2008 (1) TMI 7 - HC - Income Tax

Valuation of stock in trade - whether the ITAT was justified in differing with a view taken by a co-ordinate bench of the tribunal in respect of the same assessee for the earlier assessment year - Held answer in negative and remit the matter to tribunal for fresh consideration

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was justified in differing with the view taken by a co-ordinate Bench of the Tribunal for the same Assessee for the assessment year 1985-86?

Analysis:
The primary issue in this case revolved around the justification of the Income Tax Appellate Tribunal differing with the view taken by a co-ordinate Bench of the Tribunal for the same Assessee concerning the assessment year 1985-86. The Tribunal had to determine whether the Assessing Officer was correct in making an addition of Rs.6.01 crores upon revaluation of the stock in trade of the Assessee. The Tribunal had previously dealt with a similar issue for the same Assessee in the assessment year 1985-86, where the Assessing Officer's addition was set aside by the Commissioner of Income Tax (Appeals). The Tribunal, in that instance, relied on the Commissioner's reasoning and declined to interfere with the order. However, when the same issue arose in the assessment year 1992-93, the Tribunal rejected the Assessee's plea to follow the earlier decision, citing reasons such as the applicability of an amendment to the Act, differences in cited decisions, and the sensitive nature of the issue. The Tribunal's decision not to follow the earlier order raised concerns of judicial propriety and discipline.

The High Court referred to legal precedents to emphasize the importance of consistency in decisions by a Tribunal. It cited the Union of India v. Shri P.D. Sharma case, where it was established that a Coordinate Bench must not pass a contrary order to an earlier Bench and should refer the matter to a Larger Bench if there is a difference in opinion. Additionally, the court referenced the Sundarjas Kanyalal Bhatija case, highlighting the necessity to refer the matter to a larger bench when there is a disagreement within co-ordinate jurisdiction. The court underscored the significance of judicial decorum and legal propriety in maintaining consistency and avoiding subversion of the judicial process. Consequently, the High Court answered the question in the negative and remitted the matter to the Tribunal for a fresh consideration in accordance with the law.

In conclusion, the judgment focused on the principle of consistency and judicial discipline within the Tribunal's decisions, emphasizing the need to follow established legal procedures and refer matters to a Larger Bench in case of conflicting views. The High Court's decision aimed to ensure adherence to judicial propriety and maintain the integrity of the legal process.