ITAT-PROCEDURE- PRONOUNCEMENT OF ORDER IS REQUIRED AN ORDER YET TO BE PRONOUNCED MAY NOT BE CONSIDRED AN ORDER AT ALL.

[C.A. DEV KUMAR KOTHARI]

Relevant provisions and links:

Section 254 of I.T.Act, 1961.

Rule 34 and 35 of ITAT Rules.

Section 245R of  the I.T.Act, 1961 relating to AAR.

Code of the Civil Procedure Section 33 about . Judgment and decree.

 Civil Procedure Rules the order XX.

 CIT v. Sudhir Choudhrie and Others (2005) 278 ITR 490

Commissioner of Income-tax, Delhi    Modi Revlon (P.) Ltd.

Summary There appears no specific provision for pronouncement of judgment by the Tribunal, whereas such  provisions  exist in case of AAR and courts. Pronouncement of judgment or order is a healthy practice of prompt and quick delivery of judgment when it is made in presence of parties to the case and to others also when there is open court .  In a recent judgment Delhi High Court held that a judgment of Tribunal which has not been pronounced, cannot be relied on and based on such judgment the matter cannot be restored to lower authorities.

Earlier Delhi high court has directed the Tribunal to start practice of pronouncement of judgments.  At that time in another article written by the author he expressed view that  that the judgment of the court deserves to be accepted by the Tribunal and practice of pronouncement of orders/ judgments by Tribunals may be adopted allover India and an amendment in provisions is desirable. We find that lateron ITAT Rules were amended and now the practice of pronouncement of orders is followed by the Tribunal

Position prior to and after Delhi High Court judgment and amendment in ITAT Rules: 

Under the provisions of Income-tax Act, 1961, the Wealth-tax Act the Tribunals is second appellate authority after the CIT (A). Tribunal is also appellate authority in the case of suo moto revision orders passed by the CIT.The Tribunal is considered final fact authority. In the related provisions of these Acts, there is provision that the Tribunal shall pass an order on the appeal.  There is no specific provision to pronounce the judgment or order on appeal in the Courtroom.  Earlier (prior to judgment of Delhi High Court) as a matter of practice the Tribunal used to hear matter in open courtroom but judgment was generally not pronounced. Judgment was later on dictated, typed, signed and dated and then copy was delivered to the concerned parties by the office of the Tribunal.  These were normal procedures, which were followed by various benches of Tribunal. Only in cases where the matter was of routine nature and fully covered by judgment of the jurisdictional high court or the Supreme Court some times the Tribunal members announced or gives hint in the courtroom that those judgments will be followed. However, this cannot be called as pronouncement of judgment. Because what is expressed in such situations can just be called an observation, gesture, or indication and not pronouncement. Many times we found that during hearing what was indicated, as decision was not actually found in final order.

Relevant provisions regarding order of Tribunal, Authority for advance Ruling, and code of civil Procedures:

Relevant part of S.254 of I. t. Act regarding Tribunal's order:

(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.

(3) The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to the Commissioner.

(4) Save as provided in {the National Tax Tribunal Act, 2005}* orders passed by the Appellate Tribunal on appeal shall be final.

 * substituted fro section 256 or section 260A w.e.f. such date as may be notified in this regard vide the National Tax Tribunal Act, 2005..

Relevant part of ITAT Rules relating to orders reads as follows: 

[Order to be pronounced, signed and dated

34. (1) The order of the Bench shall be in writing and shall be signed and dated by the Members constituting it.

(2) The Members constituting the Bench or, in the event of their absence by retirement or otherwise, the Vice-President, Senior Vice-President or the President may mark an order as fit for publication.

(3) Where a case is referred under sub-section (4) of section 255, the order of the Member or Members to whom it is referred shall be signed and dated by him or them, as the case may be.

(4) The Bench shall pronounce its orders in the Court.

(5) The pronouncement may be in any of the following manners :—

          (a)  The Bench may pronounce the order immediately upon the conclusion of the hearing.

          (b)  In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement.

          (c)  In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.

