IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI SPECIAL BENCH "E", MUMBAI
Before SHRI G.E.Veerabhadrappa, President ,
Shri D.K.Agarwal, J.M. and Shri P.M.Jagtap, A.M.
ITA Nos.6490 and 6491/Mum/2008
(Asst.Years 2004-05 and 2005-06)
M/s Tulip Hotels Pvt. Ltd. Deputy Commissioner of
Chandramukhi(Basement) Income Tax,
Behind The Oberoi, Vs. Central Circle 36,
Mumbai-400 021. Mumbai.
(PAN: AAACT9446Q)
Appellant Respondent
Date of Hearing : 1.2.2012
Date of Pronouncement : 30.3.2012
Appellant by : Shri Arvind Sonde
Respondent by : Shri B.Jaikumar
ORDER
Per Bench :
The Hon'ble President of the Income Tax Appellate
Tribunal, on a reference made by a Division Bench,
has constituted this Special Bench vide order dated
14.5.2010 and the following question has been
referred for our consideration and decision:-
"Whether on a proper interpretation of sub-
section (4) of section 255 of the Income Tax Act,
the order proposed by the learned AM while
giving effect to the opinion of the majority
Special Bench-
2 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
consequent to the opinion expressed by the
learned Third Member, can be said to be a valid
or lawful order passed in accordance with the said
provision"
2. The factual matrix of the case leading to the
recommendation for the constitution of this Special
Bench by the Division Bench is as follows:
3. The assessee company is engaged in the business
of operation and management of hotels owned by third
parties. The assessee has taken over the management
of the hotel property, viz. Tulip Star Mumbai, situated
at Juhu Tara Road, Juhu, Mumbai. The assessee was
redeveloping the said property into a multi product
hospitability destination and was also developing
international standard Service Apartments. The
assessee offered the space in the same property to
Shri Somendra Khosla of UAE on a 99 years lease
basis. After negotiation, Shri Khosla agreed to acquire
the space admeasuring 12700 sq. ft. at the rate of
Rs.7,500/- per sq. ft. In pursuance to such booking of
the property, Shri Khosla advanced the sum of
Rs.4,78,12,403/- during the accounting year relevant
to assessment year 2004- 05 and the sum of
Rs.1,02,91,176/- in the accounting year relevant to
assessment year 2005-06. During the assessment
Special Bench-
3 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
proceedings, the assessee produced the copies of
correspondence between the assessee and Shri
Khosla; confirmation of Shri Khosla with regard to
advance given by him; complete details with regard to
remittance in USD; the correspondence showing why
the property could not be developed as stipulated and
the termination of the agreement with the liability on
the assessee to refund the money. The assessee also
produced the certificate from Citibank, Mumbai,
certifying the receipt of inward foreign remittance by
the assessee, which was sent by Shri Khosla. The
Assessing Officer, not being satisfied with the
evidences furnished before him held that the assessee
has not established the identity, creditworthiness and
genuineness of the transaction and accordingly added
an amount of Rs.4,78,12,403/- u/s 68 of the Income
Tax Act, 1961 (the Act) to the total income of the
assessee. In the assessment year 2005-06 also, the
assessee had received a sum of Rs.1,02,91,176/-
from Shri Khosla and for the same reasons given in
the assessment order for the assessment 2004-05, the
AO added the sum of Rs.1,02,91,176/- as income of
the assessee u/s 68 of the Act. On appeal before the
CIT(A), the assessee furnished various additional
Special Bench-
4 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
evidence in the form of certificate from a Chartered
Accountant, giving the details of the properties owned
by Shri Khosla; copy of his Passport; the Trade
License issued to the company of Shri Khosla, viz.
Dome Services (FZC); copy of his telephone bill,
electricity bill; newspaper cuttings showing the
voluminous business being done by the company
named as New World Real Estate (NWRE), whose
President is Shri Somendra Khosla; the Heath Card
and other Cards issued by the Government of UAE.
The ld. CIT(A) while observing that these documents
were not produced before the Special Auditor during
the special audit conducted u/s 142(2A) of the Act or
the AO at the time of assessment , held that the
same cannot be admitted being fresh evidence at the
appellate stage as the appellant has failed to explain
the reasons for not producing these documents before
the AO or Special Auditor. He further held that since
no evidence of creditworthiness of Shri Somendra
Khosla was produced during the assessment
proceedings, the AO was justified in making addition
u/s 68 of the Act Rs.4,78,12,403/- for the assessment
year 2004-05 and Rs.1,02,91,176/- for the assessment
year 2005-06.
Special Bench-
5 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
4. With regard to the second issue of disallowance
of payments, the brief facts are that the assessee has
entered into an agreement with M/s Tulip Hospitality
Services Ltd.(THSL) for operating their Hotel Tulip
Star, Mumbai for which the assessee is entitled to
operating fee @ 3% and reimbursement of actual
expenditure incurred by it on operating the hotel. The
assessee entered into another contract with M/s Tulip
Star Hotels Pvt. Ltd. (TSHL) for operating the Hotel
Tulip Star, Mumbai, by which TSHL is to get 3% of the
gross hotel receipt. Thus, whatever the amount
assessee is entitled to receive from THSL is to be
passed on to TSHL. The assessee also entered into an
agreement with M/s Cox & King (India) Pvt. Ltd.
(CKIL) for using their network of office and
infrastructure for brand awareness and marketing of
Tulip Star hotel for which CKIL is entitled to
reimbursement of expenses actually incurred by them.
CKIL raised monthly debit note upon the assessee for
expenditure incurred by them. In turn, the assessee
raised debit note of identical amount upon THSL.
During the whole year, CKIL raised debit note of
Rs.7,56,16,910/- and in turn, similar debit note is
raised by the assessee. The amount received from
Special Bench-
6 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
THSL is paid to CKIL. In its profit and loss account,
the assessee has not claimed any deduction in respect
of debit note raised by CKIL, because the same was
already reimbursed by THSL.
