Reference to the Special Bench cannot be withdrawn merely for the reason that the Hon’ble High Court has admitted the identical question of law in another case

DCIT vs. Summit Securities Limited (ITAT Mumbai Special Bench)- Notwithstanding the fact that the substantial question of law raised in the order of the earlier Bench has been admitted by the Hon’ble High Court, there are no fetters on the Tribunal in hearing the case in Special Bench and rendering the decision which would prevail upon and become a binding precedent for the other Benches of the Tribunal. The learned Counsel for the assessee could not point out even a single judgment in which the Hon’ble High Court abstained the Tribunal from deciding the issue through Special bench during the pendency of appeal before it. With utmost humility there cannot be such a decision for the manifest reason that the justice delivery system has to take its own course and cannot wait in eternity for a higher judicial body to decide the issue first. Here it is important to mention that we are dealing with a situation in which only a substantial question of law has been admitted by the Hon’ble High Court. It is not as if the said question of law has been finally decided. Situation may be different where the said substantial question of law receives consideration by the Hon’ble High Court and a final verdict is given. In such a case the parties before the Tribunal may apply for the withdrawal of the reference before the Special Bench provided the facts and circumstances of such case are similar to the one decided by the Hon’ble jurisdictional High Court. Such withdrawal may sound justified as proceeding with the matter would be an exercise in futility in the face of the judgment of the Hon’ble jurisdictional High Court. But where only a substantial question of law has been admitted by the Hon’ble High Court and the case is yet to come up for hearing, which may take several years, there is no reason whatsoever for any party to approach the Tribunal for the withdrawal of the reference to the Special Bench on the point. We, therefore, hold that the reference to the Special Bench cannot be withdrawn merely for the reason that the Hon’ble High Court has admitted the identical question of law in another case.

IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI SPECIAL BENCH “I”, MUMBAI

Before Shri D Manmohan (V.P.), Shri R.S.Syal (A.M.),
and Shri N.V.Vasudevan (J.M.)

ITA No.4977/Mum/2009 : Asst.Year 2006-2007

The Deputy Commissioner of Income-tax Circle 8(2) Mumbai.	Vs.	M/s.Summit Securities Limited (Formerly known as KEC Infrastructure Limited), Transasia House, 3rd Floor Chandivali Studio Road, Andheri (East) Mumbai – 400 072. PAN : AAACK4279J.
		(Respondent)
(Appellant)

 

Appellant by : Shri Sanjiv Dutt
Respondent by : S/Shri S.E.Dastur & Niraj Seth

Date of Hearing : 28.07.2011

Date of Pronouncement : 10.08.2011

 

O R D E R

Per R.S.Syal (AM) :

The Hon’ble President of the Income Tax Appellate Tribunal, on a reference made by the Division Bench, has constituted this Special Bench by posting the following question for our consideration and decision:-

“Whether in the facts and circumstances of the case, the Assessing Officer was right in adding the amount of liabilities being reflected in the negative net worth ascertained by the auditors of the assessee to the sale consideration for determining the capital gains on account of slump sale?”

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 :-

The assessee transferred its power transmission business to KEC International Limited (formerly known as KEC Infrastructure Limited) at an agreed consideration of Rs. 143 crore and offered the equal amount as capital gain arising out of sale of slump sale.The Auditors determined negative net worth of the business transferred at Rs. 157.19crore. The Assessing Officer held that the sale consideration should have been taken at Rs.300 crore (declared sale consideration of Rs. 143 crore + additional liabilities taken over amounting to Rs. 157 crore) and as such the entire amount was liable to be treated as long term capital gain on slump sale. Before the first appellate authority the assessee relied on two decisions of the Tribunal in Zuari Industries Ltd. Vs. ACIT [(2007) 105 ITD 569 (Mum.)] and Paperbase Co. Ltd. Vs. CIT [(2008) 19 SOT 163 (Del.)] in which it has been held that the negative net worth has to be treated as zero in the context of the provisions of section 50B. The learned CIT(A), following the said decisions, came to hold that the action of the Assessing Officer in determining the sale consideration as well as long term capital gain u/s.50B at Rs.300 crore was not sustainable. He reversed the assessment order on this point.

