2008 (4) TMI 162 - HC - Income Tax

President or the third member has no right to go beyond the scope of reference and has to consider only the difference of opinion stated by the members of the Division Bench Section 255(4) does not vest such power with the President or the third member they have no right to enlarge restrict and modify or formulate any question of law on their own on the difference of opinion referred by the Members of the Tribunal - order of the Third Member is set aside

Summary

Issues Involved:
1. Legality of the Third Member's decision in ITA No.2943/MDS/1993.
2. Legality of summons issued under Section 131 of the Income Tax Act, 1961.
3. Legality of notices issued under Section 226(3) of the Income Tax Act, 1961.

Issue-Wise Detailed Analysis:

1. Legality of the Third Member's Decision in ITA No.2943/MDS/1993:
The petitioner challenged the order passed by the Third Member of the Income Tax Appellate Tribunal (ITAT) on the grounds that it was ultra vires the provisions of Section 255(4) of the Income Tax Act and opposed to the principles of natural justice. The petitioner argued that the Third Member exceeded his jurisdiction by formulating new questions and deciding the case beyond the scope of the original reference made by the Judicial Member and the Accountant Member. The court examined the scope of Section 255(4) and concluded that the President or the Third Member has no right to go beyond the scope of reference and must confine themselves to the difference of opinion stated by the Members of the Bench. The court cited previous judgments from the High Courts of Madras and Allahabad to support its conclusion that the Third Member's power is limited to deciding the points of difference referred to him. Consequently, the court set aside the order of the Third Member and directed the President of ITAT to nominate a new Member to rehear the matter strictly based on the original points of difference.

2. Legality of Summons Issued Under Section 131 of the Income Tax Act, 1961:
In W.P.No.2281 of 2008, the petitioner challenged the summons issued by the first respondent under Section 131 of the Income Tax Act, 1961. The court found that the petitioner did not point out any error or legal infirmity in the impugned summons. The court noted that the petitioner merely narrated facts related to the assessment year 1990-91, which had no bearing on the summons issued under Section 131. Therefore, the court dismissed the writ petition, finding no merit in the petitioner's arguments.

3. Legality of Notices Issued Under Section 226(3) of the Income Tax Act, 1961:
In W.P.Nos.2282 and 3135 of 2008, the petitioner challenged the notices issued under Section 226(3) of the Income Tax Act, 1961, which directed the petitioner's bankers to pay a sum towards tax arrears. The court observed that the petitioner did not point out any error or legal infirmity in the impugned notices. The petitioner had again narrated facts related to the assessment year 1990-91, which were irrelevant to the notices issued under Section 226(3). As a result, the court dismissed these writ petitions as well, finding no merit in the petitioner's arguments.

Conclusion:
The court set aside the Third Member's decision in ITA No.2943/MDS/1993 and directed a rehearing based on the original points of difference. The court dismissed the petitions challenging the summons issued under Section 131 and the notices issued under Section 226(3) of the Income Tax Act, 1961, due to a lack of merit in the petitioner's arguments.