With regard to the operating fee of
Rs.61,93,015/- is concerned it entered into an
agreement with THSL for operating their hotel namely
Tulip Star. Simultaneously, the assessee entered into
another agreement with THSL for operating the said
hotel. The entire operating fee receivable by the
assessee for operating the hotel was passed on to
TSHL. Therefore, in effect, the assessee has not
claimed expenditure of Rs.61,93,015/-. The AO
however, did not accept the claim. It was observed by
him that the auditors had clearly stated that the
assessee had claimed the expenditure in P & L
account. It was observed by him that the assessee had
understanding with TSHL & CKIL to provide various
services and therefore question of reimbursement did
not arise and even if the services were actually
provided by CKIL and TSHL the assessee was required
to deduct tax at sources in respect of payments made
to them as the same were in the nature of contractual
payments. The AO accordingly disallowed the claim of
Special Bench-
7 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
deductions of Rs.7,56,16,910/- and Rs.61,93,015/- for
assessment year 2004-05. Similar deduction had also
been claimed in assessment year 2005-06 i.e. sum of
Rs.7,95,73,902/- on account of brand awareness
activities paid to CKIL and Rs.37,03,683/- on account
of operating fees paid to THSL. For the reasons give n
in the assessment order for the assessment year
2004-05 the AO disallowed the said claims in
assessment year 2005-06 also. In appeal CIT(A)
confirmed the above disallowances made by the AO.
5. On appeal before the Tribunal, on the issue of
sustenance of addition u/s 68 of the Act, both learned
Members have considered the evidence produced
before the AO as well as the additional evidence. The
learned Judicial Member, after considering all the
evidence, i.e. the evidence produced before the
Assessing Officer as well as the additional evidence ,
came to the conclusion that the assessee has
discharged the onus of proving the cash credit lay
upon it and accordingly he ordered for deletion of
addition; while the learned Accountant Member was of
the opinion that even after considering the additional
evidence the assessee has not been able to discharge
the onus of proving the cash credit and hence upheld
Special Bench-
8 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
the order of ld.CIT(A) sustaining the addition made by
the AO.
6. On the second issue of disallowance of payments,
the ld. Judicial Member while observing that there is
only incoming and outgoing entries in the books and
for this reason neither the assessee has shown in its
profit and loss account any incoming entry/ income
nor outgoing entry/ expenditure, deleted the
disallowance of Rs.7,56,16,910/- and Rs.61,93,015/-
for the assessment year 2004-05 and for the same
reasons he also deleted the disallowance of
Rs.7,95,73,902/- and Rs.37,03,683/- for the
assessment year 2005-06. However, the ld.
Accountant Member while observing that there is no
evidence for services rendered by CKIL and mere
agreement or payment by cheque is not enough, the
claim has to be disallowed in view of the provisions of
section 40(1)(ia) of the Act on the ground of non
deduction of tax, confirmed the above disallowances
made by the AO.
7. Since there was a difference of opinion between
the members constituting the Bench, a Reference was
made to the Hon'ble President under section 255(4) of
Special Bench-
9 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
the Income Tax Act, 1961, for referring the points of
difference to the ld. Third Member for adjudication of
the following points of difference: -
" Whether on the facts and circumstances of the
case:
i) the additions of Rs.4,78,12,403/- and
Rs.1,02,91,176/- made and confirmed by the lower
authorities u/s 68 for AYs 2004-05 and 2005-06
respectively are liable to be deleted or to be
confirmed?
ii) the addition made and confirmed by the CIT(A)
on account of reimbursement of expenses to M/s
Cox & King (India) Pvt. Ltd. and to M/s Tulip Star
Hotels Pvt. Ltd. for AYs 2004-05 and 2005-06 are
liable to be deleted or confirmed?"
8. The ld. Third Member on the first point of
difference vide paragraphs 22 and 23 of his order
dated 27.11.2009 held as under :
"22. Considering the totality of the above facts
namely that Shri Somendra Khosla is a NRI, he is
in the business of development of real estate and
he is a man of substantial means, in my opinion, if
he has decided to invest in the real estate in
India, the genuineness cannot be doubted unless
there is any evidence to the contrary. The Revenue
has doubted the genuineness merely on the basis
of presumption and suspicion ignoring the
documentary evidences produced by the assessee,
which establish the genuineness of transaction.
23. In view of the above, in my opinion, the
assessee has duly established the identity of the
creditor, creditworthiness of the creditor and also
genuineness of the transaction. Thus, the onus of
proving the cash credit which lays upon the
assessee is duly discharged. Accordingly, I answer
Special Bench-
10 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
question no.1 in favour of the assessee and hold
that the addition of Rs.4,78,12,403/- and
Rs.1,02,91,176/- made and confirmed by the lower
authorities under section 68 of the Income Tax Act
are liable to be deleted."
On the second point of difference, the ld. Third
Member vide paragraphs 27, 28 and 29 of his order
has held as under :
"27......The assessee has furnished the profit and
loss account in its paper book and from the
perusal of which it is evident that the total
expenditure debited in the profit and loss account
was only Rs.86,97,337/-. When the total
expenditure incurred by the assessee during the
year under consideration was Rs.86,97,337/-, by
no stretch of imagination, it can include the
expenditure incurred by CKIL for which debit note
amounting to Rs.7,56,16,910/- was raised by the
assessee. When the assessee has not claimed the
deduction in respect of the expenditure of
Rs.7,56,16,910/-, the question of disallowing the
same in the case of the assessee cannot arise.
28. With regard to the operating fee of
Rs.61,93,015/- is concerned, I find that the
assessee received the identical amount from THSL
and paid the same to TSHL. Here again, in real
terms, the assessee has neither received any
income nor incurred any expenditure. It entered
into an agreement with THSL for operating their
hotel namely Tulip Star. Simultaneously, the
assessee entered into another agreement with
THSL for operating the said hotel . The entire
operating fee receivable by the assessee for
operating the hotel was passed on to TSHL.
Therefore, in effect, the assessee has not claimed
expenditure of Rs.61,93,015/-. As I have
mentioned earlier that in the profit and loss
account, the assessee debited total expenditure of
only Rs.86,97,337/- the details of which is given in
the Schedule `G' to the profit and loss account
which is as under :
Special Bench-
11 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
"SCHEDULE ANNEXED TO AND FORMING PART OF
THE ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH 2004
Previous
Year
SCHEDULE "G" Rs. Rs. Rs.
OPERATING AND ADMINISTRATIVE
EXPENSES
Salaries 1,339,850 1,398,033
Gratuity 153,159 175,500
Staff Welfare 796,444 755,280
Travelling & Conveyance 1,101,082 1,775,118
Printing & Stationery 337,992 586,543
Bad Debts Written off 1,545,625 3,758,655
Communication Expenses 838,142 1,328,648
Repairs & Maintenance 170,462 160,122
Vehicle Expenses 558,545 931,927
Legal & Professional Fees 583,426 1,738,975
Entertainment Expenses 60,876 142,431
Audit Fees 33,000 37,650
Business Promotion Expenses 12,755 46,069
Rent, Rates & Taxes 310,048 394,516
Membership & Subscription 3,750 4,000
Electricity Expenses 110,582 140,776
Interest Charges 110,010 --
Office Expenses 97,237 95,782
Sundry Expenses 532,452 537,326
Preliminary Expenses Written Off 900 900
Total 8,697,337 14,008,251
29. From the above details of the expenditure, it is
evident that the assessee has not claimed any
deduction in respect of operating fees paid by it to
TSHL. When no deduction is claimed, the question
of disallowing the same does not arise. Before I
part with the matter, I may clarify that the
expenditure was actually incurred by TSHL and
whether such expenditure is allowable or not is to
be examined in the case of THSL. So far as the
assessee's case is concerned, in my opinion, when
no deduction was claimed, the question of any
disallowance does not arise. Similar is the fact in
assessment year 2005-06 except variation in the
amount. Therefore, my finding for the assessment
year 2004-05 would be squarely applicable to
assessment year 2005-06. Accordingly, I answer
the question no.2 also in favour of the assessee
and hold that the addition made and confirmed by
the CIT(A) on account of reimbursement of
expenses to M/s. Cox & King (India) Pvt. Ltd. and
to M/s.Tulip Star Hotels Pvt.Ltd. for the
assessment years 2004-05 and 2005-06 are liable
to be deleted."
Special Bench-
12 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
Accordingly the ld. Third Member while agreeing with
the opinion of ld.Judicial Member, has decided both
the issues in favour of the assessee.
9. While giving effect to the opinion of the ld. Third
Member, the ld. Judicial Member passed the
conformity order in February 2010. However, the ld.
Accountant Member observed that it is not possible to
give effect to the order of the ld. Third Member as the
order of the ld. Third Member is contrary to his own
expressed opinion and has also not considered various
points of differences arising from the proposed orders
of the members of the bench. There is also difficulty
in forming the majority of opinion. The difficulty, it
appears has arisen partly because of the question
framed being too general without specifying the point
of differences in deciding the issue and partly because
some of the vital facts have been omitted to be
considered in the order of the ld. Third Member. The
ld. Accountant Member, after considering the
arguments of both the sides observed that it would be
appropriate for the Division Bench to refer the matter
back to the Hon'ble President, ITAT than to pass
perverse order so that the controversy could be
Special Bench-
13 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
resolved properly and accordingly, he framed following
new questions:
"1. Whether on the facts and in the
circumstances of the case, the additional evidence
which had not been filed before AO, can be
admitted by the tribunal in deciding the issue of
cash credit and if so whether the tribunal can
decide the issue based on fresh evidence or the
issue is required to be restored to the file of the
AO for fresh adjudication after examining the
detailed evidence and after necessary inquiries
and opportunities to the assessee.
2. Whether on the facts and circumstances of
the case, as highlighted in the proposed order of
the AM and particularly the fact that the assessee
produced no evidence to show that the foreign
remittances credited in the accounts of the
assessee had been made out of funds belonging to
the creditor, the cash credit can be taken as
explained satisfactorily only on the ground that the
assessee was doing business and owned several
properties.
3. Whether considering the finding of the AO
and the auditor's note and all other relevant
material it can be said that the assessee had not
claimed any expenditure in relation to the payment
made to Cox & Kings and Tulip Star Hotels Ltd.
and whether the claim of expenditure can be
allowed considering the facts and circumstances of
the case."
10. The ld. Judicial Member has expressed his
disagreement with the course adopted by the ld.
Accountant Member and in a note dated 23.2.2010 has
proposed the following question to be referred to the
Special Bench or Larger Bench to resolve the
controversy:
Special Bench-
14 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
"Whether on the facts and circumstances of the
case, the Members of the Bench, could comment
on the order of the Third Member, instead of
passing a confirmatory order in terms of section
255(4) of the Act?"
11. However, the Hon'ble President on careful perusal
and consideration of the issue observed that a Special
Bench consisting of three or more Members may have
to be constituted to resolve the issue. It involves
interpretation of sub-section (4) of section 255 which
provides that the point on which difference arose shall
be decided in accordance with the opinion of the
majority. The question to be considered is whether at
that stage (i.e., the stage of giving effect to the
opinion of the ld.Third Member) it is legally
permissible, having regard to the statutory provision,
for a Member who is in the minority to decline to give
effect to the opinion of the majority whatever be his
reasons. In addition to the question of interpretation,
it also involves the issue of judicial decorum. The
questions proposed by the ld. Accountant Member
touche upon the merits of the decision of the ld.Third
Member. The question proposed by the ld. Judicial
Member touches upon the duty/power of the Bench
sitting to give effect to the majority opinion u/s
255(4) and accordingly he constituted this Special
Special Bench-
15 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
Bench to resolve the controversy on the question
referred in page 1 of this order.
12. At the time of hearing, the ld. Counsel for the
assessee after referring to the relevant provisions of
section 255(4) of the Act submits that in view of the
findings recorded by the ld. Judicial Member in
paragraphs 14.1, 30, 31, 35, 41 and 42 of the draft
order dated February 2009 and paragraphs 23 and
29 of the opinion of the ld. Third Member, there is a
majority of opinion in favour of the assessee,
therefore, the order passed by the ld. Judicial Member
be upheld. He further submits that the ld. Third
Member after considering the questions which have
been agreed and signed by both the Members has
answered the questions in favour of the assessee,
therefore, there is clear majority of opinion in favour
of assessee. He further submits that the ld.
Accountant Member in the order giving effect to the
order of the ld. Third Member has observed that the
questions framed being too general without specifying
point of difference in deciding the issue and
particularly because some of the vital facts have been
omitted to be considered in the order of the ld.Third
Member, therefore, he has framed three new questions
Special Bench-
16 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
which were not there at the time of reference to the
ld. Third Member. In other words, he has taken a U-
turn which is not permissible under the provisions of
section 255(4) of the Act. He further submits that it
has been observed by the ld. Third Member, at page 3
of his order, that the additional evidence has been
considered by both the ld. Members. The ld. Judicial
Member on the evidence produced before the AO as
well as the additional evidence came to the conclusion
that the assessee has discharged the onus of proving
the cash credit laid upon it. Whereas according to the
ld. Accountant Member even after considering the
additional evidence the assessee has not been able to
discharge the onus of proving the cash credit. He
further submits that once it has been held by the
majority of opinion that the assessee has duly
established the identity of the creditor,
creditworthiness of the creditor and also genuineness
of the transaction, the onus of proving the cash credit
which lay upon the assessee is fully discharged,
therefore, the order passed by the ld. Judicial Member
attained the majority and hence the questions which
have been framed by the ld. Account Member in his
order dated 18.2.2010 are against the provisions of
Special Bench-
17 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
section 255(4) of the Act. He further submits that
while giving the effect to the opinion of the ld.Third
Member under the provisions of section 255(4), we
have to ascertain the majority view and not to
consider the correctness of the view, therefore, the
ld. Accountant Member is not justified in doubting
the correctness of the opinion of the majority.
