More scope for Single Member Bench (SMC Bench) is desirable for early disposal of cases to reduce disputed dues, costs and litigation time

[CA DEV KUMAR KOTHARI]

Section 255 of the Income-tax Act, 1961.

Earlier articles on this website which can be searched in advance search page of articles with hints like ‘unnecessary litigation’ ‘Single member bench’ and expeditious justice etc.

Provision relating to hearing by single member of bench of Tribunal.

Section 255 of the Income-tax Act, 1961contains provisions relating to procedure of Appellate Tribunal. Provisions for functioning of benches are reproduced below with highlights added:

Procedure of Appellate Tribunal.

255. (1) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof.

(2) Subject to the provisions contained in sub-section (3), a Bench shall consist of one judicial member and one accountant member.

(3) The President or any other member of the Appellate Tribunal authorised in this behalf by the Central Government may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member and which pertains to an assessee whose total income as computed by the Assessing Officer in the case does not exceed five hundred thousand rupees], and the President may, for the disposal of any particular case, constitute a Special Bench consisting of three or more members, one of whom shall necessarily be a judicial member and one an accountant member.

Single member bench: 

Portion relevant to single member bench (popularly called SMC bench) are found in sub-section (3) of section 255 as reproduced above.

Who can be judge in SMC?

The President or any other member of the Appellate Tribunal can be sole member of SMC

Who authorize member of SMC?

The Central Government may, authorize a member of ITAT to constitute a SMC to dispose of case sitting singly. The case has first to be allotted to a bench , and then a member of that bench can be authorized to decide the case sitting singly.

Scope: The case should pertain to an assessee whose total income as computed by the Assessing Officer in the case does not exceed five hundred thousand rupees.

Scope need to be increased in the following manner:

The amount of disputed revenue should be criterion instead of ‘total income’ computed by the Assessing Officer.

The limit of Rs.5 lakh based on total income is very low. It can be raised to Rs. ten lakh of revenue in dispute. And for this purpose cases of any tax, interest and penalty can be covered.

Provision can be made that all covered matters can be decided by SMC bench.

In case an appeal contains some covered matters, those can be decided by SMC and other matters can then be decided by division bench.

We find that the President of ITAT is authorized to constitute Special benches, and Third Member Benches, so the power to constitute SMC can also be vested in the President and / or Vice President of ITAT in any zone where President is not sitting.

Tribunal is the final fact finding authority:

ITAT is second appellate authority dealing direct taxes. ITAT is also final fact finding authority and the facts found by it are generally final and are not disturbed by the High Court or the Supreme Court unless the findings are challenged and found perverse or patently wrong. In case of perverse finding or patently wrong finding also usually courts prefer to remit the matter to the Tribunal for correct ascertainment of facts.

Covered matters:

If an issue is covered by judgment of High Court or other benches of ITAT, generally it is followed by division bench and SMC bench. If there is difference of opinion, then the president may constitute a special bench or larger bench to resolve difference. Therefore, SMC can easily dispose off covered matters.

For example, there are large number of cases of tea companies ( at Kolkata and Guwahati benches of ITAT in which revenue is challenging orders of CIT(A) allowing deduction of green tea leaf cess against composite income of tea. The CIT(A) are following judgments of Calcutta and Guwahati High Court rendered in context of Income Tax Act, 1961. However, revenue is relying on a judgment rendered earlier by Guwahati High Court, in context of Assam Agricultural Income Tax Act, allowing green leaf cess against agricultural income.

These and similar appeals on covered matters can easily be decided by SMC bench and that will reduce work load on division benches.

Implements, of above suggestions will make work of Tribunal very convenient to quickly dispose off cases. Pending disputes and disputed demand will reduce. There will be continuous functioning of benches. We find many times benches are not functioning because either Judicial Members or Accountant Members are not available to constitute Division bench of ITAT. This is also causing lot of tours by members posted at one place to other places. .

Earlier articles:

Readers may refer to various articles written by author on issue of SMC and also on un-necessary litigation by revenue on covered matters. SMC benches will go a long way to expedite disposal of cases which are covered and will also reduce un-necessary litigation and cost of litigation will also be reduced.