Back
1996 Supreme(SC) 119
1996(1) Supreme 578
SUPREME COURT OF INDIA
B.P.Jeevan Reddy & S.B. Majmudar, JJ.
The Income Tax Appellate Tribunal,
Hydrabad -Appellant
versus
The Deputy Commissioner of Income-tax (Assts.) III, Hyderabad & Ors. -Respondents
Civil Appeal Nos. 2039-41 of 1996
Decided on 17-1-1996
Counsel for the Parties :
For the Appellate Tribunal : Shri Subba Rao.
For the Respondent : Shri Ahuja.
IMPORTANT POINT
The President of the Income-tax Appellate Tribunal was legally competent to constitute a Special Bench for hearing the three appeals moved by respondent No. 2-Assessee in these three cases and that the Special Bench was validly constituted.
Headnote:Constitution of India-Art. 136-Tribunal appealing to Supreme Court-Whether High Court erred in law in taking the view that the President of the Income-tax Appellate Tribunal had no jurisdiction to constitute a Special Bench for hearing the appeals of the respondent-Assessee ? (No) (Para 15)-Whether Tribunal committed breach of principles of natural justice ?-(Yes, in not granting short adjournment or not taking written submissions on record but as revenue sufferred nothing due to acceptance of its construction of Section 115J of I.T. Act, 1961 by High Court, no further discussion done). (Para 11)
Held : In view of the aforesaid affidavit based on the relevant events which transpired prior to the Constitution of the Special Bench, and in the light of the relevant documentary evidence produced in support of the affidavit, we have no doubt that the learned President in bona fide exercise of his administrative power constituted the Special Bench for deciding the Income Tax Appeals with which the present proceedings are concerned. Consequently, the observation of the High Court that the Special Bench was constituted at the whims and fancies of the President for deciding these appeals must be held to be unjustified and unsustainable. (Para 19)
Held further : In view of our conclusion on point No. 2 and as we have held that point No. 1 does not survive for our decision as aforesaid, the judgment and order rendered by the Division Bench of the High Court in the three writ petitions moved by the Deputy Commissioner of Income Tax on the aforesaid two points are quashed and set aside. so far as the question about true construction of Section 115-J is concerned, we keep it open for decision in the delinked S.L.Ps. of the assessees. All the three appeals are allowed accordingly. The wirt petitions before the High Court will stand dismissed to the aforesaid extent. On the facts and circumstances of the case there will be no order as to costs all throughout. (Para 21)
JUDGMENT
S.B. Majmudar, J.-Leave granted in all these petitions.
2. By consent of learned advocates of parties the appeals are heard finally and are being disposed of by this common judgment. These appeals are taken out by Income Tax Appellate Tribunal (referred to as the Appellate Tribunal ) which is up in arms against the Income Tax Department. In a way these are unusual cases wherein the Tribunal has to vioce a grievance against the Income Tax Department in connection with its functioning as such. A few relevant background facts are required to be noted at the outset to highlight the grievance of the appellant- Appellate Tribunal.
Background Facts
2. M/s. Surana Steels Pvt. Ltd., M/s. Binjusaria Metal Box Co. Pvt. Ltd. and M/s. Agroha Extraction Ltd., who are respondents Nos. 2 in each of these appeals are the concerned assessees. They were appellants in three income tax appeals before the Income Tax Appellate Tribunal, Hyderabad. The Special Bench thereof disposed of all the three appeals by common order dated 4th February 1993 as they involved consideration of common question of law relating to the construction of Section 115-J of the Income Tax Act, 1961 (hereinafter referred to as Income Tax Act ).
3. This decision of the Special Bench resulted in three writ petitions moved by the Deputy Commissioner of Income Tax, Hyderabad before the High Court of Andhra Pradesh. The assessee-respondent No. 2 in each of these appeals had succeeded before the Special Bench of the Appellate Tribunal on the construction of Section 115-J of the Income Tax Act. However, Income Tax Reference No. 126 of 1992 which was pending in the High Court also pertained to the very same question centering round the construction of Section 115-J and was, therefore, clubbed with the aforesaid three writ petitions moved by the Deputy Commissioner of Income Tax against the common order of the Special Bench dated 4th February 1993. All these matters were heard by a Division Bench of the High Court consisting of V. Sivaraman Nair and S.V. Maruthi, JJ. The Division Bench of the High Court by its common order dated 31st December 1993 allowed the three writ petitions moved by the Deputy Commissioner of Income Tax and answered the Reference in favour of the Revenue and against the assessees. The Appellate Tribunal being aggrieved by the findings reached by the High Court in the writ petitions has filed the aforesaid appeals before this Court on obtaining leave under Article 136 of the Constitution of India. The dissatisfied assessees have filed saparate Special Leave Petitions Nos. 12446 and 12835 of 1994. By an order dated 8th August 1994 in the special leave petitions moved by the Appellate Tribunal a bench of this Court consisting of one of us, Jeevan Reddy, J. and Sen, J., issued notice and directed that pending further orders, the judgment, in so far as it holds that constitution of a Special Bench consisting of three or more members by the President of Income Tax Appellate Tribunal can be done only and by virtue of a judicial order, is suspended, while notice was also issued and interim relief was granted on condition in the assessee s Special Leave Petition No.12446 of 1994 arising from the very same common judgment of the High Court.
4. By a later order dated 3rd April 1995, however, Special Leave Petitions Nos. 12054-56 of 1994 moved by the Income Tax Appellate Tribunal were-delinked from other matters. That is how the asseesse s Special Leave Petitions are now on longer a part of the present group and we are concerned, in the present proceedings, with the three appeals arising about of Special Leave Petition Nos. 12054-56 of 1994 moved by the Income Tax Appellate Tribunal against the common order of the Division Bench of the High Court in the aforesaid three writ petitions. Consequently, we will not be concerned, in these proceedings, with the question of construction of Section 115-J of the Income Tax Act and the merits of the decision of the High Court o
