STANDARD CHARTERED BANK, V. DDIT (iT) 2(1),

MA 144/MUM/2013

AI Insights

The case involves a series of appeals and miscellaneous applications related to the orders passed by the Income Tax Appellate Tribunal (ITAT) concerning the assessee, Standard Chartered Bank, and the revenue. Initially, both the assessee and the revenue filed appeals against the order dated 27-02-2004 by the CIT(A) for the assessment year 2006-07. Disagreements between the Accountant Member and the Judicial Member on certain grounds led to the framing of questions on points of difference under section 255(4) of the Income Tax Act. The matter was referred to a third member due to these differences. The assessee's miscellaneous application sought rectification of the orders passed by the members, which was contested by the revenue. The Tribunal's decision emphasized the procedural correctness in handling points of difference and the framing of questions by the third member.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136418 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 9 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 22-12-2022
• Assessment Year: 1996-1997
• Appeal Filed On: 17-04-2013
• Other Referred Cases: Suzlon Infrastructure Ltd vs. UOI, CIT vs. Bhai Shamsher Singh, Grindlays Bank vs Central Government Industrial Tribunal & ors, J.K.Synthetics Ltd vs Collector of Central Excise, Hanutram Chandanmul vs. CIT, CWT vs. Pramilaben, ACIT vs. Technimont, Dynavision Limited vs. ITAT, Jan Mohammed vs. CIT, Jain Irrigation vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Difference of opinion; Set aside
• Section: 254(2); 13; 255(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘I’ BENCH, MUMBAI. Before Shri B.R. Baskaran (AM) & Shri Sandeep Singh Karhail (JM) M.A. No. 144/Mum/2013 in (M.A. No. 139/Mum/2012 M.A. No. 21/Mum/2012) (Assessment Year :1996-97) M/s. Standard Chartered Bank 23-25, Mahatma Gandhi Road Fort, Mumbai-400 001. PAN : 35035CT8327 V s . D y. DCI T (Int ern ati on al Taxati on)- 2(1) R oom N o. 120, S cindi a H ou se, Bal lar d Pi er Mu mbai-400 03 8. (Appellant) (Respondent) Assessee by Shri Percy Pardiwala & Shri Madhur Agarwal Department by Dr. Samuel Pitta D ate of He a rin g 23.12.2022 D ate of P r on ou nc em ent 15.02.2023 O R D E R Per B.R.Baskaran (AM) :- The assessee has filed this Miscellaneous Application. 2. The facts that lead to the assessee to file this Miscellaneous Application are stated in brief. The assessee as well as the revenue filed appeals before the Tribunal challenging the order dated 27-02-2004 passed by Ld CIT(A) for AY 2006-07. The appeal filed by Revenue was numbered as ITA No. 5229/Mum/2004 and the appeal filed by the assessee was numbered as ITA No. 5303/Mum/2004. 3. After these appeals were heard by the bench, the Hon’ble Accountant Member (AM) passed order in April, 2011. The Hon’ble Judicial member (JM) did not agree with the view expressed by Ld AM in respect of Ground No. 2 in the appeal of the assessee numbered as ITA 5303/Mum/2004. Hence the M/s. Standard Chartered Bank 2 Hon’ble JM wrote a dissenting order on 13.06.2001. Both the members framed “question on the point of difference” between them u/s 255(4) of the Act. It was also referred to a third member. 4. When the above orders and question framed by both Members were forwarded to the parties, the assessee filed two Miscellaneous Applications, viz., (a) M.A.No.21/Mum/2012 in ITA No.5303/Mum/2004 against Ground No.2 and Ground no.3 in the order passed by Hon’ble AM. (b) M.A. No.139/Mum/2004 in ITA No.5229/M/2004 against Ground no.5 and also against ground no. 3 in ITA No.5303/M/04 in the order passed by Hon’ble AM. 5. The revenue also filed a miscellaneous application, viz, M.A. No. 22/Mum/2012 against Ground no.2 in ITA No.5303/Mum/2004 in the order passed by Hon'ble Judicial Member. 6. The assessee relied upon the decision rendered by Hon’ble Bombay High Court in the case of Suzlon Infrastructure Ltd vs. UOI (W.P No.4317 of 2009) and submitted that miscellaneous applications could be filed on the separate orders passed by the members of the bench. The said decision has been rendered in the context of Central Excise and Customs Act. In the above said case, the Hon’ble Bombay High Court has expressed following view:- “17. The issue therefore, before is whether during the pendency of the application before the third member, is it open to an aggrieved party to apply for rectification ? The difference of opinion can only arise when there are differing opinions in judgments or orders of members as noted in Subramaniam Chettiar (supra.) These difference of opinions would not constitute a decision. Under section 35 C power is to amend an order to rectify any mistake apparent from the record. The members of the tribunal can opinion nevertheless only pass those orders. If they differ in order would not cease to their be orders. Those orders however cannot be enforced as there is no M/s. Standard Chartered Bank 3 enforceable order. Under section 129 C (5) what has to be referred is difference of opinion on points amongst members. On the points being answered by the third member the points would stand answered in terms of the majority opinion of the judges constituting the earlier bench and the member to whom the matter was referred though a final order may be required to be formally passed. In such event, one of the two judgments would be the decision of the Tribunal and be the operative or enforceable judgment in terms of the points answered by the third member. An application for rectification would therefore be maintainable even when a reference is made to a Member. In our opinion, apart from the language of the provisions it would be a more constructive and purposeful method of answering the issue. Holding otherwise, and accepting the stand of the revenue would be to delay the proceedings and may also again lead to other points being referred once again. 