(6) The order of the Bench shall ordinarily be pronounced by the Members who heard the appeal. However, if the said Members or any of them is or are not available for pronouncement for any reason, then the order will be pronounced by such Member or Members as may be nominated by the President, Senior Vice-President, Vice-President, or Senior Member, as the case may be.

(7) In the case where the order is ready in every respect and can be made available to the parties, the Bench may advance the date of pronouncement and put this information on the notice board and the order shall be pronounced accordingly.

(8) In a case where the order cannot be pronounced on the date given, the date of pronouncement may be deferred, subject to sub-rule (5)(c) above, to a further date and information thereof shall be given on the notice board.]

Order to be communicated to parties.

35. The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner.

Orders of Authority for Advance Ruling (AAR)

Provision relating to advance ruling by AAR is contained in S. 245 R of the Income tax Act, parts relevant to order reads as follows:

(4) Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application.

 (6) The Authority shall pronounce its advance ruling in writing within six months of the receipt of application.

(7) A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the commissioner, as soon as may be, after such pronouncement.

Code of the Civil Procedure:

Section 33. Judgment and decree. - The Court, after the case has been heard, shall pronounce judgment, and on such judgment a decree shall follow.

In Civil Procedure Rules the order XX prescribes as follows:

JUDGMENT AND DECREE

1.         Judgment when pronounced. - 1) The Court, after the case has been heard, shall pronounce judgment in open Court, either at once or, as soon thereafter as may be practicable, on some future day; and when the judgment is to be pronounced on some future day, the Court shall fix a day for that purpose, of which due notice shall be given to the parties or their pleaders.

            Provided that where the judgment is not pronounced at once, every endeavor shall be made by the Court to pronounce the judgment within fifteen days from the date on which the hearing of the case was concluded but, where it is not practicable so to do, the Court shall fix a future day for the pronouncement of the judgment, and such day shall not ordinarily be a day beyond thirty days from the date on which the hearing of the case was concluded, and due notice of the day so fixed shall be given to the parties or their pleaders.

            Provided further that, where a judgment is not pronounced within thirty days from the date on which the hearing of the case was concluded, the Court shall record the reasons for such delay and shall fix a future day on which the judgment will be pronounced and due notice of the day so fixed shall be given to the parties or their pleaders.

            (2) Where a written judgment is to be pronounced, it shall be sufficient if the findings of the Court on each issue and the final order passed in the case are read out and it shall not be necessary for the Court to read out the whole judgment, but a copy of the whole judgment shall be made available for the perusal of the parties or the pleaders immediately after the judgment is pronounced.

            (3) The judgment may be pronounced by dictation in open Court to a shorthand writer if the Judge is specially empowered by the High Court in this behalf:

            Provided that, where the judgment is pronounced by dictation in open Court, the transcript of the judgment so pronounced shall, after making such correction therein as may be necessary, be signed by the judge, bear the date on which it was pronounced, and from a part of the record.

Analysis:

We find that in case of AAR, there is specific provision to pronounce advance ruling on questions framed in the application (sub-section (4) and also to pronounce the advance ruling in writing (sub-section (6), and there is also provision to provide copy of advance ruling to the applicant and the commissioner. The two provisions may create confusion, in sub section (4) there is requirement of pronouncement of the advance ruling, and also there is requirement of pronouncing in writing in sub-section (6).  

Prior to amendment of Rule 34 of ITAT Rules w.e.f. 02.03.2006, in case of The Appellate Tribunal the provisions said  that  "It may, pass such orders thereon as it thinks fit^{" and} shall send a copy of any orders passed under this section to the assessee and to the Commissioner. This means that order has to be in writing. Therefore, there was no specific requirement of pronouncing order or pronouncing the order in writing in the case of Tribunal as we find in the case of AAR. In both the cases requirement is to provide a copy of the order to the concerned parties.