3. When the matter came up before the Tribunal in an appeal filed by the Revenue, the Division Bench was not convinced with the view taken by the co-ordinate bench in the case of Zuari Industries Ltd. (supra) as in its opinion the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Attili N. Rao [(2001) 252 ITR 880 (SC)] was useful for the determination of the issue which the earlier Division Bench in Zuari Industries Ltd. (supra) found to be distinguishable. When the Bench put across its tentative view, it was submitted on behalf of the assessee that if the Bench was not in agreement with the earlier decision in the case of Zuari Industries Ltd. (supra), then the issue may be referred to the Special Bench. This contention has been recorded in para 5 of the reference. The Division Bench, not finding itself in respectful agreement with the view taken by the co-ordinate Bench in Zuari Industries Ltd. (supra), requested the Hon’ble President to constitute a Special Bench on the point. Pursuant to such recommendation, the Hon’ble President constituted this Special Bench for giving opinion on the question extracted above.

4. The hearing of the Special bench was fixed for 27.07.2011 with notice to the parties. On receipt of notice, the assessee vide its application dated 20th July, 2011 addressed to the Hon’ble President submitted that the Goa Bench of the Hon’bleBombay High Court has admitted an appeal involving same issue in the case of Zuari Industries Ltd. (supra). It was requested that the reference made to the Special Bench be withdrawn as in certain other cases in the past the reference to the Special bench was withdrawn when the Hon’ble High Court had taken steps to decide the issue. The said application of the assessee was disposed off by the Hon’ble President with the remarks : “Place before the Special Bench for consideration”.

5. At the time of hearing, Shri S.E.Dastur, the learned Senior Counsel for the assessee raised the same preliminary objection to the effect that the reference to the Special Bench be withdrawn as the Hon’ble Bombay High Court has admitted identical question of law in the case of Zuari Industries Ltd. (supra). It was submitted that in past the references to the Special bench were withdrawn in the case of Star Limited and Tivoli Investments & Trading Co. Pvt. Ltd. when it came to the notice of the President that the Hon’ble High Court had admitted questions of law similar to those before the Special Bench. Taking us through the orders of the President in these two cases withdrawing reference to the Special bench in view of the Hon’ble High Court initiating the process of deciding the similar questions, the learned Senior A.R. pleaded that the instant reference be also withdrawn. He also referred to the order of the Division Bench in the case of Harsha Achyut Bhogle Vs. ITO [(2008) 114 TTJ (Mum.) 266] in which the earlier year was decided by the Tribunal against the assessee and when the subsequent year came up for hearing, the assessee relying on a contrary order in some other case, contended that the matter be referred to the Hon’ble President for the constitution of Special Bench to resolve the diametrically opposite views expressed by different Benches on the issue. The Tribunal rejected the assessee’s prayer for constitution of Special Bench on the ground that the assessee’s own appeal against the earlier order of the Tribunal was pending before the Hon’ble High Court. In this backdrop of the facts, the learned Senior A.R. requested that the reference to the Special Bench in the instant case be withdrawn as the Hon’ble High Court is already seized of the matter on identical question of law in the case of Zuari Industries Ltd. (supra)

6. The learned Departmental Representative strongly objected to the preliminary objection raised on behalf of the assessee by arguing that it was only at the instance of the assessee during the course of hearing before the Division Bench that the reference was made for the constitution of Special Bench as the Members expressed reservations in following the order in the case of Zuari Industries Ltd. (supra). It was, therefore, argued that the assessee was not entitled to take a contrary stand at this stage of the case. He applauded the course of action adopted by the Division Bench in making a reference for the constitution of Special Bench in the light of the judgment of the Hon’ble Supreme Court in the case of Union of India & Anr. Vs. Paras Laminates (P) Ltd. [(1990) 186 ITR 722 (SC)] in which it was held that the President of the tribunal has ample power to refer a case to Larger Bench when the Members of the Bench doubt an earlier decision of another Bench. For the same proposition he relied on the judgment of the Hon’ble Gujarat High Court in the case of Affection Investments Ltd. Vs. ACIT [(2010) 326 ITR 255 (Guj.)] in which it has been held that a subsequent Bench has no right or jurisdiction to record a decision entirely contrary to one reached by another co-ordinate Bench on the same set of facts and circumstances. The only course open to the co-ordinate Bench in such circumstances, as per the Hon’ble High Court, is to make reference to the President of the Tribunal as provided in section 255(3) to constitute a Special Bench to resolve the controversy. It was also argued that the act of the President of the Tribunal constituting a Special Bench is an administrative act and if any party is aggrieved against such administrative decision, then the proper way out is to approach some higher judicial forum. It was, therefore, requested that the preliminary objection raised by the assessee be rejected.

