2004 (3) TMI 57 - HC - Income Tax

Disagreement between the two members of Tribunal - Accountant Member and the Judicial Member - procedure prescribed under section 255(4) Reference to President - Whether in terms of section 255, when there is a disagreement between the members, subsequently, one of them can change his opinion agreeing with the other member? Held, No - it was incumbent upon the members to state the points on which they differed and the case was required to be referred to the President of the Tribunal for appropriate orders. In these circumstances, the Accountant Member could not have subsequently changed his opinion and the order that was required to be passed was one for stating the point or points of difference as prescribed by sub-section (4) of section 255

Summary

Issues:
1. Interpretation of section 255 of the Income-tax Act, 1961 regarding disagreement between members of the Income-tax Appellate Tribunal.

Analysis:
The case involved appeals for the assessment years 1993-94 and 1994-95 where the Accountant Member and the Judicial Member of the Income-tax Appellate Tribunal expressed differing opinions. The Judicial Member partially allowed the appeals for the Revenue, leading to a disagreement between the two members. The procedure under section 255(4) of the Income-tax Act, 1961, which requires referral to the President for a resolution when members differ in opinion, was not followed in this case.

Subsequently, the Accountant Member changed his initial opinion to align with the Judicial Member's findings, which was deemed improper. The Accountant Member was considered functus officio after passing the initial order, and the statutory procedure for resolving disagreements was not adhered to. As per section 255(4) of the Act, in case of a difference in opinion, the points of disagreement should be stated, and the matter referred to the President for appropriate action.

Consequently, the High Court held that the Accountant Member's revised order was invalid and set it aside. With conflicting orders from the two members, the court directed the matter to be sent back to the Tribunal for a resolution in accordance with the provisions of section 255 of the Income-tax Act. The appeals were allowed to the extent specified, emphasizing the importance of following the prescribed procedure for resolving disagreements among tribunal members.

This judgment clarifies the procedural requirements under section 255 of the Income-tax Act, emphasizing the need for proper adherence to statutory provisions when members of the Income-tax Appellate Tribunal disagree on a point. The decision highlights the significance of following the prescribed process for resolving differences of opinion to ensure a fair and lawful resolution of appeals before the Tribunal.