATED BY HONBLE C OURTS ABOVE AND THAT WE SHOULD NOT EVEN SIT IN JUDGMENT OVER THE SAME. HE S UBMITS THAT THIS I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 4 OF 9 TRIBUNAL IS NOT THE END OF THE ROAD SO FAR AS THIS LITIGATION IS CONCERNED AND IN CASE THE ASSESSEE IS AGGRIEVED OF WHAT HAS BEEN DECIDED BY THE MAJORITY IN THIS CASE IT IS CERTAINLY OPEN TO HIM TO CHALLE NGE THE DECISION BEFORE THE HIGHER FORUMS. HE SUBMITS THAT THE TWO OUT OF THREE MEMBERS HAVE ALREADY GIVEN THEIR VIEWS IN FAVOUR OF THE STAND OF THE ASS ESSING OFFICER AND ALL THAT WE ARE REQUIRED TO DO AT THIS STAGE IS TO GIVE EFFE CT TO THE MAJORITY VIEWS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. AS SHRI HEMANI RIGHTLY POINTS OUT THE LEGAL POS ITION AS IT EXISTS NOW POST VALLABHDAS VITHALDAS DECISION (SUPRA) BY HONBLE JURISDICTIONAL HIGH COURT IS THAT THE DECISIONS OF THE DIVISION BENCHE S BIND THE SINGLE MEMBER BENCH EVEN WHEN SUCH A SINGLE MEMBER BENCH IS A TH IRD MEMBER BENCH. IN COMING TO THIS CONCLUSION HIS LORDSHIP HONBLE JUS TICE KURESHI WHO WAS HIMSELF SITTING AS A REFERRAL JUDGE TO EXPRESS HIS VIEWS ON A POINT ON WHICH THE DIVISION BENCH HAD DISAGREED IN THIS CASE HAS AFTER AN ELABORATE SURVEY OF JUDICIAL GUIDANCE AND ACADEMIC LITERATURE ON THI S ISSUE CONCLUDED AS FOLLOWS: IT CAN THUS BE SEEN THAT THE LAW OF PRECEDENT HEAV ILY RELIES ON THE COLLECTIVE DECISION MAKING PROCESS WHERE MULTIP LE LEGAL MINDS ARE SIMULTANEOUSLY APPLIED ASSISTED BY LEGAL RESEARCH AND PRESENTATION OF LEGAL ARGUMENTS. WHEN SUCH MATERIAL S AND LEGAL CONTENTIONS ARE PROCESSED BY SEVERAL JUDGES THE DE CISION THAT IS RENDERED EVEN IF NOT UNANIMOUS HAS THE ADVANTAGE OF INPUT FROM LARGER NUMBER OF LEGALLY TRAINED MINDS. IN THE PRES ENT CASE UNLIKE A CASE OF LARGER BENCH WHERE THREE OR MORE J UDGES WOULD BE SIMULTANEOUSLY HEARING A QUESTION OF LAW WITH T HE ASSISTANCE OF SAME SET OF ARGUMENTS I AM AS A REFERRAL JUDGE LEFT TO CHOOSE BETWEEN ONE OF THE TWO OPINIONS OF THE DIFFERING JU DGES WHICH IN MY OPINION IS CLOSER TO THE CORRECT LEGAL POSITION . THIS COMPLETELY ROBS THE PROCESS OF PLURALITY IN THE DEC ISION MAKING WHICH IS THE FOUNDATION OF LAW OF PRECEDENT WHERE A JUDGMENT OF A BENCH WOULD BIND THE BENCH OF EQUAL OR LESSER NUM BER OF JUDGES EVEN IF IT IS NOT A UNANIMOUS OPINION. UNDER THE CIRCUMSTANCES I FEEL BOUND BY THE DECISIONS OF THE LATER DIVISION BENCHES ON THE POINT WHICH ARISES DIRECTLY IN THE P RESENT REFERENCE 8. VIEWED THUS A LARGER BENCH DECISION BINDS THE BENCH OF A LESSER STRENGTH BECAUSE OF THE PLURALITY IN THE DECISION M AKING PROCESS AND BECAUSE OF THE COLLECTIVE APPLICATION OF MIND. IN S IMPLE WORDS AS HELD BY THEIR LORDSHIPS WHAT THREE MINDS DO TOGETHER EVEN WHEN THE RESULT IS NOT UNANIMOUS IS TREATED AS INTELLECTUALLY SUPERIOR TO WHAT TWO MINDS DO TOGETHER AND BY THE SAME LOGIC WHAT TWO MINDS DO TOGETHER IS CONSIDERED TO BE INTELLECTUALLY SUPERIOR TO WHAT A SINGLE MIND DOES ALONE. LET US NOT I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 5 OF 9 FORGET THAT THE DISSENTING JUDICIAL VIEWS ON THE DI VISION BENCHES AS ALSO THE VIEWS OF THE THIRD MEMBER ARE FROM THE SAME LEVEL I N THE JUDICIAL HIERARCHY AND THEREFORE THE VIEWS OF THE THIRD MEMBER CANNO T HAVE ANY EDGE OVER VIEWS OF THE OTHER MEMBERS. OF COURSE WHEN DIVISIO N BENCHES ITSELF ALSO HAVE CONFLICTING VIEWS ON THE ISSUES ON WHICH MEMBE RS OF THE DIVISION BENCHES DIFFER OR WHEN MAJORITY VIEW IS NOT POSSIBL E AS A RESULT OF A SINGLE MEMBER BENCH SUCH AS IN A SITUATION IN WHICH ONE O F THE DISSENTING MEMBERS HAS NOT STATED HIS VIEWS ON AN ASPECT WHICH IS CRUCIAL AND ON WHICH THE OTHER MEMBER HAS EXPRESSED HIS VIEWS IT IS POSSIBLE TO CONSTITUTE THIRD MEMBER BENCHES OF MORE THAN ONE MEMBERS. THAT PRECISELY COULD BE THE REASON AS TO WHY EVEN WHILE NOMINATING THE THIR D MEMBER UNDER SECTION 255(4) HONBLE PRESIDENT OF THIS TRIBUNAL HAS THE POWER OF REFERRING THE CASE FOR HEARING ON SUCH POINT OR POINTS (OF DIFFERENCE) BY ONE OR MORE OF THE OTHER MEMBERS OF THE APPELLATE T RIBUNAL . VIEWED FROM THIS PERSPECTIVE AND AS HELD BY HONBLE JURIS DICTIONAL HIGH COURT THE THIRD MEMBER IS BOUND BY THE DECISIONS RENDERED BY THE BENCHES OF GREATER STRENGTH. THAT IS THE LEGAL POSITION SO FAR AS AT L EAST THE JURISDICTION OF HONBLE GUJARAT HIGH COURT IS CONCERNED POST VALLABHDAS VITHALDAS (SUPRA) DECISION BUT EVEN AS WE HOLD SO WE ARE A LIVE TO THE FACT THAT HONBLE DELHI HIGH COURT HAD IN THE CASE OF P C PURI VS CIT [(1985) 151 ITR 584 (DEL)] EXPRESSED A CONTRARY VIEW ON THIS ISSUE WHICH HEL D THE FIELD TILL WE HAD THE BENEFIT OF GUIDANCE FROM HONBLE JU RISDICTIONAL HIGH COURT. THE APPROACH ADOPTED BY THE LEARNED THIRD MEMBER WA S QUITE IN CONSONANCE WITH THE LEGAL POSITION SO PREVAILING AT THAT POINT OF TIME. FOR THE SAKE OF COMPLETENESS OF DISCUSSION WE SET OUT THE VIEWS SO TAKEN BY HONBLE DELHI HIGH COURT AND LEAVE IT AT THAT:- THERE IS NO DIFFERENCE REALLY SPEAKING BETWEEN A FULL BENCH OF THREE JUDGES SITTING TOGETHER AND THIS METHOD OF RE FERRING TO THE THIRD JUDGE IN THE CASE OF A DIFFERENCE OF OPINION BETWEEN THE TWO JUDGES. WHETHER THE FIRST METHOD IS ADOPTED OR THE SECOND 'OPINION OF THE MAJORITY' WILL BE DECISIVE. IN THIS CASE THERE IS A FORMAL REFERENCE TO A THIRD JUDGE TO ASCERTAIN HIS OPINION. HIS IS THE DECIDING VOICE. HE TURNS THE SCALES. THE THIRD JUDGE IS THE FULL BENCH. NOT ALONE. BUT ALONG WITH THE TWO OTHER S WHO FIRST HEARD THE CASE. WHETHER THE THREE JUDGES SIT AT THE SAME TIME OR AT DIFFERENT TIMESTWO AT ONE TIME AND THE THIRD H EARING THE MATTER LATER ON A DIFFERENCE OF OPINIONDOES NOT MA KE MUCH DIFFERENCE. AS HAS HAPPENED IN THIS CASE THE TWO J UDGES HAVE DIFFERED. SO THE CASE HAS COME TO ME THE THIRD JUD GE. THE TWO JUDGES HAVE EXPRESSED THEIR OPINION. I AM NOW CALLE D UPON TO GIVE MY OPINION. THE OPINION OF THE MAJORITY WILL P REVAIL. ALL THAT HAPPENS IS THAT THE THIRD IS SEGREGATED FROM THE TW O AND DOES NOT SIT WITH THEM. HE COMES IN LATER ON WHEN THERE IS A DIFFERENCE OF OPINION BETWEEN THEM. IN ALL CASES IT IS THE TH EORY OF NUMBERS WHICH IS THE FOUNDATION OF THE DOCTRINE OF STARE DE CISIS. MAJORITY IS A TERM SIGNIFYING THE GREATER NUMBER. COUNTING O F HEADS UNDERLIES THE THEORY OF JUDICIAL PRECEDENTS AS IN A NY MAJORITY DECISION. THE CONSTITUTIONAL REQUIREMENT OF A CONST ITUTION COURT I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 6 OF 9 OF FIVE JUDGES IS BASED ON THIS THEORY. SIMILARLY THE CPC 1908 ENACTS THAT IN THE CASE OF A DIFFERENCE OF OPINION THE MATTER HAS TO BE REFERRED TO A THIRD JUDGE. (SEE SEC. 98 CPC) . IN MY OPINION THE REFERENCE WAS CORRECTLY MADE TO ME AS THE THIRD JUDGE. 9. HOWEVER BEFORE WE ADDRESS OURSELVES TO THE CORR ECTNESS OF FUNDAMENTAL FACTUAL ASSUMPTION UNDERLYING THE CONTE NTIONS ADVANCED BY THE LEARNED COUNSEL THAT THE DECISION OF THE LEAR NED THIRD MEMBER IS UNSUSTAINABLE IN LAW INASMUCH AS IT IS CONTRARY TO THE DECISIONS OF THE DIVISION BENCHES DIRECTLY ON THE ISSUE BEFORE THE L EARNED THIRD MEMBER WE STILL HAVE TO DEAL WITH THE ISSUE AS WAS RAISED BY THE LEARNED COMMISSIONER (DR) AS TO WHETHER AT THE STAGE OF GIVING EFFECT T O THE MAJORITY VIEWS UNDER SECTION 255(4) THE DIVISION BENCH CAN TAKE UP ANY OTHER ISSUES OTHER THAN THE SIMPLY IMPLEMENTING THE MAJORITY VIEWS ON THE B ASIS OF THE VIEWS ALREADY EXPRESSED BY THE DIVISION BENCH MEMBERS AND THE THIRD MEMBER IRRESPECTIVE OF RELEVANCE OF SUCH ISSUES EVEN IF A NY TO THE APPEAL. WE FIND THAT IN THE CASE OF B T PATIL & SONS BELGAUM CONSTR UCTIONS PVT LTD VS ACIT (ITA NOS 1408 AND 1409/PN/2003; ORDER DATED 28TH F EBRUARY 2013) A COORDINATE BENCH OF THIS TRIBUNAL WAS IN SEISIN OF A SITUATION IN WHICH BY THE TIME THE DIVISION BENCH WAS CALLED UPON TO GIVE EFFECT TO THE THREE MEMBER THIRD MEMBER BENCH DECISION {REPORTED AS B T PATIL & SONS BELGAUM CONSTRUCTIONS PVT LTD VS ACIT [1 ITR (TRIBU NAL) 703]} THE DIVISION BENCH ALSO HAD THE BENEFIT OF GUIDANCE FROM HONBLE JURISDICTIONAL HIGH COURT ON THAT ISSUE AND THE ASSESSEE DID OBTAIN A DIRECTIONS FROM THE HONBLE HIGH COURT TO TAKE INTO ACCOUNT INTER ALIA THIS JUDICIAL DEVELOPMENT AS WELL. IN THE COURSE OF SO GIVING EFF ECT TO THE MAJORITY VIEWS THE COORDINATE BENCH INTER ALIA OBSERVED AS FOLLO WS: 4. WHILE THE SAID APPEALS ARE PENDING BEFORE THE HO N'BLE TRIBUNAL TO GIVE EFFECT TO THE OPINION OF THE THIRD MEMBER AS P ER THE PROVISIONS OF SECTION 255(4) OF THE ACT THE HON'BLE BOMBAY HI GH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD. PASSED AN ORDER GRANTING DEDUCTION TO THE SAID ASSESSEE U/S. 80IA(4) OF THE ACT. THE SAID JURISDICTIONAL ORDER IS CONTRARY TO THE OPINION GIV EN BY THE THIRD MEMBER OF THE TRIBUNAL. MEANWHILE THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL DISMISSING THE AP PEALS OF THE ASSESSEE IN LIMINE BEFORE THE HON'BLE BOMBAY HIGH COURT CAME UP FOR HEARING ON 24/01/2013. IN THE COURSE OF HEARING BEFORE THE HON'BLE BOMBAY HIGH COURT THE COUNSEL OF THE ASSESS EE BROUGHT TO THE NOTICE OF THE HON'BLE HIGH COURT THE FACT THAT THE TRIBUNAL IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE HAD RECALLED ITS ORDER AND THE SAID MATTER WAS NOW FIXED FOR HEARING ON 15 /02/2013. AS SUCH THE ASSESSEE REQUESTED TO WITHDRAW THE SAID AP PEAL. THE ASSESSEE ALSO DREW ATTENTION OF THE HON'BLE HIGH CO URT TO THE DECISION OF ABG HEAVY INDUSTRIES AND REQUESTED THE HON'BLE BOMBAY HIGH COURT TO DIRECT THE TRIBUNAL TO CONSIDER THE A BG HEAVY INDUSTRIES DECISION ON THE ISSUE WHILE GIVING EFFEC T TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 2 55(4) OF THE ACT. I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 7 OF 9 5. THE HON'BLE BOMBAY HIGH COURT PERMITTED THE COUN SEL OF THE ASSESSEE TO WITHDRAW THE SAID APPEALS. WHILE PASSIN G THE ORDER THE HON'BLE HIGH COURT HAS KEPT ALL THE CONTENTIONS OPE N AND FURTHER DIRECTED THE TRIBUNAL TO CONSIDER THE DECISION OF T HE ABG HEAVY INDUSTRIES AND OTHER DECISIONS WHILE PASSING THEIR ORDER GIVING EFFECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVI SIONS OF SECTION 255(4) OF THE ACT. THE RELEVANT PORTION OF THE SAID ORDER OF HONBLE JURISDICTIONAL HIGH COURT IN ITA NO.1307 OF 2011 FO R A.Y. 2000-01 AND 1640 OF 2011 FOR A.Y. 2001-02 IS AS UNDER: 1. SINCE THE TRIBUNAL HAS RECALLED THE IMPUGNED OR DER DATED 23.03.2011 THE APPELLANT IS WITHDRAWING ITS APPEAL. 2. FURTHER WHILE CONSIDERING THE MATTER AFRESH TH E TRIBUNAL WILL TAKE INTO CONSIDERATION ALL DECISIONS INCLUDING THE DECISION OF THIS COURT IN THE MATTER OF CIT V. ABG HEAVY INDUSTRIES LTD. REPORTED IN 322 ITR PAGE 323. ALL CONTENTIONS ARE KEPT OPEN. 3. THE APPEAL IS DISMISSED OF IN ABOVE TERMS. 