7. We have heard the rival submissions in extenso and perused the relevant material on record in the light of precedents cited before us. It is noticed that the Division Bench hearing the appeal of the Revenue in the present case was not convinced with the earlier view taken by the co-ordinate Bench in the case of Zuari Industries Ltd. (supra). At the request of the assessee, the reference was made to theHon’ble President for the constitution of Special Bench. On the fixation of hearing of the case by the Special Bench, the assessee approached the Hon’ble President through his letter dated 20.07.2001 urging him to withdraw the reference to the Special Bench as the question of law in the case of Zuari Industries Ltd. (supra) has been admitted by the Hon’ble Bombay High Court. The Hon’ble President has placed the assessee’s request before us for consideration and decision. As such the short question before us, at this stage is : Whether the reference to the Special Bench be withdrawn in the wake of the Hon’ble High Court admitting the identical question of law in the case of Zuari Industries Ltd. (supra).

8. Before we venture to delve into this question, it will be imperative to go through the judgments relied on by the parties, which are germane to the issue in question. The Hon’ble Supreme Court in the case of Paras Laminates (P) Ltd. (supra) observed that a Bench of two Members must not lightly disregard the decision of another Bench of the Tribunal on an identical question. It is particularly true when the earlier decision is rendered by a Larger Bench. The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of the Tribunals have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier case on identical matters. It was further observed that : “It is, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings bring to light what is perceived by them as an erroneous decision in the earlier case. In such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a larger Bench.”

9. On the same lines is the judgment of the Hon’ble Gujarat High Court in Affection Investments Ltd. (supra). In this case the Tribunal recorded that the facts before it were identical to another case. Thereafter the Tribunal took a different view for various reasons stated in the order. The Hon’ble High Court held that : “Once the Tribunal had come to the conclusion that the fact situation was identical to the one obtaining in a decided matter, no co-ordinate Bench of the Tribunal has any right or jurisdiction to record a contrary decision, entirely contrary to the one reached by another co-ordinate Bench of the same Tribunal on same set of facts and circumstances.” The Hon’ble High Court further observed that the only course open to the subsequent co-ordinate Bench would be to make a reference to the President of the Tribunal as provided in section 255(3) of the Income tax Act, 1961 to constitute a Special Bench to resolve the controversy.

10. The Hon’ble jurisdictional High Court in the case of CIT Vs. Goodlass Nerolac Paints Ltd. [(1991) 188 ITR 1 (Bom.)] has also held that a subsequent Bench of the Tribunal should not come to a conclusion totally contradictory to the one reached by the earlier Bench of the Tribunal in the same case for an earlier year on a similar set of facts. Their Lordships held that it is desirable that in case a subsequent Bench of the Tribunal is of the view that the finding given by the Tribunal in an earlier year requires reappraisal either because the appreciation in its view was not quite correct or inequitable or some new facts came to light justifying reappraisal or reappreciation of the evidence on record, it should have the matter placed before the President of the Tribunal so that the case could be referred to a Larger Bench of the Tribunal for adjudication.

11. A survey of the above judgments divulges that there should be consistency in the approach of various Benches of the tribunal. Once a case has been decided by an earlier Bench, the subsequent Bench should respect such decision and should not endeavor to make departure there from unless the facts are different or the legal position appreciated by the earlier Bench has undergone change because of some statutory amendment or enunciation of law by the Hon’ble Supreme Court or the Hon’ble jurisdictional High Court. Consistency in the judicial approach removes the sword of uncertainty hanging over the heads of litigants. The Income-tax Appellate Tribunal is an all India Body working through its Benches across the country. The judicial discipline requires that the view taken by one Bench should be respected and ordinarily followed by the others. This type of approach results into consistency in the administration of justice as the parties can reasonably predict the decision of a subsequent bench when the same issue has been decided by an earlier bench.

12. It is however not the end of the road. As the Tribunal is quasi judicial body, its Members cannot work mechanically by following the view taken by the earlier co­ordinate Bench when they strongly believe that the earlier decision was not rendered by appreciating the legal position in correct perspective. Naturally there cannot be any fetters on the powers of the subsequent Bench of the tribunal to dispute the correctness of the earlier order in justifiable cases. To presume that a subsequent bench, despite having strongly entertained the doubt about the accuracy of the earlier decision should follow the same, would make a mockery of the judicial system and act as a speed breaker on the thinking process and flow of thoughts. The Members have freedom to doubt the correctness of an earlier decision in deserving cases from their own point of view. If after due application of mind the subsequent Bench comes to the conclusion that it cannot agree with the earlier view, it should not straight away proceed to record a conflicting decision. In such a situation the subsequent Bench is empowered or rather duty bound to make a reference to the President on the point they perceive to be an error of law in the earlier decision. The Larger Bench is then made up to consider the correctness of the earlier decision on the facts and circumstances of the case before it. The decision thus arrived at by the larger wisdom becomes a binding precedent for all other Benches across the country unless there is a contrary judgment of the Hon’ble jurisdictional High Court on the point. After such order, no Division Bench can or should question the correctness of view taken by the Special Bench.