Vis a Vis CPC:

A perusal of the above provisions of the Income Tax Act, and Civil procedure shows that there are use of different words and phrases, but main purpose is that order, ruling or judgment as the case may be, must be in writing and a copy of the same must be provided to the parties. 'Pronouncement', is a part of procedure, and it leads to healthy practice to be observed to ensure that the parties to the lis. Comes to know the outcome as soon as the judgment is finalized. Provisions of the Civil Procedures make it clear that pronouncement of judgment within a limited time frame is equally important to serve the purpose of justice.

Subsequent amendment:

 As noted above after amendment of Rule 34 of ITAT Rules, the ITAT is also now required to pronounce orders. The procedure for such pronouncement is also provided. The amendment is a procedural amendment and therefore it applies to all appeals order on which is made after amendment  irrespective of assessment year.

Whether, Tribunal is duty-bound to pronounce its

 Judgment as per the provisions of Income-tax Act and Allied Acts?

As observed above  earlier there was no specific provision to pronounce judgment as is the case in case AAR or courts.

High Courts pronounce judgment in open Court and many time dictation of order is also given in the open Court. Many times judgment is kept reserved and separate date is fixed for pronouncement of the order.  However, in case of Income-tax Appellate Tribunal, such practice was not  generallu followed earlier.

Whether the Tribunal is also required to pronounce judgment / order even prior to amendment of ITAT Rules:

As per Delhi High Court in CIT v. Sudhir Choudhrie and Others (2005) 278 ITR 490 the Tribunal is also required to pronounce judgment ( this was prior to amendment of ITAT Rules).

An analysis of observations and ruling is made below: -

There is no specific provision in the Income Tax Act, or Rules and ITAT Rules to pronounce judgment.

The Code of Civil Procedure vide section 33 and Order 20, rules 1, 2 and 3 provide for pronouncement of judgment in the open court as well as the judgment to be dated and signed by the judge in the open court at the time of pronouncement. This is a procedural law and confers right to the litigants to know the order or judgment on the day when it is made and signed.

There are not even provisions under the Income-tax Act, which contemplate signing, dating and pronouncing of the orders passed by the Tribunal under section 254(1) of the Income-tax Act, 1961.

Rules of procedure have to further the cause of justice and avoid prejudice to the litigating parties.

The provisions of section 254(1) cannot be construed, so as to exclude the act of pronouncement of order of judgment.

In fact, section 254 (1) does not deal with the manner of writing, dating or pronouncement of orders, but is a provision which primarily deals with the empowerment of the Tribunal to pass appropriate orders in the given facts and circumstances of a case. (Added by author- in fact phrase use is ' tribunal may' and not 'tribunal shall', but it cannot be said that this is discretionary to the tribunal to pass or not to pass any order on appeal the word 'may' needs to be construed as 'shall' in this context.)

 Even if the provisions were silent in that regard to read the word "pronouncement", to include such an act would be necessary by the very nature of things and would impose an obligation upon the Tribunal to pronounce its orders on the occasion when they are dated and signed by the members of the Bench of the Tribunal.

Dating and signing of judgment and declaration is a procedural matter and this would in no way infringe the rules and procedure.

The fine distinction between the expressions "pass" and "pronounce" should not be stretched to the extent that it offends the basic rule of law. The expression "pass" in common parlance or its usual sense means, "to deliver". 

In context of orders or judgments the term "pronounce" means to proclaim, to utter formally, to utter rhetorically, to declare, to utter articulate.  "Pronouncement in relation to a judgment requires the authority to apply its mind and arrive at a conclusion whether, there is any cause to modify or remit the award.  Further, the phrase "pronounce judgment" would itself indicate judicial determination by reasoned order, for arriving at a conclusion that decree in terms of the award is passed.

To argue that there is no specific provision like section 245R(6) relating to AAR, requiring the Tribunal to pronounce its order would be a travesty of justice as such an order is passed for the benefit of the parties to the lis.

Communication of the order for the purposes of limitation or as postulated under section 254(3) falls in a different field and domain.

Known precepts of procedural law would necessarily impose an obligation upon any forum or Tribunal, judicially determining the rights of the parties to declare its order on the date it is signed and declared.

Directions under extraordinary jurisdiction:

Exercising extraordinary jurisdiction under articles 226 and 227 of the Constitution of India the court directed the Income-tax Appellate Tribunal to pronounce its judgments and orders in open hearing and upon enlisting them for a given date.

The court ordered that this practice should be adopted by the Tribunal in addition to its obligation to communicate the orders as contemplated under section 254(3) of the Act and rule 35 of the ITAT Rules.

Rejecting arguments advanced by counsels for Tribunal court held that no prejudice, inconvenience or obstruction would be caused to the functioning of the Income-tax Appellate Tribunal by the pronouncing of its orders after enlisting them for a given date.  Rather it would facilitate proper functioning, would help the litigant to lawfully know the result of his appeal as well as avoid unnecessary delay in communication of the orders in accordance with law.  Such a practice would further the cause of justice and would also serve larger public interest.

Binding nature of the directions of the Delhi High court:

A. The above directions have been issued by the Delhi High Court. These directions touch upon the provisions of the Income Tax Act and The Income Tax Appellate Tribunal Rules read with Code of Civil Procedures. Therefore, the directions are binding upon all benches of ITAT, functioning in the jurisdiction of Delhi High Court.

B. A possible view is that these directions can be considered as binding on all benches of ITAT allover India. This is because:

(a)   The ITAT has its head quarters at Delhi

(b)   And all other benches are constituted by the ITAT from the head quarters; they are akin to branches of ITAT, Delhi.

(c)  The directions given are in the field of procedure to be adopted for better delivery of judgment.

Appeal is not desirable rather ITAT Rules may be amended:

It is hoped that considering the purpose of directions given by the Delhi High Court, the Tribunal shall not appeal against he judgment and accept the same. It is desirable that the Tribunal may amend the Income Tax Appellate Tribunal Rules to provide for pronouncement of orders/ judgments of tribunal by all benches.

Subsequent amendment in ITAT Rules:

As suggested in earlier published article, the Rule 34 of the ITAT Rules was amended w.e.f.02.03.06 vide the ITAT (Amendment) Rules 2006, after the Delhi High Courts judgment referred to above. After this amendment the ITAT has adopted practice of pronouncement of orders.  

Recent Ruling of Delhi High Court-

an unpronounced order is practically not an order:

Commissioner of Income-tax, Delhi . Vs  Modi Revlon P. Ltd decided on 28.04.2008 the court considered provisions of S. 254.  In this case the court found that the order relied on by the Tribunal was (passed) (should be pronounced, as per context and words used in judgment- author)  on  by the Tribunal on 31.03.2006 (in IT Appeal Nos. 2107 and 4156 (Delhi) of 2001), while the order under appeal was passed on 14-2-2006. Under these circumstances, the Tribunal could not direct the Assessing Officer to follow an order which was not yet pronounced( on 14.02.2006). It was clear that there had been a complete non-application of mind in this regard. It was not at all possible to understand as to how the Tribunal could give a direction to the Assessing Officer to follow an order which was due to be pronounced.

The court held that, it could be concluded that the impugned order passed by the Tribunal was vitiated by non-application of mind inasmuch as the Tribunal had restored the matter to the file of the Assessing Officer with a direction to follow the order of the Tribunal which was due to be pronounced. Thus, the case was to be remanded to the file of the Tribunal for reconsideration on merits and in accordance with law.

Implications of the judgment:

In view of author it appears that the order relied on by the Tribunal was dictated, typed and may have been signed but the same was not pronounced when the Tribunal relied on the same. The pronouncement of this order took place afterwards. This means that an unpronounced order is not an order in eyes of law.

If this view is taken a problem can arise in respect of earlier orders when the Tribunal had no practice of pronouncing orders.

If extreme view is taken once can say that all such orders, which are passed, signed and delivered but not pronounced   are  no orders or orders yet to be pronounced  and therefore they cannot be followed or acted upon. If so, this can lead to chaos to a great extent because Tribunal then should pronounce all old orders also. The best course is to amend the section 254 of the Income-tax act to provide for pronouncement of orders with clarity that the amendment shall not apply to earlier orders which have been passed and delivered to parties even without pronouncement.