18. We have also to consider whether a Court or tribunal has suo motu or inherent or implied power of procedural review if the said has our opinion, the issue ig not been specifically conferred is no longer res integra having In been concluded by the judgment of the Supreme Court in Grindlays Bank vs Central Government Industrial Tribunal & ors 1980 (supp) Supreme Court cases 420. We may gainfully reproduce the following observations made in para 13 : " .The expression "review" is used in two distinct senses, namely (1) a procedural review, which is either inherent or implied in a court or Tribunal to set aside a palpably erroneous order passed under a misapprehension by it, and (2) a review on merits when the error sought to be corrected is one of law and is apparent on the fact of the record. It is in the latter sense that the court in Patel Narshi Thakershi case held that no review lies on merits unless a statute specifically provided for it. Obviously, when a review is sought due to a procedural defect, the the inadvertent error committed by Tribunal must be corrected ex debito justitae to prevent the abuse of its process and such power inheres in every court or Tribunal." It will be thus clear, that there is inherent or incidental power for procedural review in courts and tribunals to do justice. This view has been reiterated by the Supreme Court in J.K.Synthetics Ltd vs Collector of Central Excise 1996 (86)E.L.T. 472 (S.C.) which was a case under the provisions of the Central Excise Act. 19. The Bench is bound to refer the points of difference for determination and get answered the said points by a third member. The points for determination would be those points which are relevant for the purpose of deciding the controversy and if decided would have the affect of determining the controversy in the appeal. For this purpose while hearing and deciding an appeal the Tribunal is bound to frame points for determination which are relevant for deciding M/s. Standard Chartered Bank 4 the issue in controversy in the appeal. Once the points for determination are fixed only on the members are bound to answer the points so framed. It the points on which there is difference is of opinion, then only is there a need to refer to a third member those points for determination. It is in that context while disposing of appeals the tribunal is bound to fix points for determination and answer the said. 20. In the instant case, as we have noted, there are several points which have not been answered. Each of those points if answered and if both the members had concurred could have resulted in the appeal being allowed or dismissed. The points in difference already referred then perhaps would have been immaterial and even not required to be referred to a third member. If there was unambiguity on other points on which the appeal could be allowed or dismissed. 21. In our opinion, therefore as discussed earlier, once there be two orders, it is not possible to say that they are merely opinions. These are two distinct jugdments, which on account of difference in answer to the points raised, the members differ on the reliefs to be granted and as such is not a final decision. It is therefore, not possible to accept the contention as argued on behalf of opinions the application the revenue that these being merely for rectification is not maintainable. In our opinion, such an application would be maintainable. 22. Apart from that, it is the cardinal duty of Court or Tribunal to do complete justice between the parties subject to its jurisdiction in order to avoid multiplicity of proceedings. The Court or tribunal in such case has an inherent jurisdiction to decide an application for rectification so that the real controversy in issue is decided and/or referred if there be any difference of opinion amongst the members to a third member. The power to do procedural justice inhers in every Court or tribunal as noted by the Supreme Court. The Court or Tribunal in deciding an appeal have to frame points for determination which would be relevant for answering the contrary in appeal. Once points are framed, each point has to be answered by the Tribunal. 7. Accordingly, all the three Miscellaneous Applications (referred supra) were heard by the bench. The Hon'ble Accountant Member passed the order on the three miscellaneous applications (referred above) on 20.7.2021. We notice that the AM has passed two orders on 20-07-2021, i.e., the first order was on the three miscellaneous applications and the second order was a consolidated order on ITA No.5229/M/2004, ITA 5303/M/2004 and also three miscellaneous applications. M/s. Standard Chartered Bank 5 8. The Hon'ble JM did not agree with the order passed by Hon'ble AM against the three miscellaneous applications. Hence, he passed a separate order dated 16.11.2012. The Hon’ble JM also framed the question on the point of difference arising in the disposal of the Miscellaneous applications filed by the assessee in MA No.139/M/2012 & MA No.21/M/2012. 