13. The learned Counsel for the assessee has raised objection to the continuation of the Special Bench on the ground that similar question of law has been admitted by the Hon’ble Bombay High Court in the case of Zuari Industries Ltd. (supra). The only reason advanced by the learned A.R. for the un-constitution of the Special Bench is the admission of the question of law by the Hon’ble High Court in March 2007. It is not the case of the parties that any judgment has been delivered on merits by the Hon’ble Bombay High Court on the point.

14. We are unable to accede to this request made on behalf of the assessee for the manifest reason that the Hon’ble High Court has neither decided the point on merits nor blocked hearing of cases involving identical question of law by the Tribunal till the disposal of appeal pending before it. The mere fact that a superior authority is seized of an issue identical to the one before the lower authority, there cannot be any impediment on the powers of the lower authority in disposing off the matters involving such issue as per prevailing law. The first appellate authorities in all subsequent cases shall be debarred from hearing the matters involving a question against which either the Revenue or the assessee have preferred appeal before the Tribunal and the matter is still undecided. The same consequences will follow if the Tribunal is proscribed from hearing the matters on the admission of identical question of law by the Hon’ble High Court till a final decision is rendered, which may take a couple of years. It can be seen that the substantial question of law was admitted by the Hon’ble High Court in the case of Zuari Industries Ltd. (supra) in March 2007 and we are running through 2011. More than four years have elapsed and the matter has still not been taken up for consideration and final disposal. If the argument raised on behalf of the assessee is accepted and further advanced then all the Hon’ble High Courts will have to bring to an end the hearing of appeals before them involving a question of law on which SLP has been admitted by the Hon’ble Supreme Court, which may again take a number of years.

15. The consequences of such a course of action suggested by the learned A.R. would lead to a chaotic situation. The entire working of the Tribunal will come to standstill if a reference to the Special Bench is withdrawn simply on the ground that identical question of law has been admitted by the Hon’ble High Court. The above discussed three judgments including that of the Hon’ble Supreme Court and that of the Hon’ble jurisdictional High Court do not permit subsequent Bench of the Tribunal to take a contrary view from the one expressed by an earlier Bench. Contemplate a situation in which an earlier Bench decides an issue in favour of one party, be it the Revenue or the assessee and the aggrieved party appeals against the said Tribunal order which is admitted by the Hon’ble High Court. Suppose similar issue comes up before a subsequent Bench which finds itself unable to endorse the view taken by the earlier Bench. The only course open to the subsequent Bench, as per the afore-stated three judgments, is to make a reference to the President for the constitution of a Special Bench instead of recording a contrary decision at its own. On the constitution of the Special Bench if an argument is taken that since the substantial question of law has been admitted by the Hon’ble High Court against the earlier order of the Tribunal and hence such reference be withdrawn, there would be a deadlock. The subsequent Bench would land itself in a quagmire, being neither in a position to swallow the earlier view nor spit it out. Following the earlier decision of the co-ordinate Bench would be difficult because of its non-concurrence with it. In the like manner it would find its hands tied to directly record a contrary conclusion because of the prevalence of the aforestated legal position expressed by the Hon’ble Supreme Court and other Hon’ble High Courts prohibiting adopting such a course of action. Disposal of appeal against the earlier order by the Hon’ble High Court may take several years and during the currency of these years the Tribunal would become defunct on such issues.

16. In order to come out of such a tricky situation, the legislature has provided a solution by enshrining section 255(3) empowering the President of the Tribunal to constitute the special bench, which reads as under:-

“255(3) The President or any other member of the Appellate Tribunal  …………….. , and the President may, for the disposal of any particular case, constitute a Special Bench consisting of three or more members, one of whom shall necessarily be a judicial member and one an accountant member.

