Bombay High Court |
The
Bombay High Court, in Income Tax Appeal No. 1481 of 2012 filed by the State
Bank of India, has expressed its displeasure at the ‘light hearted’ and ‘casual’
manner adopted by the Income Tax Appellate Tribunal in the consideration and
disposal of an application filed by the State Bank of India in an appeal before
the Tribunal, wherein the Tribunal had passed an order merely reviving the
said appeal (Income Tax Appeal No. 3145 of 2009)
before it for hearing afresh on merits
in relation withdrawal of deduction under Section 36(1)(viia) of the IT Act,
instead of hearing the appeal on all grounds raised by the appeal in the memo
of appeal, including invokability of section 263 of the IT
Act by the Commissioner.
The effect of the order passed in the Miscellaneous
Application in the appeal was that the Tribunal would hear the appeal on merits but not allow arguments
on the ground challenging the exercise of powers under Section 263 of the
IT Act by the Commissioner to be raised after revival of the Appeal.
The
Department contended that the SBI did not seek revival of
the Appeal so as to challenge the order passed by the Commissioner
under Section 263 of the IT Act. It was in these circumstances that a limited
order was passed by the Commissioner under Section 263 of the IT Act.
The Application was filed by the Assessee bringing to the
notice of the Tribunal that the ground in respect of withdrawal
of deduction under Section 36(1)(viia) of the IT Act of Rs.405,17,20,944/-in relation to standard assets
was raised in the the Memo of Appeal.
The Tribunal’s attention was invited by the
assessee to para 3 of its earlier order dated 06.06.2012 from which the
miscellaneous application arose. The Assessee contended that the Tribunal
has merely followed its order for the preceding assessment for the year 2005-06
and upheld the order passed by the Commissioner of Income Tax, which is the complaint.
What
the Tribunal was called upon to consider was that the Commissioner in
assessment year 2005-06 had not decided the ground on
merits but directed the Assessing Officer to redo the assessment. However for
the assessment year 2006-07, the Commissioner of Income Tax had decided the ground on merits.
This part of the order, it was contended was vitiated by error apparent on the
face of the record.
A Division
Bench of the Bombay High Court comprising of A.A. Sayed and S.C. Dharmadhikari,
JJ. held that the Court was not happy in the manner in which the Tribunal has
decided the Miscellaneous Application.
“If the Tribunal was required to devote so
much time for assigning reasons in more than five paragraphs in a lengthy eight
page order on the Miscellaneous Application so as to correct an obvious mistake
by exercising powers under section 254(2) of the IT Act, then, interest of
justice would have been sub-served and better had the Tribunal revived the
entire Appeal and not partially. If there was a mistake with regard to the
claim of deduction, we do not think that the tribunal was justified in
directing partial revival of the Appeal…… We do not think that interest of
justice and equity is served by non consideration of vital materials by the
last fact finding authority, namely the Income Tax Appellate Tribunal. That the
Tribunal was required to recall its earlier orders and for the reasons which
have been assigned by it would indicate that it failed to apply its mind at the
initial stage to the grounds raised in the Appeal and in their entirety. It
omitted from consideration crucial documentary material as well. In such
circumstances, such partial revival of the Appeal would not meet the ends of
justice”, the Bench said.
Accordingly, the Bench modified
the order passed on the Miscellaneous Application and directed the Appeal to be
heard on its own merits and in accordance with law, permitting the Assessee to
raise all grounds raised in the Memo of Appeal.
The Bench also observed thus:
“This
direction issued by us in the exercise of our further appellate and inherent
powers should serve as a reminder to the Tribunal that the matters of vital
importance affecting the interest of public should not be disposed of in a
light hearted or casual manner. The record must be perused in its entirety and
properly and minutely. That is the function and which the judicial body is
required to perform and oblige to carry out as well. In these circumstances and
the unsatisfactory and unhappy manner in which the Miscellaneous Application
has been dealt with and decided that we have directed the revival of the
Appeal.”
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