9. The Hon’ble AM did not agree with the question on point of difference framed by Hon’ble JM. Accordingly, he framed three questions separately. The Hon’ble President referred this matter also to a third member. 10. The present miscellaneous application numbered as MA 144/M/2013 has been filed by the assessee with the title as mentioned below:- Miscellaneous Application in Order under Section 255(4) of the Income tax Act, 1961 (dated 16.11.2012) passed by the Ld Judicial Member AND Order under Section 255(4) of the Income tax Act, 1961 (dated 04-12- 2012) passed by the Ld Accountant member Arising out of Miscellaneous Application No.139/M/12 read with Miscellaneous Application No.21/M/12 (AY 1996-97) 11. The contents of the miscellaneous application has been summarised as under in a note furnished to the bench on an earlier occasion:- (1) The differing Members in the first instance failed in their duty to formulate clearly and then state the point of difference and only thereafter to refer them to the Hon’ble President. (2) In the absence of agreed points of difference clearly formulated by the differing Members, no reference could have been made to the M/s. Standard Chartered Bank 6 Hon’ble president and no nomination of the Third Member could have been done. (3) At this stage, the law does not permit any reformulation or enlargement or restriction or modification of the points of difference, either by any of the members or by the Third member of by the Hon’ble President. (4) This has created a judicial deadlock which cannot be resolved within the parameters of section 255(4) and therefore, the only course left open is to release the matter and post it for a fresh hearing. (In circumstances somewhat similar, Punjab & Haryana High Court in CIT vs. Bhai Shamsher Singh (179 ITR 538) held that “the only proper course would be to send the case back to the Tribunal for decision of the appeal afresh in accordance with law.” 12. It can be noticed that the assessee has filed the present miscellaneous application against the “two different set of questions” framed by Hon’ble JM and Hon’ble AM in respect of separate orders passed by each of them in the miscellaneous applications filed by the assessee. The contention of the assessee is that the members should concur with the “point of difference”. Another main contention of the assessee is that, without reference of a proper statement on point of difference by the bench, the Hon’ble President of ITAT cannot refer the same to a third member. It is contended that, if the event of members not agreeing on the on the point of difference, then the proper course of action available to the Hon’ble President of ITAT is to refer the matter back to the bench for fresh hearing. Accordingly, it is contended in the present miscellaneous application that the Hon’ble President was not right in law in referring the issue to a Third Member, without there being concurrence between the members on the point of difference. 13. We have heard the parties and perused the record. A miscellaneous Application is filed either by the assessee or by the Revenue or by both under section 254(2) of the Act seeking rectification of mistake apparent from record in the order passed by the Tribunal under section 254(1) of the Act. As M/s. Standard Chartered Bank 7 per the decision rendered by Hon’ble jurisdictional Bombay High Court in the case of Suzlon Infrastructure Ltd (supra), a miscellaneous application could also be filed against the separate order(s) passed by the members, when they do not agree with the view taken by each of them on any issue/issues and even if the final order has not been passed u/s 254(1) of the Act. 14. We noticed that the ultimate prayer of the assessee in this miscellaneous application is that the Hon’ble President should refer the issue back to the bench for finalizing the “Point of difference”, which according to the assessee is the only option available to the Hon’ble President. In support this contention, the assessee has placed reliance on the following case laws:- (1) Hanutram Chandanmul vs. CIT (23 ITR 505)(Patna) (2) CWT vs. Pramilaben (239 ITR 36)(Guj) (3) Suzlon vs. UOI (225 CTR 177)(Bom) (4) ACIT vs. Technimont (148 TTJ 547)(Mum)(TM). (5) Dynavision Limited vs. ITAT (304 ITR 350)(Mad) (6) Jan Mohammed vs. CIT (23 ITR 15)(All) (7) Jain Irrigation vs. DCIT (266 ITR 31)(AT)(Pune) Relying on the above said decisions, the assessee is contending that the members of the bench alone can state “points of difference” and after that only the case may be referred to the President of the Tribunal for referring the issues to a third member. Another contention, on which there cannot be any dispute, is that the proceedings before the third member is confined to the “point of difference” stated by both the members of the division bench, i.e., the third member cannot enlarge the scope of reference. 15. There cannot be any dispute with regard to the proposition that it is the differing members, who are required to state the “point on which they differ”. In the instant case, we noticed that the members had difference M/s. Standard Chartered Bank 8 (a) in the order passed against the appeal filed by the assessee And also (b) in the order passed against the miscellaneous applications filed by the assessee against the separate orders passed by the members. In respect of (a) above, both the members have concurred with the “point of difference” as well as “questions framed to resolve the said point of difference”. In respect of (b) above, they have differed on the “questions that should be framed to resolve the point of difference”, i.e., it is a case, where both the members agreed that there is a point of difference between them, but they have differed only with regard to the “questions that should be framed to resolve the point of difference”. Accordingly, in our view, there is a distinction between “point of difference” and “questions that should be framed to resolve the point of difference”. 