2015 (5) TMI 510 - AT - Income Tax

Penalty under section 271(1)(c) - CIT(A) confirmed penalty levy - whether the Tribunal while complying with the provisions of section 255(4) of the Act can consider the judgment of the Hon ble High Court in the case of ABG Heavy Industries 2010 (2) TMI 108 - BOMBAY HIGH COURT ? - grievance with the majority view - Held that - In the light of the clear directions given by the Hon ble Bombay High Court in the appeals filed by the assessee for the impugned assessment years inter alia directed the Tribunal to consider the said decision of ABG Heavy Industries and all other decisions, we can 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 provisions 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. In case anyone has grievances with the majority view, the aggrieved 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 before 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 giving effect to the majority view. The majority view in these appeals is that the learned CIT(A) was correct in confirming the impugned penalties of ₹ 54,82,239 and ₹ 34,90,015 in the case of Jupiter Corporation Services Ltd for the assessment year 1995-96 and 1996-97 and of ₹ 9,17, 680 in the case of Smt Sulochana V Gupta for the assessment year 1996-97. We, accordingly, confirm the same. - Decided against assessee.

Summary

Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Validity of the Third Member's decision in light of jurisdictional High Court precedents.
3. Request for adjournment and reference to a special bench.
4. Procedural propriety in giving effect to the majority view.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c) of the Act:
The primary issue in this case was whether the CIT(A) was justified in confirming the penalty under section 271(1)(c) of the Income Tax Act, 1961. Initially, there was a disagreement between the Judicial Member and the Accountant Member, leading to the referral of the matter to a Third Member. The Third Member concurred with the Accountant Member, stating that "on the facts and circumstances of the case, deletion of penalty was not justified," thus supporting the confirmation of the penalty by the CIT(A).

2. Validity of the Third Member's Decision in Light of Jurisdictional High Court Precedents:
The appellant's counsel argued that the Third Member's decision disregarded the division bench orders and cited the case of CIT Vs Vallabhdas Vithaldas, where it was held that decisions of division benches must bind single member benches. The counsel contended that the Third Member should have referred the matter to a special bench of three or more members instead of disregarding the earlier division bench rulings. The Tribunal acknowledged the legal position post Vallabhdas Vithaldas decision, emphasizing that "the decisions of the division benches bind the single member bench, even when such a single member bench is a third member bench."

3. Request for Adjournment and Reference to a Special Bench:
The appellant's counsel sought an adjournment on the grounds that quantum proceedings were pending before the Gujarat High Court. Upon refusal, the counsel argued for referring the Third Member effect proceedings to a special bench, asserting that the Third Member's decision was erroneous and contrary to binding judicial precedents. However, the Tribunal noted that the Third Member had provided specific reasons for not following the coordinate benches' decisions, and any grievances with the majority view should be addressed through higher forums.

4. Procedural Propriety in Giving Effect to the Majority View:
The Tribunal deliberated on whether it could consider other issues while giving effect to the majority views under section 255(4). It concluded that the division bench's role at this stage is limited to implementing the majority views without revisiting the adjudication process. The Tribunal referenced the case of B T Patil & Sons Belgaum Constructions Pvt Ltd, where specific directions from the High Court allowed considering subsequent judicial developments. However, in the absence of such directions, the Tribunal emphasized that the adjudication process should not be re-examined at the stage of giving effect to the majority view.

Conclusion:
The Tribunal confirmed the penalties imposed by the CIT(A), aligning with the majority view that the penalties were justified. The appeals were dismissed, and the Tribunal underscored the necessity of adhering to the majority view without reopening the adjudication process unless directed by higher judicial authorities. The judgment was pronounced in the open court on April 24, 2015.