17. A bare perusal of the relevant part of sub-section (3) of section 255 transpires that the President may for the disposal of any particular case constitute a Special Bench consisting of three or more members. The President is empowered to constitute a Special Bench u/s. 255(3) on his own volition if he considers any issue of a greater significance affecting large number of tax payers or due to the importance of the issue even if it does not affect several assessees or otherwise. The powers of the President in forming the Special Bench at his own will are plenary, unfettered and unlimited. Apart from making a Special Bench on the President’s own choice, such a Bench can also be constituted by the President on a representation made either by the assessee or by the Revenue. Further if a single member bench of the tribunal or a Division bench hearing a particular case considers it expedient to have opinion of the Larger Bench on the issue because of its vital implications or they feel themselves unable to agree with the view expressed by an earlier Bench on similar point, they can request the President for the making of a Special Bench on such issue. Besides that there may be certain other circumstances also in which the President can constitute Special Bench u/s. 255(3) consisting of three or more members for the disposal of any particular case.

18. Thus it can be noticed that the constitution of the special bench eases the situation in a case where the subsequent bench finds itself unable to endorse the view taken by the earlier bench on the point. The order of the Special Bench helps in providing consistency qua different benches of the tribunal until the matter receives consideration of the higher judicial forums. It is further pertinent to note that the practice, similar to the constitution of special bench by the tribunal to resolve a possible conflict in the views amongst various benches of the tribunal and not waiting till the matter is finally decided by the High court, is also uniformly followed by the High Courts as well. Whenever a view is taken on a point by a Bench of a High Court and the subsequent Bench of the same High Court finds it difficult to accept the same, the practice is to refer the matter to the Chief Justice of the concerned High Court for constitution of a Larger Bench. Notwithstanding the fact that SLP against the judgment of its earlier Bench has been admitted by the Hon’ble Supreme Court, the Hon’ble High Court does not stop its functioning to wait for the outcome before the Hon’ble Supreme Court for an indefinite time. The Larger Bench so constituted hears the matter and gives its conclusion, which becomes final qua various Benches of that High Court until the final judgment is rendered by the Hon’ble Supreme Court.

19. The Hon’ble Delhi High Court in the case of CIT Vs. Asian Hotels Limited [(2010) 323 ITR 490 (Del.)] held that notional interest on refundable interest free deposit received from the tenant is neither taxable as business income u/s.28(iv) nor as income from house property u/s.23(1)(a). Subsequently similar issue came up before the Hon’ble Delhi High Court in CIT Vs. Moni Kumar Subba [(2010) 235 CTR (Del.) 132] in which the question was whether notional interest on interest free security deposit was to be taken in the consideration to arrive at final value of the property. The Hon’ble Court considered the earlier judgment in the case of Asian Hotels Limited (supra) and on observing that certain relevant aspects were not considered in the afore-said earlier judgment, the matter was referred to the Hon’ble Chief Justice for constituting Full Bench. Thereafter the matter came up before the Larger Bench of the Hon’ble Delhi High Court in CIT Vs. Moni Kumar Subba [(2011) 333 ITR 38 (Del.)]. From the above discussion it can be seen that the subsequent Bench of the Hon’ble Delhi High Court in Moni Kumar Subba (supra) did not find itself in respectful concurrence with the view taken in the case of Asian Hotels Limited (supra). Instead of adopting its own view contrary to the one taken earlier, the matter was placed by the latter Bench for consideration by the Larger Bench for rendering finality to the issue. The latter Bench did not stop the hearing to wait for the Hon’ble Supreme Court to decide about the correctness of the earlier judgment in the case of Asian Hotels Limited (supra). It was right because the disposal by the Hon’ble Supreme Court may have taken several years. With the advent of the decision by the Larger Bench the issue has now attained finality insofar as the Hon’ble Delhi High Court is concerned.

20. Similar practice is followed in the Hon’ble Supreme Court as well inasmuch as where a Bench doubts the correctness of the view expressed by its another Bench of same strength, the controversy is referred to a Larger Bench. It can be noticed from the judgment of the Hon’ble Supreme Court in the case of Union of India Vs. Dharmendra Textile Processors [(2007) 212 CTR (SC) 432] that when the question of penalty came up before it, an earlier judgment in the case of Dilip N.Shroff Vs. JCIT & Anr. [(2007) 291 ITR 519 (SC)] was cited in which the view was taken in assessee’s favour. Finding it difficult to approve the earlier view in Dilip N. Shroff (supra), the matter was placed before the Larger Bench to take a final decision, which has since been decided in Union of India & Ors. Vs. Dharmendra Textile Processors & Ors. [(2008) 306 ITR 277 (SC)].

