INCOME TAX ACT, 1961

Appeal (Tribunal)- Constitution of special bench-Plenary powers of president-Preliminary objection of assessee

Assessee submitted in respect of the first relevant assessment year before Tribunal that once refund was granted under section 143(1)(a)( ii), no notice could be issued under section 143(2) because of absence of the words without prejudice of sub-section (2). The Division Bench of Tribunal held that AO had exceeded his jurisdiction in issuing the notice under section 143(2) and the assessment completed in pursuance thereof was null and void. The Division Bench considering the same issue in Agarwal Warehousing & Leasing Ltd. Indore, in IT Appeal No. 952 (IND.) of 1994, by following the decision of the Madhya Pradesh High Court Kamal Textiles v. ITO [1991] 189 ITR 339/ 59 Taxman 555 read with the provisions of section 143(1)(a)/143(2)(3) and 143(4), held that AO was perfectly justified and within his right to issue a notice under section 143(2) after refund was granted to the assessee under section 143(1)(a)( ii). Thereafter, Tribunal considered the appeal of the assessee for the second relevant assessment year by following latest decision of the Tribunal in case of Agarwal Warehousing, decided question in favour of the revenue. In view of conflicting decisions, as per order of the President, the Special Bench was constituted to consider the issue. In meantime, the assessee had applied for Kar Vivad Samadhan Scheme and had received a certificate for full and final settlement of tax arrears under the scheme, therefore, sought permission to withdraw appeal. The assessee raised preliminary objection that since the appeal in the case of Agarwal Warehousing and Leasing Limited was requested to be dismissed as withdrawn, there was no valid reference made by Tribunal to the President of Tribunal to constitute the Special Bench, therefore, the matter should be sent back to the Division Bench directing them to maintain judicial consistency and to accept order of the Tribunal in the first relevant assessment year. Held:As per available facts, is was cleared that the preliminary objections raised by the assessee had no force and were liable to be rejected. In the given circumstances, President had exercised his plenary powers to constitute the Special Bench to dispose of two appeals because of the appropriate and germane ground . Even if the assessee had made a request for withdrawal of the appeal, it would not affect the constitution of the Special Bench in the aforesaid case. The Special Bench is competent and empowered to decide the issue referred to it in the light of the material available on record. The assessee had raised the preliminary objection in the hope that if ultimately the matter was considered by the Division Bench of Tribunal, it had to follow its earlier order whether such view was legally permissible or not. Therefore, preliminary objection raised by the assessee was without substance and was to be rejected. [Para 12]

Income Tax Act, 1961 Section 255