Income Tax Appellate Tribunal - Madras
A. Thangam vs Assistant Commissioner Of Income-Tax on 28 May, 1997
Equivalent citations: [1998]66ITD103(MAD)
ORDER
N.D. Raghavan, Judicial Member
1. These are appeals of the two assessees and also the Department challenging the respective orders of the C.I.T. (A) as erroneous. Short facts on the preliminary point are as below :
2. The assessee's appeals for the assessment years 1989-90 and 1990-91 were filed in June, 1993 and September, 1995 respectively, while the other assessee's appeal for the assessment year 1986-87 was filed in December, 1993 and the Revenue's appeal for the assessment year 1988-89 was filed in June, 1993. These appeals have been fixed for early hearing in May, 1997 under the orders of the Hon'ble Vice President on 21-3-1997, after the assessees' counsel filed petitions dated 19-3-1997 and 21-3-1997 in this regard. Such fixation of early hearing has been objected to by the Revenue before us as a preliminary point before going into the merits of the appeals.
3. The learned Representative for the Revenue submitted in this regard THAT : In these cases, there does not appear to be any stay granted by the Tribunal. On the contrary, the case is coming up for hearing on the basis of approval by the administrative authorities of Tribunal. Such cases should be heard on the directions of the Bench alone and not by the orders of the administrative authorities. Reliance is also placed on the decision dated 24th March, 1997 in I.T.A. No. 628 (Mad.)/96. The Tribunal there in has directed the Registry that not only in that appeal of that assessee but also even in respect of other cases the petitions for early hearing should be put up before the particular Bench through Hon'ble Vice-President. Therefore, these appeals should not be heard by this Tribunal early as ordered by the administrative authorities.
4. On the other hand, the learned counsel for the assessee countered THAT : The assessees' counsel by their petition dated 19-3-1997 addressing the Tribunal has informed that due to the departmental pressure for payment of taxes the assessees are suffering, apart from heart disease and that therefore the appeals were prayed before the Tribunal for being fixed for early hearing. Such stand has also been strengthened by their another petition dated 21-3-1997 enclosing copies of Tax Recovery Officer's order of proclamation of sale of the properties in question. Further, it is also erroneous on the part of the Revenue to state that there is no stay involved in the instant cases as in fact stay petitions have been filed by the assessees before the Tribunal which are pending for being heard. Consequently, these appeals seem to have been fixed for early hearing perhaps on account of the aforesaid petitions of the assessees.
5.1 Rival submissions heard and the relevant papers in this regard have been gone through, as are available in the files before us, besides the copy of the order of the Tribunal filed before us by the Revenue. After doing so, we are convinced with the stand taken by the assessees before us in view of the material evidence available on record such as the petitions and the enclosures therewith stated by him as above. In fact we also note that fixing an early hearing was not granted without application of mind by the Hon'ble Vice-President just by the assessee filing his first petition dated 19-3-1997 even though it was stated therein that the assessees are suffering from not only heart disease but also the Departmental pressure for payment of taxes. In fact, we note, the order passed by the Hon'ble Vice-President, after assessees' petition dated 19-3-1997 directs that the assessees have to file evidence first to prove that the Department is pressurising for payment and such order was passed by him on 20th March, 1997. Thereafter the assessees' counsel had filed a petition dated 21-3-1997 enclosing evidence regarding proclamation of sale by the Department as well as the summons issued to the assessee-defaulter under Rule 83 of the Second Schedule to the Income-tax Rules besides copy of the application for stay of recovery of tax and interest. Having been convinced with all these material evidence filed by the parties, the Hon'ble Vice-President has ordered on 21-3-1997 for early hearing by directing the Registry to post these cases in the month of May, 1997. Under these circumstances we are unable to find any flaw in the early hearing fixed.
5.2 In fact, we are of the considered opinion that it is unnecessary for us to go into the merits of the Hon'ble Vice-President's order fixing an early hearing for the simple reason that what is before us is not a petition or application praying for fixing an early hearing but only the appeals fixed for early hearing on the day cause listed under the directions of the Hon'ble Vice-President who has passed an order after duly considering the material papers filed by the assessee before him. But we are compelled to enter into this arena as to whether there is power for the administrative authorities of the Tribunal to direct an early hearing as a result of the preliminary objection raised by the Department by way of filing its petition dated 30-4-1997 and further relying upon the decision dated 24-3-1997 of the Tribunal, not only in the instant appeals but even in some other appeals which had been listed for early hearing wherein time and again such preliminary objection is being raised by the Department for early hearing fixed. Therefore, we are fored to pronounce our opinion in this regard especially when the Revenue before us, has focussed our attention that the order of the Tribunal relied upon by it has to be followed for reasons of uniformity and consistency.
5.3 We have carefully gone through the aforesaid order of the Tribunal with great reverence and respect and we also do appreciate the spirit and principle discussed by that order that the order passed on a petition for fixing early hearing has to be only a judicial order and not administrative as it used to happen in Courts. Rightly or wrongly such system is not followed now in the Tribunal, which may be for the reason that the Tribunal is not a Court in the strict and full sense of the technical legal term. It is however certain that such system is not adopted in the Tribunal as a result of the I.T.A.T. Rule 4A(2)(xiv) the validity of which no Bench of the Tribunal can question, in our humble and considered opinion, whether such provision is right or wrong, so long and as far such provision remains to exist in the Statute Book. Further, as in Courts, if petitions for fixing an early hearing are also posted before the Bench of the Tribunal to pass a judicial order thereon, the proceedings before the Tribunal will get multiplied and enlarged and also open the flood-gates of proceedings when there are already huge number of cases of the kind of Stay Petitions, Appeals, Reference Applications and Miscellaneous Applications pending before the Tribunal having also dearth of Members assistant birth of innumerable cases and further when the Tribunal has been created for the purpose of early and expeditious disposal of cases, which is well reflected in its emblem slogan (Quote Justice - Quick Justice). It takes enormous time even for the proceedings in a case to be completed and to reach for final adjudication before Courts due to obstacles of the procedural laws (requiring careful appreciation of and meticulous application by Courts). That is why the provisions of the procedural laws like the Code of Civil Procedure and the Indian Evidence Act are not strictly made applicable in respect of Tribunal for being observed and applied in the proceedings before it. That is why perhaps the I.T.A.T. Rules have been amended by inserting Rule 4A vesting with powers to fix early hearing on the administrative authorities.
5.4 Rule 4A deals with the powers and functions of the Registrar. It may be significant to note here that in clause (xiv) the word employed is "direction" and not "order" and that too and that is why without prescribing hearing of the parties on the point of early hearing fixation. To elaborate, sub-rule (2) thereof starts with and proceeds by the words "Subject to any general or special order of the President, the Registrar shall have the following powers and duties, namely .... (xiv) to fix cases out of turn on the direction of the President, Senior Vice-President, Vice-President or Senior Member". A perusal of clause (xiv) under sub-rule (2) of Rule 4A, therefore, clearly demonstrates that even the Registrar of the Tribunal has got power to fix a case out of turn but only on the direction of the President, Senior Vice-President, Vice-President or Senior Member, who are in turn subjected to any general or special order of the President passed in this regard. To our knowledge, no general or special order of the President contrary to clause (xiv) referred to above seems to exist nor any such order of the President contrary to it has also been cited before us by the Revenue so as to sustain its stand that the early hearing fixed is wrong. We may also further observe that nowhere in the order dated 24-3-1997 of the Tribunal relied upon by the Revenue, the aforesaid specific provision of clause (xiv) vesting powers on the said administrative authorities to fix an early hearing has been discussed or at least referred to, much less even cited, unfortunately. In our considered view such inadvertent mistake of omission in looking into that provision has arisen in the aforesaid order of the Tribunal; otherwise we are sure and certain that such order of the Tribunal, not only holding to the effect that the President, Senior Vice-President, Vice-President or Senior Member cannot fix cases out of turn but also even directing the Registry to take out beside that appeal all other appeals too from the list of priority hearing fixed, could have been or would have been, not passed. We may also add that we put a specific question to the learned Representative for the Revenue before us that clause (xiv) of Rule 4A(2) has not been cited, referred to or discussed by the Tribunal in its order, to which he had nothing to say. Under these circumstances, we are of the clear and considered view that the aforesaid decision of the Bench of the Tribunal being per incuriam does not hold water for being applied not only to these appeals but also to any of the cases fixed for early hearing. As has been already observed by us above, fixing of early hearing directed under clause (xiv) of sub-rule (2) of Rule 4A cannot be questioned by any of the parties and also even by any of the Benches throughout, even if such direction fixing it early would be wrong, for the simple reason, to repeat, that what is fixed before a Bench is only appeal (and also other cases) for hearing them and not a petition for a Bench to fix an early hearing thereon.
