1999 (3) TMI 46 - HC - Income Tax

Summary

Issues:
1. Appeal against the order passed by the Income-tax Appellate Tribunal on the stay application.
2. Disagreement between the Vice-President and the Judicial Member on the observations made during the stay application.
3. Procedure to be followed in case of a difference of opinion among the members of the Tribunal.
4. The power of the President of the Tribunal to constitute a Bench of Third Member.
5. Adjudication on the final order in accordance with the majority decision.
6. Proper procedure under section 255(4) of the Income-tax Act.

Analysis:

1. The petition was filed by the Joint Commissioner of Income-tax challenging the order passed by the Income-tax Appellate Tribunal on the stay application submitted by the first respondent. Two applications for stay of demands were made by the assessee, and the appeals are still pending. The petitioner was aggrieved by the observations made by the Vice-President, which led to a dissenting order by the Judicial Member.

2. The judgment emphasized that observations made during a stay application are tentative and do not impact the final decision on the case. In case of a difference of opinion among members, the point must be decided by the majority, and if equally divided, the case should be referred for further hearing. The final order passed in accordance with the majority decision is the one that can be challenged in proper proceedings.

3. The procedure under section 255(4) of the Income-tax Act was highlighted, stating that the Tribunal must frame the points of disagreement and refer the case to the President for further hearing by other members. The President has the authority to constitute a Bench of Third Member, who will decide the points referred to them. The parties must be given an opportunity to address the points before a final decision is made.

4. It was clarified that any jurisdictional error or failure to follow the prescribed procedure under section 255(4) can be challenged at the appropriate stage. The judgment refrained from interfering in the matter and left it to the Tribunal to follow the correct procedure for resolving the disagreement among the members.

5. The judgment also addressed concerns about the procedure followed by the Vice-President but refrained from commenting on it, as the matter was pending before the Third Member due to the existing difference of opinion. Ultimately, the petition was disposed of with the observations made in the judgment.