Income Tax Appellate Tribunal - Delhi
Finance Officer, Maharishi Dayanand ... vs Income Tax Officer on 7 December, 2007
Equivalent citations: (2008)113TTJ(DELHI)914
ORDER
G.S. Pannu, A.M.
1. This appeal is by the assessee against the order of the CIT(A) dt. 30th Aug., 2005 pertaining to the financial year 2001-02. In this appeal, the primary grievance of the assessee is that the CIT(A) erred in holding that the assessee is in default under Sections 201 and 201 (1A) of the IT Act, 1961 (in short the Act) for the impugned financial year in spite of the fact that in the immediately financial year, the Tribunal had adjudicated the issue in favour of the assessee.
2. Briefly stated the circumstances leading upto the present proceedings can be understood as follows. The assessee before us is a university which was inter alia deducting tax at source on salaries and other benefits paid to its teaching as well as non-teaching staff. The AO noted that the assessee was providing accommodation to its teaching and non-teaching staff and in turn it was charging standard rent for the aforesaid accommodation. The standard rent, depending on the type of accommodation allotted to an employee, was calculated with reference to the basic pay. Similar was the position in the case of the assessee for financial year 2000-01. In the annual return of salaries furnished under Section 206 of the Act, the assessee was deducting taxes on the basis that the accommodation was provided to the employees at concessional rate for which 5 per cent of basic pay was being charged. In the year under consideration, the AO required the assessee to show cause as to why the difference between the rent actually charged and the rent which as per the AO, the university should have charged, be not treated as a perquisite paid to the employees on which the assessee university had failed to deduct the requisite tax at source. It is pertinent to note here that the reasoning weighing with AO to hold so stood on identical footing to that taken by him during the financial year 2000-01. We find from the order of the AO that the pleas of the assessee against the above view of the AO also remained the same in the year under consideration. Nevertheless, the AO treated the assessee in default for the purpose of Sections 201 and 2O1(1A) of the Act in relation to the short deduction of taxes on the alleged perquisite allowed to the employees. The CIT(A) has thereafter sustained the stand of the AO.
3. The grievance of the assessee emerges now. Subsequent to the order of the AO dt. 30th Dec, 2004 in the instant year, the Tribunal, 'D' Bench, New Delhi adjudicated the dispute in the assessee's own case for the financial year 2000-01 vide its order in cross appeals in ITA Nos. 4113/Del/2004 and 4185/Del/2004 dt. 4th May, 2005. A copy of the said order has been placed on record before us in the course of the hearing. When the assessee carried the issue before the CIT(A) in the impugned year, it brought to the notice of the CIT(A) the order of the Tribunal dt. 4th May, 2005 (supra). The CIT{A), we find, has not followed the order of the Tribunal although it was on the same issue as was before him. Instead, the CIT(A) has chosen to follow his own earlier order dt. 9th July, 2004 in the case of the assessee, ostensibly which was for financial year 2000-01. Curiously, this order of the CIT(A) stood overruled by the order of the Tribunal dt. 4th May, 2005. For the reasons mentioned in the impugned order, the CIT(A) has chosen to follow his own order which stood overruled. To put it in brief, in the view of the CIT(A), the order of the Tribunal was incorrect and thus he chose not to apply the same to decide the controversy on hand. While doing so, no change in legal position has been referred to by the CIT(A).
In any case, we do not go into the merits of the controversy since it was a common ground between the parties before us that the similar issue stood adjudicated by the Tribunal vide order dt. 4th May, 2005 (supra) in favour of the assessee. Therefore, in our considered opinion, the issue should have been decided by the CIT(A) in the light of the order of the Tribunal.
4. The learned Counsel for the assessee has vehemently argued that the first appellate authority fell grossly in error by not regarding the order of the Tribunal dt. 4th May, 2005 (supra). The learned Departmental Representative, on the other hand has not offered any defence to the action of the CIT(A), but has merely reiterated the stand of the Revenue with regard to the merits of the issue.
5. We have given our utmost anxious thought to the manner in which the CIT(A) has proceeded to dispose of the appeal before him. In our view, the learned Counsel for the appellant is quite right in saying that the CIT(A) has not afforded the due regard that was required to be shown to the order of the Tribunal dt. 4th May, 2005. The fact that the order of the Tribunal is to be followed as a binding precedent by the authorities working within its jurisdiction cannot be disputed and is so well settled that it does not require any emphasis from our side at this stage. This principle of judicial discipline has also received the unmistaken approval of the Hon'ble Supreme Court. A gainful reference in this regard can be made to the decision of the Supreme Court in the ease of Union of India v. Kamlakshi Finance Corporation Ltd. (1991) 55 ELT 433 (SC). We deem it fit and proper to reproduce hereinafter the following extracts of the above decision:
The High Court has, in our view, rightly criticized this conduct of the Asstt. Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of the authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi-judicial issues before them, Revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Asstt. Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Asstt. Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is 'not acceptable' to the Department-in itself an objectionable phrase-and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws.
6. The aforesaid discussion in the judgment of the Hon'ble Supreme Court does not need any further amplification from our side as the same is quite eloquent by itself. In this light, we are constrained to consider the comments of the CIT(A) that "the interpretation taken by Delhi Bench, Tribunal deserves to be repudiated" as an act of gross judicial indiscipline. Certainly, the earlier view of the CIT(A) was contrary to the subsequent order of the Tribunal dt. 4th May, 2005 (supra) and after the order of the Tribunal was brought to his notice, the principles of judicial discipline required the CIT(A) to follow the same unreservedly as has been opined by the Hon'ble Supreme Court. Be that as it may, we have extracted the relevant observations of the Hon'ble Supreme Court, which are authoritative and unambiguous and coming from the highest Court of the land, we do not find it necessary to add anything from our side to demonstrate the wrong approach of the CIT(A). The approach of the CIT(A) was in utter disregard to the expected norms of judicial discipline. The impression or anxiety of the CIT(A) that if he accepted the stand of the assessee, it would be violative of the laws as per his interpretation, cannot be a credible reason for him to disregard the binding nature of the order of the higher appellate authority which was pressed into service before him by one of the parties. Without going further, we sincerely hope and expect that our aforesaid observations are taken in its proper spirit by the Revenue Department. The observations of the Hon'ble Supreme Court, extracted above, in our view, should be kept in mind in future and utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of maintaining judicial discipline and the necessity for giving effect to the orders of the higher appellate authorities which are binding on them.
7. Insofar as the merits of the dispute are concerned, we find that the Tribunal in its order dt. 4th May, 2005 (supra) has made a detailed discussion and has considered rival submissions and relevant provisions of the law. The Tribunal has also taken into consideration its earlier precedent by way of decision of the Chandigarh Bench of the Tribunal in the case of Kurukshetra University in ITA Nos. 64 and 65/Chd/1997 dt. 23rd May, 2002. The Tribunal has reproduced in its order the relevant extract from the precedent which is again based on the decision of the Hon'ble High Courts of Andhra Pradesh and Madhya Pradesh in the case of Steel Executives Association v. Rashtriya Ispat Nigam Ltd. (2000) 160 CTR (AP) 38 and Officers Association, Bhilai Steel Plant v. Union of India , respectively. No decision or legal position to the contrary has either been brought on record by the CIT(A) or even by the learned Departmental Representative before us. We, therefore, set aside the order of the CIT(A) and hold that the assessee could not be treated as an assessee in default in terms of Sections 201 and 2O1(1A) for the impugned financial year with respect to the accommodation provided to the employees at concessional rate.
8. In the result, the appeal of the assessee is allowed with above remarks.