16. In our opinion, the statute did not visualize a situation that the members may differ on the “questions that should be framed to resolve the point of difference”. Since the statute does not provide any procedure to deal with the situation like this, the Tribunal has followed a procedure, i.e., the third member shall frame the question(s), with the concurrence of both the parties, which will resolve the “point of difference”. The following views expressed by Hon’ble Bombay High Court in the case of Suzlon infrastructure Ltd (supra) supports above said procedure followed by the Tribunal:- “In our opinion, apart from the language of the provisions it would be a more constructive and purposeful method of answering the issue. Holding otherwise, and accepting the stand of the revenue would be to delay the proceedings and may also again lead to other points being referred once again.” ................... 22. Apart from that, it is the cardinal duty of Court or Tribunal to do complete justice between the parties subject to its jurisdiction in order M/s. Standard Chartered Bank 9 to avoid multiplicity of proceedings. The Court or tribunal in such case has an inherent jurisdiction to decide an application for rectification so that the real controversy in issue is decided and/or referred if there be any difference of opinion amongst the members to a third member. The power to do procedural justice inhers in every Court or tribunal as noted by the Supreme Court. The Court or Tribunal in deciding an appeal have to frame points for determination which would be relevant for answering the contrary in appeal. Once points are framed, each point has to be answered by the Tribunal.” We notice that this procedure of framing questions by the Third member with the concurrence of both the parties has been followed by the ITAT in many cases. In our view, no prejudice would be caused to any of the parties under this procedure, since there is complete transparency in this procedure. We may explain this aspect in brief. Whenever there is difference between the members, a third member is appointed by Hon’ble President to resolve the point of difference. In accordance with the Rules, the copies of “questions framed on point of difference between the members” and also the orders passed separately by the dissenting members are forwarded to both the parties by the registry. Hence, both the parties shall become aware about the “point of difference” upon reading the above said documents. Thus the point of difference shall be static and it cannot be tinkered with by anyone. 17. In the instant case, we notice that the members have differed only on the “questions that should be framed to resolve the point of difference”. As submitted by the assessee, the provision of sec. 255(4) has prescribed the manner of dealing with the “point of difference” and as stated earlier, the same is static and cannot be changed. However, whenever there is difference between the members on the questions that should be framed to resolve the point of difference, the Tribunal has followed a particular procedure, since the statute is silent on the same. As stated earlier, it was a transparent procedure followed with the concurrence of both the parties and hence no prejudice is caused to any of them. As stated earlier, the ultimate purpose is to do complete justice to both the parties. Accordingly, we are of the M/s. Standard Chartered Bank 10 considered view that the said procedure, i.e., the Third member framing question(s) with the concurrence of both the parties to resolve point of difference” would not be contrary to the requirements of sec. 255(4) of the Act as contended by the assessee. We may reiterate here that, even when the question is reframed, the “point of difference” shall remain intact and it is only the “questions that should be framed to resolve the point of difference” would undergo a change. 18. We notice that the present miscellaneous application is not directed against any order passed either u/s 254(1) of the Act. It is also not directed against the separate orders passed by the members constituting bench, which heard miscellaneous applications filed by the assessee and the revenue (Suzlon Infrastructure Ltd vs. UOI (supra)). In this peculiar situation, we are of the view that the present miscellaneous application could not have been filed by the assessee u/s 254(2) of the Act at all. The various contentions raised by the assessee are related to the scope of sec.255(4) of the Act and in our view, those contentions cannot fall within the scope of provisions of section 254(2) of the Act. Accordingly, we dismiss the present Miscellaneous Application filed by the assessee. 19. In the result, Miscellaneous Application filed by the assessee is dismissed. Pronounced in the open court on 15.2.2023. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (B.R. BASAKARAN) Judicial Member Accountant Member Mumbai; Dated : 15/02/2023 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent M/s. Standard Chartered Bank 11 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai