2016 (5) TMI 957 - AT - Income Tax

Rectification of mistakes - Procedure of Appellate Tribunal - Whether on a proper interpretation of sub-section (4) of section 255 the order proposed by the Learned AM while giving effect to the opinion of the majority consequent to the opinion expressed by the learned Third Member, can be said to be a valid or lawful order passed in accordance with the said provision? Held that - The presence or absence of the consent of the parties will not change the decision rendered by the Special bench on various grounds on the basis of majority view in terms of sec. 255(4) of the Act. Since we are considering the miscellaneous petitions filed by the revenue u/s 254(2) of the Act and since we have noticed that the presence or absence of consent of parties does not affect the decision rendered by the Special bench on various grounds in terms of sec. 255(4) of the Act, we are of the view that the order passed by the Special bench cannot be held to be suffering from mistakes, warranting rectification within the meaning and scope of the provisions of sec. 254(2) of the Act. Accordingly, we are of the view that the said observations do not require any modification in terms of sec. 254(2) of the Act, as the appeals have been disposed of by the Special bench strictly in accordance with the provisions of sec. 255(4) of the Act. Hence we are of the view that the order passed by the Special Bench does not require rectification in terms of provisions of sec. 254(2) of the Act nor it curtails the right of the revenue to contest the orders passed by the Tribunal in accordance with the majority view in terms of sec. 255(4) of the Act by filing appeals before the Hon ble High Court. The revenue contention that it had argued against the constitution of Special Bench and the same was not considered by the Special Bench, the matter relating to the constitution of Special Bench is required to be represented before the Hon ble President, who had constituted the same and hence, even if the Revenue had argued against the same during the course of hearing before the Special Bench, the said contentions could not have been taken cognizance of by the Special bench. Accordingly, we are of the view that this contention of the revenue also does not give rise to any mistake apparent from record. The power given to the Tribunal u/s 254(2) of the Act is confined to the correction of mistakes apparent from record and the Tribunal is not entitled to review its own order under the garb of rectification of mistakes apparent from record. The above said contentions of the Ld D.R would result in review of the order passed by the Special bench in accordance with the majority view of the members. Accordingly, we decline to entertain the said contentions of the Ld D.R. - Decided against revenue

Issues Involved:
1. Recall of the common order dated 30-03-2012 by the Special Bench.
2. Legality of the order passed by the Accountant Member under section 255(4) of the Income Tax Act.
3. Admission and consideration of additional evidence.
4. Discrepancies and errors in the Special Bench's decision.
5. Consent for disposal of appeals by the Special Bench.

Issue-wise Detailed Analysis:

1. Recall of the Common Order Dated 30-03-2012 by the Special Bench:
The revenue filed miscellaneous applications to recall the common order dated 30-03-2012 passed by the Special Bench, aiming to rectify apparent mistakes of facts and modify the conclusion. The Special Bench was constituted to address the legality of the order passed by the Accountant Member while giving effect to the opinion of the majority, consequent to the opinion expressed by the Third Member.

2. Legality of the Order Passed by the Accountant Member Under Section 255(4) of the Income Tax Act:
The Special Bench examined whether the order proposed by the Accountant Member while giving effect to the opinion of the majority, consequent to the opinion expressed by the Third Member, was valid or lawful. The Special Bench concluded that the proposed order dated 18-02-2010 by the Accountant Member was not sustainable in law, holding that the Accountant Member had become functus officio and could not frame new questions for the President to resolve.

3. Admission and Consideration of Additional Evidence:
The Accountant Member questioned whether the additional evidence, which had not been filed before the Assessing Officer (AO), could be admitted by the Tribunal in deciding the issue of cash credit. The Special Bench observed that the Third Member had agreed with the Judicial Member, forming a majority view in favor of the assessee. The Special Bench also noted that the Third Member had acknowledged the need for the AO to examine the additional evidence, which had not been done.

4. Discrepancies and Errors in the Special Bench's Decision:
The revenue pointed out several errors in the Special Bench's decision:
- The phrase "the order proposed by the Ld. Accountant Member" was erroneous as only an opinion was expressed.
- The assertion of a majority opinion in favor of the assessee was disputed.
- The Third Member's omission to consider the audit report and the net basis of income declaration.
- The claim that additional evidence was considered by both members who originally heard the appeal and the Third Member, which was contested by the Accountant Member.

The Special Bench dismissed these contentions, stating that the observations in the disputed paragraphs related to the question posed before it and did not affect the grounds raised in the appeals.

5. Consent for Disposal of Appeals by the Special Bench:
The revenue contended that it did not consent to the Special Bench disposing of the appeals and argued against the constitution of the Special Bench. The Special Bench clarified that the decision to dispose of the appeals on the basis of majority view was made by the President in the interest of justice, and the presence or absence of consent did not affect the decision rendered. The Tribunal emphasized that the appeals were disposed of in accordance with the provisions of section 255(4) of the Income Tax Act, which does not require the consent of the parties.

Conclusion:
The Special Bench dismissed the miscellaneous petitions filed by the revenue, concluding that the order dated 30-03-2012 was valid and lawful, and did not suffer from mistakes warranting rectification under section 254(2) of the Income Tax Act. The appeals were disposed of in accordance with the majority view, as mandated by section 255(4) of the Act. The Tribunal also noted that the revenue's right to contest the orders before the High Court remained unaffected.

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