5.5 To reiterate, we are sure, that Bench of the Tribunal also would not have entered into this sensitive sphere of dealing with the interesting issue as to whether the early hearing fixed is correct or not but for the inadvertent omission of looking into the provisions of clause (xiv) of Rule 4A(2). If we may further observe, the I.T.A.T. Rules of 1963 have been framed to regulate the procedure of the Appellate Tribunal and its Benches and passed by the Tribunal through the Hon'ble President in exercise of the powers conferred by sub-section (5) of section 255 of the Income-tax Act, 1961. Therefore, the entire set of rules framed, passed and published under Notification No. 1-AT/63, dated 17-4-1963 with subsequent amendments thereto, are binding on all the Benches also through out the territory of India for bring sincerely followed and strictly complied with as they are binding on both sides on all the parties before us, as elsewhere too. If on the other hand the Tribunal will be sustaining the stand point of the Revenue, the Tribunal will be violating its own Rules framed by it which would be highly improper and irregular. Further, the Tribunal also cannot strike down any of its own Rules, much less Rule 4A framed by it and inserted by the I.T.A.T. (Amendment) Rules of 1991. w.e.f. 25-7-1991, as it is incompetent to do so by an order of Bench at the instance of either, both or any of the parties before it. If at all, an amendment could be made to the I.T.A.T. Rules in this regard, rather in facts is desirable, for which steps have to be taken only through the Hon'ble the President of the Tribunal so as to restore the position prior to the amendment of the Rules. Under these circumstances, we have no other alternative than to reject the preliminary objection raised by the Revenue. By saying so, it is not that we are, strictly speaking, pronouncing that the early hearing fixed in the instant cases is sustained by us, though in effect it amounts so, since that is not our role as it is being sufficiently taken care of by the existing Rule 4A(2)(xiv) which also further has a safety value of the President's General or Special Order if perhaps there could be any arbitrary exercise of power by the Sr. Vice-President, Vice-President or, as the case may be, the Senior Member.
6. Thus, the appeals of the assessee and the Revenue were adjourned to May 29, 1997 for hearing along with the stay petitions pending for hearing after rectifying the defects, if any, therein for which notices have been already issued to the parties by the Registry on our directions.
7. In the result, the preliminary objection of the Revenue for fixing early hearing is overruled.
Kalsian, A.M.
1. I have carefully gone through the order of my learned brother. I agree with the conclusion reached by him on the main issue in this case. However, I would like to add the following :
2(i). First issue is regarding fixing of appeals for early hearing under the I.T.A.T. Rule 4A(2)(xiv). My learned brother observed that fixing of early hearing ordered under clause (xiv) of sub-rule (2) of Rule 4A cannot be questioned by any of the parties and also even by any of the Benches throughout, even if such order fixing it early would be wrong, for the simple reason that what is fixed before a Bench is only appeals (and other cases) for hearing them and not a petition for a Bench to fix an early hearing.
2(ii). In my opinion this view is not correct. When an appeal is fixed for hearing before a particular Bench, then that Bench has jurisdiction not only to hear the said appeal but also to consider any preliminary objection raised by the litigant before the Bench by virtue of its inherent powers to deal with preliminary objection in any appeal.
2(iii). Rule 4A(2)(xiv) gives discretionary power to the Vice-President and Senior Member to issue directions to Registry to fix cases out of turn for hearing before the Bench. But no norms, standards and procedure have been laid down for the exercise of discretionary power either by general or special order of the President or in the Rules itself. It is settled law that unguided discretionary power is clearly violative of the equality enshrined in Article 14 of the Constitution. It might lead to gross abuse of arbitrary exercise of power. An Administrative Authority should establish certain norms, standards and procedures to be followed wherever discretionary powers are given. The exercise of the power should be reasonable and in public interest and not arbitrary and capricious. The administrative authorities should be guided by clear norms while exercising discretionary powers. He has to function by an unbiased mind and decide in accordance with the principle of natural justice. We are discharging our judicial functions in a democratic country and not in a dictator's regime. Society must be governed by established principles so that the actions of the administration is forseeable.
2(iv). Further, Rule of Law limit the scope of action of the administrative authority in a developing society. The principle of Rule of Law is in contradiction to arbitrariness. No administrative action can march along the true democratic life without a true and continuous realisation of the importance of the Rule of Law. Our Constitution in its preamble aspires to build a sovereign, democratic republic dedicated to ideas of justice, equality and fraternity. The rule of law requires that administrative action should be subjected to law rather than the law subjected to administrative actions. In our country the power of administration cannot be so exercised so as to be derogatory or contravening any provisions of the Constitution or transgressing any of the fundamental rights guaranteed to the citizen by the Constitution. The phrase "Rule of Law" also means the Government on principles of law and not of men. It is clearly opposed to arbitrary or tryancial power. The "Rule of Law" is very much in evidence in various provisions of the Indian Constitution and Rule of Law is one of the basic values in a democratic State. Unless there is a Rule of Law there is a danger that administration would become totalitarian. The same idea was expressed in a more forceful language by a Hon'ble Judgment of the Calcutta High Court in the following words : "A nation that does not know how to respect the Rule of Law and the judiciary as its final interpreter, is a nation that is not fit for the democratic way of life". (AIR 1951 journal p. 38) 2(v). There are more than 20,000 appeals pending before the Income-tax Appellate Tribunal, Madras Benches. Every appellant before the Tribunal has inherent desire that his case should be heard out of turn because he has desire that his appeal should be decided first. In the absence of norms and standards determining the procedure for early hearing of the appeals, it may happen that discretion vested in the authority concerned to fix the appeals out of turn might be exercised in such manner which is not in accordance with the "Rule of Law". There may be circumstances which may justify the early hearing of the appeal but such circumstances should be made applicable to every appellant who comes before the Tribunal for early hearing of appeals. If there is no reason, then no appellant should be allowed to jump the queue. If there are standards and norms fixed for determination of early hearing the appeals, then there is no cause of action for any litigant. In the absence of any standards and norms when one appellant is allowed to jump the queue and his case is fixed out of turn without any valid reason, it might not give proper signal to other appellants who have filed appeals before the Tribunal. When a party before the Tribunal contests and challenges why a particular appeal is fixed out of turn for hearing, the Tribunal cannot abdicate its responsibility to demonstrate the reasonableness of early hearing that party. It is the duty of the Tribunal to give reasons for such early hearing of the appeal so that there is no doubt in the mind of the party as to why a particular litigant has been given out of turn hearing in this context, when the Tribunal hears an appeal it has jurisdiction to decide such preliminary issues which are raised by the litigant before it. It would not in any way affect the powers of the Vice-President or the Sr. Member given under Rule 4A(2)(xiv) because there is no dispute that rules are binding on Members of the Tribunal. What has to be considered by the Tribunal when a party raises a dispute against early hearing of the appeal, is whether the discretionary power conferred on the authority to direct early hearing of the appeal has been properly exercised or not. A decision of a Single Member could be overruled by the decision of a Bench and the decision of a Bench could be overruled by the decision of a Special Bench consisting of three or more Members. In a similar way, if a particular litigant is authorised for early hearing and is not able to satisfy the Bench the reason for early hearing of his appeal and gives no reply to the objections raised by the other party before the Tribunal, then there is no reason why in exercise of its inherent power the Tribunal cannot hear the objections raised by a party against the early hearing of the appeal, in view of the principles of Rules of Law applicable even to the administrative proceedings.
2(vi). Rule 4A(2)(xiv) does not prohibit a Bench of the Tribunal to hear objections against early hearing. Even assuming without admitting that Bench does not have power to hear objections, then there are no provisions to check arbitrary exercise of or abuse of powers in violation of Rules of Law. Therefore the Bench cannot be deprived of its inherent power as well as duty to hear objections against early hearing.
3. The second issue considered my learned Brother is that inadvertent mistake of omission in looking into the provision of clause (xiv) had arisen in the order of the Tribunal in the case of Olympic Paper & Stationary Stores v. Asstt. CIT [1997] 63 ITD 148 (Mad.). The Tribunal in that case directed the Registry not to post the appeal of the assessee on priority basis. In that case the Tribunal has gone into the merits of the case. No valid reasons could be given before the Tribunal by the assessee's counsel why its case should be heard out of turn. In view of the facts and the circumstances of the case, the Tribunal came to the correct conclusion that the case of the assessee does not deserve early hearing.
4. The third main issue considered by my learned Brother is that the case of the assessee deserves out of turn hearing. I agree with my learned Brother. In view of the facts discussed in para 5.1 of the said order, the assessee's appeals should be heard out of turn.