13. The ld. Counsel for the assessee while referring
to the decision in A.N.Seth V/s CIT (1969) 74 ITR
852 (Del) submits that the duty of the ld. Third
Member is to decide the point of difference which the
Members of the Bench originally heard the case
differed. He cannot himself formulate a new point on
which he could base his decision. In the case before
us, the ld. Third Member has decided the issues on
the basis of reference jointly signed by both the
Members, therefore, the opinion expressed by the
ld. Third Member is a valid opinion in the eyes of the
law.
14. The ld. Counsel for the assessee while referring
to the decision in Niraj Petrochemicals Ltd. V/s ITO
(2001) 248 ITR (AT) 1(Hyd) submits that the ld.Third
Member cannot alter the referred questions to him or
Special Bench-
18 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
cannot modify the questions and/or reframe the
questions and then decide the reframed questions
instead of the original questions. He further submits
that the ld. Third Member while deciding the issue can
take a different route but cannot alter the questions
framed and he has to agree either with the opinion of
the ld. Judicial Member or with the ld. Accountant
Member.
15. The ld. Counsel for the assessee while referring
to the decision in Jain Irrigation System Ltd. V/s
DCIT(2004) 266 ITR (AT) 31 (Pune) submits that the
duty of the ld.Third Member is to resolve the dispute
and point involved shall be decided according to the
opinion of majority. The ld.Third Member is competent
to decide only the point on which the members of the
bench originally hearing the case differed. He cannot
himself formulate a new point on which he could base
his decision.
16. The ld. Counsel for the assessee further submits
that in view of the decision in ITO V/s Vice-President,
Income Tax Appellate Tribunal (1985) 155 ITR 310
(Mad) the powers of the ld.Third Member of the
Tribunal to whom any case is referred u/s 255(4) of
Special Bench-
19 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
the Act is confined to the giving of a decision on the
points on which the members of the Tribunal had
differed and which has been formulated by them as
the question for the decision of the ld. Third Member.
He further submits that according to this decision the
ld. Third Member cannot remit the matter back to the
two Members who originally heard the appeal to re-
hear the matter which is beyond his jurisdiction.
17. The ld. Counsel for the assessee further refers to
the decision of the Tribunal in Rameshwar Soni V/s
ACIT (Invst.) (2005) 279 ITR (AT) 60 (Jodhpur) to
contend that the jurisdiction of the Tribunal u/s
255(4) is confined to deciding the points of difference
according to the majority of the Members of the
Tribunal and not beyond that.
18. The ld. Counsel for the assessee further refers to
the decision of the Tribunal in H.P. Agro Industries
Corporation Ltd. V/s DCIT (1999) 240 ITR (AT) 62
(Chd) to submit that the ld.Third Member is fully
empowered in law to arrive at the same end result as
done by any of the Members constituting the Division
Bench although he may do it by a different route and
all that is necessary is that he must agree with one
Special Bench-
20 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
of the members constitution the Division Bench and
who have disagreed on the point at issue.
19. The ld. Counsel for the assessee while referring
to the decision of the Hon'ble Delhi High Court in CIT
V/s Sudhir Choudhrie (2005) 278 ITR 490(Delhi)
submits that the duty of the Tribunal is to pronounce
its judgments and orders in open hearing upon
enlisting them for a given date. Since in this case,
there is no final order and only opinions were
expressed by the Members constituting the Bench
and the ld.Third Member, therefore, the order passed
by the respective Members/ Third Member is merely an
opinion which cannot be said that the Tribunal has
passed any order so far. Therefore, the contention of
the Revenue that there is a mistake in the order
passed by the ld.Third Member is devoid of any
merit.
20. He, therefore, submits that since in this case
opinion of the majority has been arrived at on the
questions referred to by both the Members who
originally heard the appeal, therefore, the effect may
be given in view of the provisions of section 255(4) of
the Act as per opinion of majority which is in favour
Special Bench-
21 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
of the assessee and the opinion expressed by the ld.
Accountant Member, while giving the effect to the
order of the ld. Third Member is not in accordance with
the provisions of section 255(4) of the Act as he is in
the minority.
21. On the other hand, the ld. DR, at the outset,
submits that there is a technical mistake in the
question referred to Special Bench wherein it has been
mentioned " the order proposed by the ld. Accountant
Members", whereas there is no such order and only
an opinion, therefore, the question referred should
suitably be amended. The ld. DR while referring to
the opinion expressed by the ld.Third Member dated
27.11.2009 submits that even according to the ld.
Third Member on the issue of admission of additional
evidence it has been observed by him that "In
principle I agree with the learned DR that when the
Income Tax Appellate Tribunal admits additional
evidence, it should allow a reasonable opportunity to
the Assessing Officer to examine such additional
evidence and to produce any evidence or document in
rebuttal of such additional evidence. For this purpose,
either the ITAT can call for the Remand Report from
the Assessing Officer or may set aside the matter to
Special Bench-
22 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
the Assessing Officer for examination of additional
evidence and thereafter re-adjudication. Admittedly, it
has not been done by the ITAT in this case".
Therefore, the order passed by the ld. Third Member
admitting the additional evidence is not a valid order
in the eyes of law. He further submits that it is borne
out from the assessment order that the assessee has
never filed any such evidence before the AO in support
of the said credits. Therefore, the AO was fully
justified in making the addition u/s 68 of the Act.
22. He further submits that it has been held in Abhay
Kumar Shroff V/s ITO (1997) 63 ITD (Pat) 144 that
where additional evidence enables the Tribunal to pass
orders or for any other substantial cause it could
require the parties to do so. There is no gain saying
that while this power could be exercised by the
Appellate Tribunal suo motu the jurisdiction vested in
the Tribunal could be got invoked at the instance of
one of the parties before it. Relying on the said
decision he submits that it was the duty of the
Tribunal to exercise his power to provide a reasonable
opportunity of being heard to the department for
examining the evidence submitted by the assessee
which has not been done in this case, therefore, in
Special Bench-
23 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
the interests of justice the matter may be set aside to
the file of the AO.
23. The ld. DR further submits that in ITO V/s Baker
Technical Services (P) Ltd. (2009) 126
TTJ(Mumbai)(TM) 455 it has been held that when a
majority opinion has not been formed it was
suggested by the ld. Third Member that a reference
may be made to the Hon'ble President for making a
further reference to a Member or Members for
resolving the difference of opinion in accordance with
law. Relying on the same view the ld.DR submits
that both the Members while giving effect to the
opinion of the ld. Third Member have passed two
separate orders, therefore, the opinion of the
majority has not been formed in this case and
therefore, the issue may be decided fresh.
24. The ld. DR further submits that in M/s Deepak
Agro Foods V/s State of Rajasthan & Ors. (SC) (Civil
Appeal Nos.4327-28 of 2008 (arising out of Special
Leave Petition (C) No.17346-47 of 2005 and Ors.
dated 11.7.2008, it has been observed that "where an
authority making order lacks inherent jurisdiction,
such order would be without jurisdiction, null, non est
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24 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
and void ab initio as defect of jurisdiction of an
authority goes to the root of the matter and strikes at
its very authority to pass any order and such a defect
cannot be cured even by consent of the parties,".
Relying on the same he submits that since in this case
the additional evidence produced by the assessee
before the Tribunal has not been admitted by the
Tribunal by any specific order, therefore, the order
passed by the ld. Third Member after considering the
additional evidence is without jurisdiction, non est
and void ab initio.
25. The ld. DR further submits that in Khopade
Kisanrao Manikrao V/s ACIT (2001) 250 ITR 18(Pune);
(2000) 74 ITD 25(Pune), it has been observed that
power of the ld. Third Member is not limited to the
language of the questions framed in the reference
but it extents to entire sum and substance of the
opinion on the specified point(s); the Third Member
has power to consider the entire material, the
reasoning and the conclusion recorded by the Members
as well as the contentions advanced on behalf of the
parties. Relying on the same he submits that in the
absence of any specific order of admission of the
additional evidence either by the ld. Accountant
Special Bench-
25 ITA Nos.6490 and 6491/Mum/2008
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Member or by the ld. Judicial Member or by the ld.
Third Member, the opinion given by the ld. Third
Member is bad in law.
26. The ld. DR further submits that in Collector,
Central Excise, Bombay V/s M/S. S.D. Fine Chemicals
Pvt. Ltd.(1995)(3)SCR 84, it has been observed and
held that, if the third Member of the Tribunal has not
dealt with the case in a full and proper manner and
has disposed of the issue in a cryptic manner ,
therefore, it become necessary to remit the matter for
the fresh opinion of the third Member of the Tribunal.
Relying on the above decision, the ld. DR submits that
since in the case of the assessee, there is no mention
about the admission of the additional evidence,
therefore, the order passed by the ld.Third Member
has to be set aside.
27. The ld. DR further submits that in B.T.Patil &
Sons Belgaum Construction (P.) Ltd V/s ACIT (2010)
35 SOT 171(Mum)(LB) it has been held that the
parties are entitled to file additional evidence before
the ld. Third Member. Relying on the same he submits
that in the case of the assessee, the additional
evidence was already on record, therefore, it was the
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26 ITA Nos.6490 and 6491/Mum/2008
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duty of the Third Member to pass a specific order for
admission of the same which has not been done,
therefore, the order passed by the Third Member is
void ab initio.
28. The ld.DR while relying on the decision in CIT V/s
Shri Ramdas Motor Transport (1999) 238 ITR 177
(AP) submits that the order passed by the Third
Member should be well considered order, answered the
reference by giving sound and valid reasons. In the
case of the assessee the order passed by the Third
Member is not a well considered order, therefore, the
same may be set aside.
29. In the light of the above, the ld. DR submits that
the order passed by the ld.Third Member is not a valid
order, and in the absence of any opinion of the
majority, the order passed by the ld.Third Member
may be set aside and the issue may be decided
afresh.
30. We have carefully considered the submissions of
the rival parties and perused the material available on
record. To appreciate the controversy in proper
perspective it is seemly to reproduce section 255(4) of
the Act which reads as under :
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27 ITA Nos.6490 and 6491/Mum/2008
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"255. (1) ......
(2) ...
(3)....
(4) If the members of a Bench differ in opinion on
any point, the point shall be decided according to
the opinion of the majority, if there is a majority,
but if the members are equally divided, they shall
state the point or points on which they differ, and
the case shall be referred by the President of the
Appellate Tribunal for hearing on such point or
points by one or more of the other members of the
Appellate Tribunal, and such point or points shall
be decided according to the opinion of the majority
of the members of the Appellate Tribunal who have
heard the case, including those who first heard it."
31. A harmonious reading of the aforesaid provision
shows that the majority decision of the Bench of the
Tribunal has to prevail and in case of difference of
opinion among equal number of members of the
Tribunal, the matter is further required to be decided
by one or more of the other members of the Tribunal
and such point or points shall be decided according
to the opinion of the majority of the members
of the Appellate Tribunal who have heard the
case, including those who first heard it. Thus, it is the
final conclusion of majority of the members of the
Tribunal which is to prevail.
32. In this regard, we may refer with profit to the
following decisions relating to the relevant provisions
of section 255(4) of the Act.
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28 ITA Nos.6490 and 6491/Mum/2008
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33. In A.N.Seth (supra), Their Lordship have
observed as under (page 860 of 74 ITR) :
"Under this provision, if the Members of a Bench
of the Appellate Tribunal are equally divided on
any point or points, the said point or points have
to be referred to one or more of the other
Members of the Tribunal for his or their opinion. A
reading of the sub-section shows that it
contemplates a difference amongst the Members
on the conclusion on a point, and not a difference
in the reasoning or reasons for arriving at the
conclusion. Therefore, if the Members agree on
the conclusion on a point, but differ in the
reasoning or reasons for arriving at the conclusion,
the provision in the sub-section does not apply,
and the question of any reference to one or more
of the other Members does not arise............"
34. In ITO V/s Vice-President, ITAT (supra), it has
been observed and held that the power of the third
member to whom the case is referred under section
255(4) is confined to the giving of a decision on the
point(s) on which the two members had differed and
which has been formulated by them as a question or
questions for the decision of the third member. The
third member acting under section 255(4) does not
have any power to direct the two members of the
Tribunal who had differed on the point(s) referred to
him to decide on a particular point or points or act in a
particular manner. The third member cannot act as if
he was an appellate authority over the two members
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29 ITA Nos.6490 and 6491/Mum/2008
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of the Tribunal and direct them to rehear and dispose
of the matter afresh.
35. In H.P. Agro Industries Corporation Ltd.(supra) it
has been observed and held (page 77):
"A question may be raised at this stage as to how
the Third Member has expressed an opinion
different from the one given by the two Members
constituting the Division Bench. In my opinion, the
Third Member is fully empowered in law to arrive
at the same end result as done by any of the
Members constituting the Division Bench although
he may do it by a different route and all that is
necessary is that he must agree with one of the
Members constituting the Division Bench and who
have disagreed on the point at issue. By means of
the present order I have held that the deduction
of Rs.10,090 is allowable and the learned
Accountant Member has also expressed a similar
opinion by allowing the miscellaneous petition filed
by the assessee. In other words, the majority
opinion of the Tribunal is available as a result of
the present Third Member order and the matter
shall now be posted before the Division Bench for
passing an order in conformity with the majority
opinion."
36. In Khopade Kisanrao Manikrao (supra), it has
been held (headnote, page 22):
"A plain reading of section 255 of the Income-tax
Act, 1961, makes it clear that the jurisdiction of
the Third Member is in regard to the point of
difference and the framing of the question for a
reference under section 255(4) need not be
equated with a reference to the High Court under
section 256. Under section 256, the High Court,
till, recently, had advisory jurisdiction in regard to
any question of law arising out of the order of the
Tribunal and referred to the High Court for its
opinion. In the case of the reference under section
255(4) to the Third Member, the object is to
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30 ITA Nos.6490 and 6491/Mum/2008
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resolve the difference in opinion on any point
which arises in the course of deciding of an
appeal. Therefore, the jurisdiction of the Third
Member is not limited to the language of the
question(s) framed in the reference but it extends
to the entire sum and substance of opinion on the
specified points. The questions are framed in
accordance with rules for identifying the dispute
but it is a well settled principle of law that the
rules cannot restrict the scope of the powers
conferred under the statute. Therefore, the rules
do not have the effect of curbing the scope of
powers of the Third Member conferred upon him
under section 255(4)."
37. Applying the ratio of the aforesaid decisions to
the facts of the present case, we find that there is no
dispute that there was a difference of opinion
between the two Members who originally heard the
appeal and the reference was made to the Hon'ble
President of the Tribunal, u/s 255(4) of the Act for
referring the points of difference to the ld.Third
Member. The Hon'ble President accordingly referred
the said matter for a decision to a Third Member.
The ld. Third member after giving the opportunity to
the parties observed that "the Judicial Member after
considering all the evidences i.e. evidence produced
before the AO as well as the additional evidence, came
to the conclusion that the assessee has discharged the
onus of proving the cash credit lay upon it; while the
ld. Accountant Member was of the opinion that even
Special Bench-
31 ITA Nos.6490 and 6491/Mum/2008
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after considering the additional evidence the assessee
has not been able to discharge the onus of proving the
cash credit" and held that the assessee has duly
established the identity of the creditor,
creditworthiness of the creditor and also the
genuineness of the transaction. Thus, the onus of
proving the cash credit which lays upon the assessee
is duly discharged and accordingly the ld. Third
Member while agreeing with the views of the ld.
Judicial Member answered the first question in favour
of the assessee. Similarly, on the other issue of
addition on account of reimbursement of expenses he
observed that when no deduction was claimed, the
question of any disallowance does not arise and
accordingly while agreeing with the views of the ld.
Judicial Member answered the other question also in
favour of the assessee, and deleted the additions
made by the AO. Thus, in this case, opinion of the
majority has arrived at in favour of the assessee.
38. However, we find that while giving effect to the
opinion of the Third Member, ld. Accountant Member
has again formulated three questions which we have
already referred in paragraph 9 of this order.
According to the ld. Accountant Member since the
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32 ITA Nos.6490 and 6491/Mum/2008
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additional evidence has not been filed before the AO,
the ld.Third Member cannot decide the issue based
on fresh evidence filed before the Tribunal, rather the
ld. Third Member is required to restore the same to
the file of the AO for fresh adjudication after
examining the said evidence and after providing
reasonable opportunity of being heard to the assessee.
39. From the reading of the above, there is no doubt
that the ld. Accountant Member while agreeing with
the questions formulated at the time of the original
reference to the Hon'ble President of the ITAT has
again framed three new questions at the time of giving
effect to the opinion of the majority de hors the
provisions of section 255(4) of the Act as he had
become functus officio after he passed his initial draft
order. This view also finds support from the decision
in Delhi Press Samachar Patra Ltd. V/s CIT (2004)
267 ITR 458 (Del), wherein it has been held
(headnote):
"Held, that the Accountant Member had become
functus officio after he passed his initial order.
Secondly, the procedure prescribed by the statute
had not been followed. In such a situation, the
procedure indicated in sub-section (4) of section
255 of the Income-tax Act, 1961, is required to be
followed. It was incumbent upon the members to
state the points on which they differed and the
Special Bench-
33 ITA Nos.6490 and 6491/Mum/2008
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case was required to be referred to the President
of the Tribunal for appropriate orders."
40. At this juncture, we cannot resist observing that
the opinion expressed by the ld.Third Member was
very much binding on the ld. Accountant Member.
The ld. Accountant Member who is in minority was
bound to follow the opinion of the ld. Third Member in
its true letter and spirit. It was necessary for judicial
propriety and discipline that the member who is in
minority must accept as binding opinion of the ld.
Third Member. The reliance is also placed on the
decision of the Hon'ble Apex Court in Assistant
Collector of Central Excise v. Dunlop India Ltd.(1985)
154 ITR 172 (SC), wherein it has been observed and
held (page 180) :
"We desire to add and as was said in Cassell and
Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope
it will never he necessary for us to say so again
that " in the hierarchical system of courts " which
exists in our country, " it is necessary for each
lower tier ", including the High Court, " to accept
loyally the decisions of the higher tiers ". " It is
inevitable in a hierarchical system of courts that
there are decisions of the supreme appellate
tribunal which do not attract the unanimous
approval of all members of the judiciary ...... But
the judicial system only works if someone is
allowed to have the last word and that last word,
once spoken, is loyally accepted" (See
observations of Lord Hailsham and Lord Diplock in
Broome v. Cassell). The better wisdom of the court
below must yield to the higher wisdom of the court
above. That is the strength of the hierarchical
judicial system......"
41. In this view of the matter, the questions framed
by the ld. Accountant Member while giving effect to
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34 ITA Nos.6490 and 6491/Mum/2008
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the opinion of majority are outside the purview of
section 255(4) of the Act and hence have no
relevance.
42. Now we shall discuss the decisions relied upon by
the ld. DR.
43. In Deepak Agro Foods (supra), it has been held
"15. All irregular or erroneous or even illegal
orders cannot be held to be null and void as there
is a fine distinction between the orders which are
null and void and orders which are irregular,
wrong or illegal. Where an authority making order
lacks inherent jurisdiction, such order would be
without jurisdiction, null, nonest and void abinitio
as defect of jurisdiction of an authority goes to the
root of the matter and strikes at its very authority
to pass any order and such a defect cannot be
cured even by consent of the parties. (See: Kiran
Singh & Ors. Vs. Chaman Paswan & Ors.1).
However, exercise of jurisdiction in a wrongful
manner cannot result in a nullity - it is an
illegality. 1 AIR 1954 SC 340 capable of being
cured in a duly constituted legal proceedings."
Whereas in the case before us, the ld. Third Member
has passed the order after hearing the parties and
after considering the material including the additional
evidence filed by the assessee, which was also
considered by the Members who originally heard the
appeal, therefore, there is no irregularity in the order
of the ld. Third Member and therefore, the decision
Special Bench-
35 ITA Nos.6490 and 6491/Mum/2008
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relied on by the ld. DR is distinguishable and not
applicable to the facts of the present case.
44. In Baker Technical Services (P) Ltd.(supra), the
Third Member had partly agreed with the Ld.
Accountant Member and partly agreed with the
ld.Judicial Member, therefore, he while observing that
if the Division Bench finds it difficult to form the
majority opinion as per the orders in this case, it is
suggested that a reference may be made to the
Hon'ble President of ITAT for making a further
reference to a Member or Members for resolving a
difference of opinion in accordance with law.
45. Whereas in the case before us, there is no such
situation. The ld.Third Member while agreeing with the
views of the ld. Judicial Member has passed the order
in favour of the assessee, therefore, the majority of
opinion has been arrived at and, therefore, the
decision relied on by the ld. DR is distinguishable and
not applicable to the facts of the present case.
46. In B.T.Patil & Sons Belgaum Construction (P.)
Ltd.(supra), the questions for considerations before
the Larger Bench were :
Special Bench-
36 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
"(1) Whether on facts and circumstances of the
case, the appellant assessee is entitled for
claiming of deduction under the provisions of
section 80-IA(4) in respect of the projects
undertaken?
(2) Whether the Tribunal has to decide an issue
on the basis of the law as it stands on the day of
the passing of the order?"
On the question No.1 it has been held
"....... that the conditions set out in sub-section (4)
clause(i) are not satisfied and, hence, the
assessee cannot claim deduction under this
section. The insertion and substitution of the
Explanation is only to clarify that the deduction
cannot be allowed in relation to a business in the
nature of works contract under any circumstances.
In other words, the view emerging from the careful
circumspection of sub-section (4) has been
endorsed by the Explanation and that too with
retrospective effect from 1.4.2000 thereby
covering both the years under consideration. We,
therefore, answer question No.1 in negative by
holding that the assessee is not entitled to
deduction under the provisions of section 80-IA(4)
in respect of the projects undertaken. (para 59)
On the question No.2, it has been held
"......that the Tribunal is not empowered but duty
bound to apply such retrospective amendment
made to the relevant section after allowing chance
to the aggrieved party to address on such
retrospective amendment concerning the dispute in
question. We, therefore, answer this question in
affirmative by holding that the Tribunal has to
decide an issue on the basis of the law as it stands
on the day of the passing of the order." (para 26)
47. Whereas in the case before us the issue is
entirely different i.e. whether the order proposed by
the ld. Accountant Member while giving effect to the
opinion of the majority consequent to the opinion
expressed by the ld. Third Member, can be said to be a
Special Bench-
37 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
valid order. Therefore, the decision relied on by the
ld. DR is of no help to the Revenue and hence not
applicable.
48. In M/S. S.D. Fine Chemicals Pvt. Ltd. (supra), it
has been held that if the Third Member of the Tribunal
has not dealt with the case in full and proper manner
and has disposed of the issue in cryptic manner, the
matter has to be remitted back to the Third Member
for a fresh opinion after hearing the parties.
49. Whereas in the case before us, the ld.Third
Member has passed a detailed and reasoned order and
it is not the case of the Revenue that the ld. Third
Member has not dealt with the any of the issues or
plea taken by the Revenue or the order passed by him
is a cryptic order, therefore, the decision relied on by
the ld. DR is distinguishable and not applicable to the
facts of the present case.
50. In Abhay Kumar Shroff (supra) it has been held
that if the additional evidence enables the Tribunal to
pass order or for any other substantial cause it could
require the parties to do so. There is no gain saying
that while this power could be exercised by the
Appellate Tribunal suo motu the jurisdiction vested in
the Tribunal could be got invoked at the instance of
one of the parties before it.
Special Bench-
38 ITA Nos.6490 and 6491/Mum/2008
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51. Whereas in the case before us the additional
evidence, after providing opportunity, was considered
by both the members who originally heard the
appeal and the same was also considered by the ld.
Third Member, therefore, the decision relied on by the
ld. DR rather supports the assessee's case.
52. There is no quarrel with the principles
enunciated in the aforesaid decision of the Tribunal
in Khopade Kisanrao Manikrao (supra) inasmuch as in
the case before us the additional evidence after
providing opportunity was considered by the ld. Third
Member, therefore, the decision relied on by the ld.
DR rather supports the assessee's case.
53. In Shri Ramdas Motor Transport (supra) it has
been held (page 4) :
"4. Question No. 11.-Except raising bare ground
in the I. T. C. that the Third Member has not
answered the reference as contemplated under
section 255(4) of the Act, no argument is
advanced before us as to how the order of the
Third Member is unsustainable in law. We have,
however, perused the order passed by the Third
Member. He was called upon to answer three
questions on which there was a difference of
opinion among the two Members. The Third
Member in a well considered order, answered the
reference by giving sound and valid reasons
agreeing with the Accountant Member. Thus, the
majority view was in favour of the assessee and a
Special Bench-
39 ITA Nos.6490 and 6491/Mum/2008
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consolidated order was accordingly passed by the
Tribunal in accordance with the provisions of
section 255(4) of the Act. Therefore, we are not
ready to accept the contention that the order of
the Appellate Tribunal does not represent the
majority view. There is absolutely no question of
law involved in this point. We, therefore, decline
to refer this question also."
54. Whereas in the case before us, the ld. Third
Member in a well considered order, answered the
reference by giving sound and valid reasons agreeing
with the views of ld. Judicial Member, therefore,
the decision relied upon by the ld. DR is
distinguishable and not applicable to the facts of the
present case.
55. For the reasons as discussed above we hold that
on a difference of opinion among the two Members of
the Tribunal, the ld.Third Member was called upon to
answer two questions on which there was difference
of opinion among the two members who framed the
questions and the ld.Third Member in a well
considered order, answered the reference by giving
sound and valid reasons agreeing with the views of
the ld. Judicial Member. Thus, the majority view was
in favour of the assessee. We further hold that the
proposed order dated 18.2.2010 of the ld. Accountant
Member who is in the minority and had
Special Bench-
40 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
become functus officio wherein he has expressed his
inability to give effect to the opinion of the majority
and proceeded to frame three new questions to be
referred to the Hon'ble President, ITAT again for
resolving the controversy cannot be said to be a valid
or lawful order passed in accordance with the
provisions of section 255(4) of the Act and, hence,
the said order dated 18.2.2010 proposed by the ld.
Accountant Member is not sustainable in law.
Accordingly, we answer the question referred to us in
negative i.e.in favour of the assessee.
56. At the time of hearing, with the consent of the
parties and in the interests of justice, it has been
decided by the Hon'ble President to finally dispose of
the appeals on the basis of majority view. Therefore,
based on the opinion of the majority, the ground wise
decision of the appeals for the assessment years
2004-05 and 2005-06 is as under :
ORDER GIVING EFFECT
Assessment Year : 2004-05
57. Ground Nos.1 and 2 are against the confirmation
of action of the AO in appointing Special Auditor u/s
142(2A) of the Act.
Special Bench-
41 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
58. It has been decided by the members who
originally heard the appeal against the assessee and in
favour of the Revenue. The grounds taken by the
assessee are, therefore, rejected.
59. Ground No.3 is against the sustenance of
disallowance of Rs.2,76,885/- paid to Mr. Sudhanshu
Purohit and treating the amount of Rs.1,17,627/-
receivable as income from Mr. Sudhanshu Purohit.
60. It has been restored back by the members who
originally heard the appeal to the file of the AO to
examine the issue afresh. The ground taken by the
assessee is, therefore, partly allowed for statistical
purposes.
61. Ground No.4 is against the sustenance of
addition of Rs.4,78,12,403/- received from Mr.
Somendra Khosla.
62. As per majority view, the issue is decided in
favour of the assessee and against the Revenue by
deleting the same. The ground taken by the assessee
is, therefore, allowed.
63. Ground Nos.5 to 8 are not pressed, hence, they
are dismissed being not pressed.
Special Bench-
42 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
64. Ground No.9 is against the sustenance of addition
of the value of 150 Room nights vouchers
Rs.21,00,000/- on adhoc basis or in alternative, as an
additional ground for assessment year 2005-06, the
same may be allowed in assessment year 2005-06 as
loss/bad debts.
65. It has been restored back by the members who
originally heard the appeal to the file of the AO to
decide the same as per directions given by the
Tribunal. The ground including the additional ground
taken by the assessee are therefore, partly allowed for
statistical purposes.
66. Ground No.10 is against the sustenance of
disallowance of bad debts written off Rs.5,44,000/-.
67. The Members who originally heard the appeal
confirmed the disallowance of Rs.4,45,000/- and
deleted the balance amount of Rs.99,000/-. The
ground taken by the assessee is, therefore, partly
allowed.
68. Ground No.11 is against sustenance of addition of
Rs.4,11,217/- u/s 68 of the Act.
Special Bench-
43 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
69. It has been decided by the members who
originally heard the appeal in favour of the assessee
and against the Revenue by deleting the amount of
Rs.4,11,271/-. The ground taken by the assessee is,
therefore, allowed.
70. Ground Nos.12 and 13 are against the
sustenance of disallowance of the expenses
Rs.7,56,16,910/- and Rs.61,93,015/-.
71. As per majority view, the issue is decided in
favour of the assessee and against the Revenue by
deleting the same. The grounds taken by the assessee
are, therefore, allowed.
Assessment year 2005-06.
72. Ground No.1 is against the sustenance of addition
of Rs.1,02,91,176/- received from Shri Somendr a
Khosla.
73. As per majority view, the issue is decided in
favour of the assessee and against the Revenue by
deleting the same. The ground taken by the assessee
is, therefore, allowed.
Special Bench-
44 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
74. Ground No.2 is against the deletion of addition of
Rs.10,42,027/- towards interest paid to Shri Somendra
Khosla.
75. It has been decided by the members who
originally heard the appeal in favour of the assessee
and against the Revenue by deleting the same. The
ground taken by the assessee is, therefore, allowed.
76. Ground No.3 is against the sustenance of
disallowance of bad debts Rs.15,58,655/-.
77. It has been decided by the members who
originally heard the appeal in favour of the assessee
and against the Revenue by deleting the same. The
ground taken by the assessee is, therefore, allowed.
78. Ground No.4 and 5 are against the sustenance of
disallowance of expenses of Rs.7,95,73,902/- and
Rs.37,03,683/-.
79. As per majority view, the issue is decided in
favour of the assessee and against the Revenue. The
ground taken by the assessee is, therefore, allowed.
Special Bench-
45 ITA Nos.6490 and 6491/Mum/2008
:AY 2004-05 and 2005-06
80. In the light of discussions, besides answering
the reference, the captioned appeals be treated as
partly allowed in the manner indicated.
Order pronounced in the open Court on 30th Mar., 2012.
sd sd sd
(P.M.JAGTAP) (G.E.VEERABHADRAPPA ) (D.K.AGARWAL)
Accountant Member President Judicial Member
Mumbai : 30th March, 2012.
SRL:
Copy to :
1. The Appellant.
2. The Respondent.
3. The CIT concerned
4. The CIT(A) concerned.
5. The DR/ITAT, Mumbai.
6. Guard File.
By Order
true copy
Assistant Registrar, ITAT, Mumbai.
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