21. In the name of precedents, the ld. Sr. AR in support of his objection, apart from relying on certain administrative orders passed by the Hon’ble President, has relied on the solitary case of Harsha A Bhogle (supra). That case rested on the facts in which the tribunal decided the issue against the assessee in his own case in the earlier year. When the subsequent year came up for hearing, the assessee came out with a request that a special bench be formulated on the subject because the tribunal in another case had taken a different view. The Division Bench dealing with the assessee’s case for the subsequent year observed that the facts of the other case cited by the assessee were different. Following the view taken by the earlier bench in assessee’ s own case, the tribunal refused to accede to the request of the assessee that special bench be proposed.

22. At the cost of repetition we reiterate that consistency in the approach of the tribunal in the sense of following the earlier view is a rule but doubting its correctness is an exception. No fault can be found with the tribunal following the view taken by it in an earlier case/year when it is satisfied with its correctness. So what the tribunal did in the case of Harsha V Bhogle (supra) was to follow the rule of consistency. Obviously no exception can be found in the way in which the tribunal proceeded with the matter in that case. When an issue is decided in favour of one party, the aggrieved party may seek to get it reviewed through the route of the Special Bench. Unless the Bench really doubts the correctness of the earlier view, it does not recommend the making of a Special Bench. Whereas the case of Harsha A Bhogle (supra) fell in the domain of the rule of consistency, the case of the present assessee has fallen in the ambit of exception inasmuch as the Division Bench was hesitant to follow the earlier view in the case of Zuari Industries Ltd. (supra). Thus it is axiomatic that there is a sea change in the facts and circumstances prevailing in the case of Harsha A Bhogle (supra) and those presently under consideration. In that case the Division Bench was satisfied with the correctness of the view taken by the tribunal in the earlier year and that is how it refused to make a reference for the constitution of the Special Bench. We are dealing with a case in which the Division Bench is not satisfied with the correctness of the earlier view in Zuari Industries Ltd. (supra) and very graciously, instead of imposing its own contrary view, it made a reference to the Hon’ble President to constitute a Special Bench so that a larger view on the subject may come on surface.

23. Thus it can be noticed that the case of Harsha A Bhogle (supra) does not advance the case of the assessee any further. In all circumstances where the subsequent bench finds it difficult to accept and adopt the view taken by the earlier bench, the only course open to it is to make a reference for the constitution of the Special Bench. Our view is fortified by the Special Bench order in the case of Daks Copy Services Pvt. Ltd. Vs. ITO [(1989) 30 ITD 223 (Bom.) (SB)]. In that case the point in question was decided against the assessee in an earlier year. When the subsequent year of that assessee came up before the next Bench, it was noticed that a contrary view was also available. In order to resolve this conflict a Larger Bench of three Members was formed. In that case also a preliminary objection was raised on behalf of the Revenue that since the point in controversy was already decided against the assessee by the Tribunal in an earlier year and such matter was pending before the Hon’ble High Court, the same view should be followed in the subsequent assessment years as well and as such there was no need for a Special Bench. Repelling this contention, the Special Bench held that when the subsequent Bench was not convinced with the earlier view, the constitution of the Larger Bench for resolving the conflicting decisions of the benches of the Tribunal was in order.

24. Adverting to the facts of the instant case we find that situation is identical apart from the change of parties. Whereas in that case the Revenue raised preliminary objection for not proceeding with the Special Bench in view of the earlier Bench’s decision in their favor pending for adjudication before the Hon’ble High Court, now is the turn of the assessee to take similar objection in seeking the un-constitution of the Special bench because the earlier decision given by the Tribunal in its favour is awaiting adjudication by the Hon’ble High Court. As the facts and circumstances are similar in the present case, we are not persuaded to accept the assessee’ s preliminary objection for withdrawal of the reference to the Special bench by following the view taken by the Special bench in the case of Daks Copy Services Pvt. Ltd. (supra).

25. There is one more additional reason for not accepting the assessee’s preliminary objection. We have noticed from the reference made by the Division Bench to the Hon’ble President for the constitution of the Special Bench that when the Division Bench expressed its disagreement with the earlier decision in the case of Zuari Industries Ltd. (supra), the assessee took a plea that if the Division bench was not agreeable with the view taken by the Tribunal in Zuari Industries Ltd. (supra), then it should make a reference to the Hon’ble President for the constitution of Special Bench. The Bench accepted the assessee’s request and following the judicial discipline made such reference to the Hon’ble President. It is now that when the Special Bench has been constituted and the hearing is fixed that the assessee has come up with a plea that the Special Bench should be deconstituted. We are reminded of the doctrine of approbate and reprobate which debars a person from blowing hot and cold in the same flow. One cannot approve and reject the same thing in the same stream. The assessee is trying to do the same in the instant case. When during the hearing of its case by the Division Bench it found the Bench to be not accepting the decision in the case of Zuari Industries Ltd. (supra) which was in its favour, the assessee requested the Bench to make a reference to the Hon’ble President for constituting a Special bench. With such a request the assessee found an escape route from the view likely to be taken against it. Now it is pressing that the reference to the special bench be withdrawn and the case be heard by the Division Bench so that the earlier view in the case of Zuari Industries Ltd. (supra) may be pressed in to service once again. We are unable to find a solution to the likely problem to arise if the assessee’s contention is accepted and the special bench is deconstituted and again the DB finds itself unable to agree with the earlier view. Will the assessee in that case again request the DB to make a reference for the constitution of Special Bench and on such constitution will again request to dismantle it? Law does not permit a person to both approbate and reprobate. When the Special Bench has actually been constituted at the plea of the assessee, now the assessee can not turn around and argue that the Special Bench be deconstituted. We do not approve such a vacillating stand of the assessee.

26. It is beyond our comprehension as to what difference it makes to the assessee when his case is heard by the Division Bench or the Special Bench. The hearing by the special bench inter alia, is only to regularize the working of the tribunal aimed at achieving a uniform view by different Benches on the point. The assessee’s interest is not affected in any manner whether the case is heard by the Division Bench or the Special Bench. The assessee’ s logic for withdrawing the reference to the special bench on the ground that similar issue is pending for adjudication before the Hon’ble High Court would apply with full force even to the matters pending before the Division Bench. Tomorrow someone will come out with a similar plea requesting the keeping of the subsequent appeals in the Division Bench also on hold till the earlier decision of the co-ordinate bench is examined and finally decided by the Hon’ble High Court. Accepting such logic would mean making the tribunal non-operational. We cannot accept such a contention.

27. The ld. AR failed to draw our attention towards any provision of the Act which forbids the tribunal from going ahead with the hearing of the case in the circumstances as are presently prevailing, which in other words implies sanction to dispose of the cases notwithstanding the pendency of the matter before the Hon’be High Court. This inference gains strength from the section 158A, which reads as under:-

“158A. (1) Notwithstanding anything contained in this Act, where an assessee claims that any question of law arising in his case for an assessment year which is pending before the [Assessing] Officer or any appellate authority (such case being hereafter in this section referred to as the relevant case) is identical with a question of law arising in his case for another assessment year which is pending before the High Court on a reference under section 256 or [before the Supreme Court on a reference under section 257 or in appeal under section 260A before the High Court or in appeal under section 261 before the Supreme Court] (such case being hereafter in this section referred to as the other case), he may furnish to the [Assessing] Officer or the appellate authority, as the case may be, a declaration in the prescribed form and verified in the prescribed manner, that if the [Assessing] Officer or the appellate authority, as the case may be, agrees to apply in the relevant case the final decision on the question of law in the other case, he shall not raise such question of law in the relevant case in appeal before any appellate authority or [in appeal before the High Court under section 260A or in appeal before the Supreme Court under section 261].

(2)                Where a declaration under sub-section (1) is furnished to any appellate authority, the appellate authority shall call for a report from the [Assessing] Officer on the correctness of the claim made by the assessee and, where the [Assessing] Officer makes a request to the appellate authority to give him an opportunity of being heard in the matter, the appellate authority shall allow him such opportunity.

(3)                The [Assessing] Officer or the appellate authority, as the case may be, may, by order in writing, -

(i)                admit the claim of the assessee if he or it is satisfied that the question of law arising in the relevant case is identical with the question of law in the other case; or

(ii)             reject the claim if he or it is not so satisfied.

(4)        Where a claim is admitted under sub-section (3), -

(a)              the [Assessing] Officer or, as the case may be, the appellate authority may make an order disposing of the relevant case without awaiting the final decision on the question of law in the other case; and

(b)              the assessee shall not be entitled to raise, in relation to the relevant case, such question of law in appeal before any appellate authority or [in appeal before the High Court under section 260A or the Supreme Court under section 261].

(5)                When the decision on the question of law in the other case becomes final, it shall be applied to the relevant case and the [Assessing] Officer or the appellate authority, as the case may be, shall, if necessary, amend the order referred to in clause (a) of sub-section (4) conformably to such decision.

(6)              An order under sub-section (3) shall be final and shall not be called in question in any proceeding by way of appeal, reference or revision under this Act.

Explanation.- In this section, -

(a)        “appellate authority” means the [Deputy Commissioner (Appeals)] the Commissioner (Appeals) or the Appellate Tribunal;

(b)       “case”, in relation to an assessee, means any proceeding under this Act for the assessment of the total income of the assessee or for the imposition of any penalty or fine on him.

28. A careful analysis of section 158A, to the extent we are concerned here, makes it palpable that where an assessee claims that any question of law arising in his case for an assessment year which is pending before the Tribunal is identical with the question of law arising in his case for other earlier case which is pending before the High Court, he may make an application to the Tribunal giving his consent for applying the final decision on the question of law in the earlier case to the case under consideration. If the Tribunal admits the claim of the assessee, on being satisfied that the question of law arising in the latter case is identical with the question of law in an earlier case, it may make an order disposing of the latter case without awaiting the final decision on the question of law in the earlier case. Later on when the decision on the question of law in the earlier case becomes final, the Tribunal shall amend the order passed in the latter case, if necessary, in conformity with the final decision in the earlier case by the High Court. Sub-section (4) of section 158A is unequivocal empowering the Tribunal to “make an order disposing of the” latter case without awaiting the final decision on the question of law in the earlier case pending before the Hon’ble High Court. If we look at the prescription of sub-section (4), it becomes vivid that the Tribunal is not supposed to stop hearing of subsequent case simply on the ground that the decision rendered by it in the earlier year involving the same question of law is awaiting consideration by the Hon’ble High Court. Albeit section 158A is activated at the instance of the assessee to circumvent the situation of approaching the High Court against the order of the tribunal in the subsequent case as well involving similar question decided adversely by the tribunal in its own earlier case which is pending before the Hon’ble High Court, the underlying rationale is discernible that the functioning of the tribunal should not close down merely on the ground that the similar question of law is under consideration of the Hon’ble High Court in the same case or an other case. If the contention raised by the learned A.R. is accepted that the Tribunal should desist from hearing the matter in special bench on the substantial question of law which is awaiting adjudication by the Hon’ble High Court, then the provisions of section 158A shall become redundant. The very presence of this section in the Act amply demonstrates that the tribunal is not bound to wait for the judgment of the Hon’ble High Court on the point before applying it to the next cases.

29. From the above discussion it clearly emerges that if a subsequent Bench of the Tribunal is disinclined to follow the view taken by an earlier Bench on a particular issue, the only course open before it is to make a reference to the Hon’ble President for the constitution of Special bench so that the issue may be finally decided by a Larger Bench. Notwithstanding the fact that the substantial question of law raised in the order of the earlier Bench has been admitted by the Hon’ble High Court, there are no fetters on the Tribunal in hearing the case in Special Bench and rendering the decision which would prevail upon and become a binding precedent for the other Benches of the Tribunal. The learned Counsel for the assessee could not point out even a single judgment in which the Hon’ble High Court abstained the Tribunal from deciding the issue through Special bench during the pendency of appeal before it. With utmost humility there cannot be such a decision for the manifest reason that the justice delivery system has to take its own course and cannot wait in eternity for a higher judicial body to decide the issue first. Here it is important to mention that we are dealing with a situation in which only a substantial question of law has been admitted by the Hon’ble High Court. It is not as if the said question of law has been finally decided. Situation may be different where the said substantial question of law receives consideration by the Hon’ble High Court and a final verdict is given. In such a case the parties before the Tribunal may apply for the withdrawal of the reference before the Special Bench provided the facts and circumstances of such case are similar to the one decided by the Hon’ble jurisdictional High Court. Such withdrawal may sound justified as proceeding with the matter would be an exercise in futility in the face of the judgment of the Hon’ble jurisdictional High Court. But where only a substantial question of law has been admitted by the Hon’ble High Court and the case is yet to come up for hearing, which may take several years, there is no reason whatsoever for any party to approach the Tribunal for the withdrawal of the reference to the Special Bench on the point. We, therefore, hold that the reference to the Special Bench cannot be withdrawn merely for the reason that the Hon’ble High Court has admitted the identical question of law in another case.