6. THE ISSUE BEFORE US IS WHETHER THE TRIBUNAL WHIL E COMPLYING WITH THE PROVISIONS OF SECTION 255(4) OF THE ACT CAN CON SIDER THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES. IN LIGHT OF THE CLEAR DIRECTIONS GIVEN BY THE HON'BLE BOMBAY HIGH COURT IN THE APPEALS FILED BY THE ASSESSEE FOR THE IMPUGN ED ASSESSMENT YEARS INTER ALIA DIRECTED THE TRIBUNAL TO CONSIDER THE SAID DECISION OF ABG HEAVY INDUSTRIES AND ALL OTHER DECISIONS WE CA N CONSIDER THE SAID JUDGMENTS OF ABG HEAVY INDUSTRIES AND ALSO THE OTHER JUDGMENTS FOR ALLOWING THE DEDUCTION U/S. 80IA(4) OF THE ACT WHILE GIVING EFFECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVI SIONS OF SECTION 255(4) OF THE ACT. FOLLOWING THE DIRECTIONS OF THE HON'BLE BOMBAY HIGH COURT BEING THE JURISDICTIONAL HIGH COURT THE TRIBUNAL IS BOUND TO FOLLOW THE DIRECTIONS AND WE DO ACCORDINGLY. 10. IT WAS THUS A CASE IN WHICH SPECIFIC DIRECTIONS WERE ISSUED BY THE HONBLE HIGH COURT TO TAKE INTO ACCOUNT THE SUBSEQU ENT JUDICIAL DEVELOPMENTS BY WAY OF ADJUDICATION ON THE ISSUE IN APPEAL BY HONBLE COURTS ABOVE. THE DIVISION BENCH HAS TAKING NOTE O F THESE DIRECTIONS AND INDICATING THEIR LIMITATIONS IN THE LIGHT OF THESE DIRECTIONS HAVE SPECIFICALLY OBSERVED THAT THE TRIBUNAL IS BOUND TO FOLLOW THE DIRECTIONS AND WE DO SO ACCORDINGLY. IF THE DIVISION BENCH HAD THE POWERS TO TAKE NOTE OF THE SUBSEQUENT JUDICIAL DEVELOPMENTS POST THE EXPRESSI ON OF VIEWS BY DIFFERENT MEMBERS CONSTITUTING THE DIVISION BENCH AND THE THI RD MEMBER BENCH AT THE STAGE OF GIVING EFFECT TO THE MAJORITY VIEW TH ERE WAS NO NEED TO TAKE NOTE OF HONBLE HIGH COURTS DIRECTIONS AND STATE T HAT THIS IS BECAUSE OF THE HONBLE HIGH COURT DIRECTIONS THAT THE SUBSEQUENT J UDICIAL DEVELOPMENTS ARE BEING TAKEN NOTE OF. THESE DIRECTIONS WERE CASE SPECIFIC AND CANNOT BE I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 8 OF 9 TREATED AS A GENERAL INTERPRETATION OF THE SCOPE OF JUDICIAL WORK IN THE COURSE OF GIVING THIRD MEMBER EFFECT. NO OTHER JUDI CIAL PRECEDENT SUPPORTING THE STAND OF THE ASSESSEE HAS BEEN BROU GHT TO OUR NOTICE. IN VIEW OF THESE DISCUSSIONS AND AS SHRI BAINS RIGHTS CONTENDS AT THE TIME OF GIVING EFFECT TO THE MAJORITY VIEW IT CANNOT NORMA LLY BE OPEN TO THE TRIBUNAL TO GO BEYOND THE EXERCISE OF GIVING EFFECT TO THE MAJORITY VIEWS HOWSOEVER MECHANICAL IT MAY SEEM. IN THE CASE OF DI SSENTING SITUATIONS ON THE DIVISION BENCH THE PROCESS OF JUDICIAL ADJUDIC ATION IS COMPLETE WHEN THE THIRD MEMBER NOMINATED BY HONBLE PRESIDENT RESOL VES THE IMPASSE BY EXPRESSING HIS VIEWS AND THUS ENABLING A MAJORITY V IEW ON THE POINT OR POINTS OF DIFFERENCE. WHAT THEN REMAINS FOR THE DIV ISION BENCH IS SIMPLY IDENTIFYING THE MAJORITY VIEW AND DISPOSE OF THE AP PEAL ON THE BASIS OF THE