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2008 (2) TMI 641 - HC - Income TaxTribunal was justified and/or had the jurisdiction to ignore the decision of the High Court on the ground that it does not lay down the correct principles of law on the issue involved therein. - Tribunal was right in their observations, even then what was the procedure which the Tribunal should have followed in such eventuality or not. Regarding jurisdiction of Tribunal. Held that - the Tribunal was not justified in commenting upon the decision of High Court nor was justified in ignoring the decision on the ground that it does not lay down the correct principle of law on the issue involved. Decided in favour of Assessee. Regarding procedure followed by Tribunal. held that - a power to overrule any decision of the High Court vests only with the Supreme Court and with the larger Bench of the same High Court. So long as the decision is not overruled, it continues to hold the field and is, therefore, binding on courts/tribunals subordinate to such High Court. decided in favour of Assessee.
Issues Involved:
1. Jurisdiction and justification of the Tribunal in ignoring the High Court's decision. 2. Procedure to be followed by the Tribunal if it disagrees with the High Court's decision. Issue-wise Detailed Analysis: 1. Jurisdiction and Justification of the Tribunal in Ignoring the High Court's Decision: The primary issue was whether the Tribunal had the jurisdiction to ignore a decision of the High Court on the grounds that it did not lay down the correct principles of law. The Tribunal had ignored the Madhya Pradesh High Court's decision in CIT v. Premier Industries P. Ltd. [1997] 227 ITR 282 (MP), arguing that the High Court had not considered retrospective amendments to section 143(1A) of the Income-tax Act, 1961. The High Court emphasized that the Tribunal, being subordinate to the High Court, must follow the decisions of the jurisdictional High Court. It cited several precedents, including the Supreme Court's rulings in Tirupati Balaji Developers P. Ltd. v. State of Bihar, AIR 2004 SC 2351, and East India Commercial Co. Ltd. v. Collector of Customs, AIR 1962 SC 1893, which established that lower courts and tribunals must adhere to the decisions of higher courts. The High Court reiterated that the Tribunal had no jurisdiction to comment on or ignore the decisions of the High Court, as doing so would undermine the hierarchical judicial system and the respect for law. The High Court concluded that the Tribunal was not justified in ignoring the High Court's decision and that it had no jurisdiction to declare the High Court's decision as incorrect. The Tribunal should have followed the decision of the jurisdictional High Court without making any adverse comments. 2. Procedure to be Followed by the Tribunal if it Disagrees with the High Court's Decision: Assuming the Tribunal was right in its observations, the second issue was what procedure it should have followed. The High Court stated that the Tribunal should have relied on the High Court's decision if it found it applicable and left any further action to the parties involved. The Tribunal should have mentioned the submission of the Revenue about the decision and left the issue at that stage, allowing the parties to appeal to the High Court for reconsideration by a larger Bench if necessary. The High Court emphasized that the jurisdiction to declare any decision of the High Court as incorrect or per incuriam lies only with the Supreme Court of India or a larger Bench of the concerned High Court. The Tribunal should not have ignored the High Court's decision but should have followed it and allowed the parties to seek further recourse through proper legal channels. Conclusion: The High Court answered both questions in favor of the assessee and against the Revenue. The Tribunal was not justified in ignoring the High Court's decision and had no jurisdiction to declare it incorrect. The proper procedure for the Tribunal, if it disagreed with the High Court's decision, was to follow it and allow the parties to seek further legal recourse.
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