MAJORITY VIEWS. IN THE COURSE OF THIS EXERCISE IT IS IN OUR HUMBLE UNDERSTANDING NOT OPEN TO THE DIVISION BENCH TO RE VISIT THE ADJUDICATION PROCESS AND START EXAMINING THE LEGAL ISSUES. OF CO URSE WE MAY HASTEN TO ADD THAT ALL THAT THE TRIBUNAL DOES REMAINS AND S HALL ALWAYS REMAIN SUBJECT TO THE DIRECTIONS OF THE HONBLE COURTS ABO VE AND NOTWITHSTANDING OUR HUMBLE UNDERSTANDING ABOUT THE SCOPE OF WORK AT THIS STAGE OF PROCEEDINGS UNDER THE SCHEME OF THE INCOME TAX ACT ANY DIRECTIONS FROM THE HONBLE COURTS ABOVE AS IN THE CASE OF B T PATIL (SUPRA) ARE TO BE LOYALLY AND UNHESITATINGLY FOLLOWED BY US. THAT IS A DIFFERENT SITUATION ALTOGETHER BUT THEN MERELY BECAUSE SUCH DIRECTIONS HAVE BEEN ISSUED IN ONE CASE IT CANNOT BE INFERRED THAT AS A NORMAL RULE ADJUDICATION PROCESS IS TO BE STARTED DE NOVO AT THE STAGE OF MAJORITY VIEW EF FECT PROCEEDINGS. IN CASE ANYONE HAS GRIEVANCES WITH THE MAJORITY VIEW THE A GGRIEVED PARTY CAN SEEK APPROPRIATE REMEDY AGAINST THE SAME. THAT SITUATION WILL COME ONLY WHEN THE MAJORITY VIEW IS IMPLEMENTED AND A FORMAL ORDER IS PASSED ON THE APPEAL. HOWEVER JUST BECAUSE ONE OF THE PARTIES BE FORE US HAS A GRIEVANCE WITH THE MAJORITY VIEW NOTWITHSTANDING THE MERITS OF SUCH GRIEVANCE EVEN IF ANY WE MUST NOT DELAY THE JUDICIAL PROCESS OF G IVING EFFECT TO THE MAJORITY VIEW. THE MAJORITY VIEW IN THESE APPEALS IS THAT TH E LEARNED CIT(A) WAS CORRECT IN CONFIRMING THE IMPUGNED PENALTIES OF RS 54 82 239 AND RS 34 90 015 IN THE CASE OF JUPITER CORPORATION SERVI CES LTD FOR THE ASSESSMENT YEAR 1995-96 AND 1996-97 AND OF RS 9 17 680 IN THE CASE OF SMT SULOCHANA V GUPTA FOR THE ASSESSMENT YEAR 1996-97. WE ACCORD INGLY CONFIRM THE SAME. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US. RESPECTFULLY FOLLOWING THE SAME AND RE JECTING THE OBJECTIONS RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE WE HOLD TH AT THE MAJORITY VIEW IS THAT CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTIES IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 OF RS 46 64 350 FOR THE ASSESSMENT YEAR 1995-96 RS 2 88 42 796 FOR THE ASS ESSMENT YEAR 1996-97 AND OF RS 34 78 593 FOR THE ASSESSMENT YEAR 1997-98. TH E RELIEF SO GRANTED BY THE I.T.A. NOS. : 1828 1829 AND 1830/AHD/2011 ASSESSMENT YEARS: 1995-96 1996-97 AND 1997-98 PAGE 9 OF 9 CIT(A) THUS STANDS VACATED AND THE PENALTY ORDERS P ASSED BY THE ASSESSING OFFICER STANDS RESTORED. 5. IN THE RESULT THE APPEALS ARE ALLOWED. PRONOUNC ED IN THE OPEN COURT TODAY ON 24 TH DAY OF APRIL 2015. SD/- SD/- PRAMOD KUMAR S. S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD THE 24 TH DAY OF APRIL 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD