Insertion of Rule 13E in the I.T.A.T. (Recruitment and Conditions of Service) Rules, 1963, vide Notification No. GSR 389E dated 3-6-2009 prohibiting Retired ITAT President, Vice-President and members to appear before ITAT. No doubt the Ministry, as it were, built a nice palace so that all of us in the ITAT could lead a happy and blissful life hereafter, used strong bricks, good cement and ISI marked steel but they built, in our view, on a loose soil or sandy bed or say without taking ecological clearance. The palace so built, although of strong structural components, is likely to crumble. The same is true here. We were very anxious to apply the ratio laid in P.C. Jain’s case (supra) but refrained or shown caution because the base on which our palace is built is different from the one appreciated by the Delhi High Court. We can only accept the reality and envy our neighbours in the CESTAT.
(1) In our view it does not apply to Members who have retired prior to the date of publication of notification.
(2) In our view the question no. 2 is answered to the effect that it applies to the Members who retired from the Tribunal on or after the date of the publication of this Notification.
(3) That once the Member reties after the date of Notification, it certainly applies. It does not matter when the Members were recruited. Even it applies to the Members who are recruited prior to the date of Notification. Crucial date must be the date of retirement. If it is after 3rd June, 2009, it applies.
(4) Question no. 4 is answered that the Members who retire on or after 3-6-2009, even if otherwise qualified to practice u/s 288 of the Act, would still be debarred to appear and argue before the Tribunal, in the light of Rule 13E of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963.
(5) Persons who have resigned from service prior to the date of Notification, without any retirement benefits would not be covered by this Notification because it applies to those persons who have retired after the date of Notification.
(6) As regards question no. (6), we say the notification does not apply to members who are appointed on a temporary basis and resign from service without being confirmed during probationary period.
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “B” NEW DELHI (SPECIAL BENCH )
ITA No. 3370/Del/08
Asst. Yr: 2005-06
M/s Concept Creations
Vs
Addl. CIT, Range, Panipat
ORDER
PER G.E. VEERABHADRAPPA, V.P:
1. When the above captioned appeal was posted for hearing before the Division Bench, it was noticed by the Bench that in view of insertion of Rule 13E in the I.T.A.T. (Recruitment and Conditions of Service) Rules, 1963, vide Notification No. GSR 389E dated 3-6-2009, questions were raised as to validity to the appearance of Dr. Rakesh Gupta, Advocate, on behalf of the assessee. The Bench, after hearing Dr. Rakesh Gupta, Adv. and some ex-members of the Income tax Appellate Tribunal (“ITAT” in short), who were present in the court, felt that the issue was complex and would therefore require to be first decided, before deciding the merits of appeal. It was argued before the Division Bench that it was inherent duty of the ITAT in the light of the provisions of Sec. 254 of the Income-tax Act, 1961, first to dispose off the preliminary issues, such as this, before disposing off the appeal on merits. The Division Bench also felt that, in the interest of justice, it is necessary that this matter receives uniform treatment so that one may avoid unnecessary and avoidable multiple litigations. Prima facie, the Division Bench was of the opinion that the issue required reference to Special Bench and therefore, drew a reference to the President, ITAT (‘President” in short), on 10th July, 2009. The Division Bench also suggested the President to explore the possibility of the Ministry of Law and Justice being given a notice of hearing so that they may make a representation as regards the exact objectives and implications of the said Rule 13E and also to represent the Government in support of the said Notification. It appreciated the fact that the departmental representatives may not possibly argue in the manner expected of them, while they may not have any interest as to who argues and who does not argue and sometimes they also engage services of ex-members of ITAT to argue their cases.
2. When the reference was placed before the President, he was of the opinion that the questions raised were of great public importance and also felt that in large number of cases ex-members do appear before different Benches in the country, both for the revenue as well as for the assessee. According to the President, engagement of a counsel of its own choice is part of effective hearing before the Tribunal. The President accepted the recommendations of the Division Bench to constitute a Special Bench. It was also directed that the Special Bench to decide whether notice of hearing has to be sent to the Government of India through the Ministry of Law & Justice. That is how the Special Bench was constituted. The Special Bench, it may be stated, was constituted to answer the following questions:
“1. Whether, the said Notification applies to the Members who have retired prior to the date of publication of the Notification?
2. Whether, the said Notification applies only to the Members who retired from the Tribunal on and from the date of publication of this Notification?
3. Whether, the said Notification applies to those Members who are recruited before but retire after the date of Notification?
4. Whether, the said Notification applies to the Members who retire, if otherwise are qualified to practice u/s 288 of the Income Tax Act, should still be debarred to appear and argue before the Tribunal?
5. Whether, the said Notification applies to the Members who resigned from services before the date of Notification, without any retirement benefits?
3. In pursuance of the directions of the Special Bench, a notice was issued to the Ministry of Law & Justice. The case was fixed for hearing on 3rd August, 2009. In pursuance of the notice given, several ex-Members of the ITAT, who are practicing in Delhi and outside Delhi, sent their applications, referring to their cases before ITAT and pleaded to act as interveners in this case. Having regard to the issue in question, the Bench permitted all such persons who have the cases before the Tribunal to act as interveners. The departmental representative was also present and on behalf of the Ministry, Sr. Central Government counsel, Shri A.K. Bhardwaj, put in the appearance.
4. At the out set, a preliminary objection was taken by the Sr. Central Govt. Counsel that this Tribunal has no jurisdiction to go into Rule 13E, which is the part of the I.T.A.T. (Recruitment and Conditions of the Service) Rules, 1963 and pleaded that no further hearing is necessary on this issue and that the issues be directed to Central Administrative Tribunal (“CAT” in short), who according to him, is the proper forum for disposing off such matter.
5. The assessee’s counsel as well as the interveners vehemently argued that ITAT is the only proper forum to adjudicate preliminary issues, such as, capacity of the parties’ representative or as to their qualification or disqualification to appear before the Tribunal. It is very fundamental issue that requires adjudication before the appeal is taken up on merits. If ITAT were to wrongly permit a person who is not qualified to appear in a case or a qualified person is denied his right of opportunity to argue the matter, a grave injustice is caused and therefore it is absolutely necessary as a part of its incidental or inherent power that only ITAT should dispose off such issue. For it, specific reliance was placed to the decision of the Supreme Court in the case of ITO Vs. M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC). On that date we proceeded with the matter by keeping the said issue open, but issued direction to the Sr. Central Government counsel to file a detailed affidavit on merits. Accordingly, the matter was adjourned to 17th August 2009. there were also requests from some interveners to adjudicate upon the following question:
“Whether the said Notification applies to the Members who are appointed on temporary basis and resign from service without being confirmed during the probation period, either before or after the date of Notification, without any retirement benefits.”
6. Having regard to the specific facts in some of the cases of the interveners and also it is part of large question no. (5) above, , the Bench after going through their request, found it reasonable and the Sr. Central Govt. counsel or the department had no objection for adjudication of the said question. We, accordingly, take that question as part of the reference and proceed to answer all the (6) questions.
7. Shri A.K. Bhardwaj, Sr. Central Govt. Counsel, ultimately filed an affidavit on behalf of the Ministry on 24-8-2009 and the parties were served with that and the matter was extensively heard on 24th and 25th August 2009. Before going into the questions themselves, as we discussed earlier, the objection of the Law Ministry remains to be adjudicated, which we take up now.
8. It was argued on behalf of the Ministry of Law & Justice that the ITAT is constituted only for the purpose of hearing and disposing off the appeals arising under the Income-tax Act. It cannot go into interpretation of the validity or correctness or otherwise of Rule 13E which is the part of the ITAT Members (Recruitment & Conditions of service) Rules, 1963. The proper forum, according to him, is the Central Administrative Tribunal (‘CAT’) and, therefore, it was vehemently opposed the reference by arguing that this Tribunal has no jurisdiction to adjudicate upon the issues that are being raised before it. The service in the Government is a contract between the employee and the Government of India. The Tribunal Members are part of that class and if their conditions of service are amended to their detriment, it is fair and proper that they should be directed to go before the CAT and not argue their entitlement before the ITAT.
9. On the other hand, the learned counsel for the assessee as well as the interveners, appearing, vehemently argued that this Tribunal is the only forum where the issue of this nature requires to be adjudicated. The ITAT Jaipur Bench in the case of Sagarmal Sarawgi Vs. ITO vide its order dated 10th August, 1976 in ITA no. 473/Jp/1973-74, (1976) 2 TTJ (JP) 1371, went into such questions, when similar issues were raised. Similarly, ITAT Mumbai Bench ‘A’ in the case of Tata Chemicals Ltd. Vs. DCIT vide their order dated 5-12-1997 ITA no. 4604/Mum/(1996) 67 ITD 56, went into the question whether particular DR was validly appointed by the Department and whether he could argue the case before the ITAT. The Tribunal disposed off and adjudicated the same, meaning thereby the Tribunal is the only forum, where such issues require to be thrashed out. It was pointed out by them that they having already retired from government service, cannot approach the CAT. They pleaded that since right to appear before the ITAT is being questioned, only the ITAT has to deal and dispose them. Our attention was drawn to the decision of the Supreme Court in the case of ITO Vs. M.K. Mohammed Kunhi (supra).
10. We have considered the rival contentions on this preliminary issue in the light of ratio laid down by the cases to which reliance is placed. For this it is necessary to go into ourselves. Section 254(1) of the Income-tax Act, 1961, reads as under:
254(1) – The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.”
11. The Tribunal under the aforesaid section is required to hear both the parties to the appeal before passing any order. U/s 254(1) of the Income-tax Act, 1961, the ITAT is required to give both the parties to the appeal, an opportunity of being heard. The expression “opportunity of being heard” is not an empty formality but a valuable right made available to the parties in appeal before the Tribunal. Even though such right personifies the principle of natural justice, it can accurately be described as a statutory right in the context of the explicit provisions of section 254(1). Such a right cannot be allowed to be defeated by procedural wrangles or whims and fancies of the authority concerned. It was explained by the Kerala High Court in the case of SISCO v. State of Kerala (1995) 96 STC 438 that an opportunity of being heard contemplated in section 254(1) shall be effective and adequate and it cannot be made illusory under any circumstance. Mere issue of a notice of hearing of the appeal will not suffice in all circumstances. In fact the power to grant adjournment also arises from the provisions of sec. 254(1) of the Act. A wrong exercise of a discretion to adjourn itself can give rise to questions of law before the High Court and the decision rendered by the ITAT without giving an opportunity of being heard itself can be questioned. The powers of the ITAT u/s 254 of the Act in dealing with the appeal are expressed in the widest possible terms and are similar to the power of an appellate court under the Civil Procedure Code. It was so held by the Bombay High Court in New India Assurance Co. Ltd. vs. CIT (1957) 31 ITR 844. The Supreme Court in the case of Esthuri Aswathiah Vs. CIT (1967) 66 ITR 478 (SC) has held that function of the Appellate Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it. But the Tribunal cannot make arbitrary decisions. It cannot found its judgment on conjectures, surmises or speculation. In the exercise of its powers, the Tribunal is vested with a large area of discretion in a number of matters such as condoning the delay in filing of the appeal, admission of new pleas and additional evidence, conduct of further inquiry on its own or by remand to the lower authorities, passing such orders on the appeal as the interests of justice may require and so on. The discretion thus conferred is an impartial legal discretion to be exercised in conformity with the spirit of the law and in such a manner as to sub serve, and not defeat, the interests of justice or furtherance of its cause. It should be guided by law and should not be arbitrary, capricious, vague, fanciful or governed by humor, unthinking folly or rash injustice.
12. Section 254 provides that “Save as provided in section 256 or section 260A, orders passed by the Appellate Tribunal on appeal shall be final”. U/s 256, the High Court has only reference jurisdiction on questions of law framed by it. Now, after the amendment w.e.f. 1-10-1998, an appeal shall lie to the High Court from every order passed by the tribunal, if the High Court is satisfied that the case involves a substantial question of law. All these provisions point out to one thing that the order of the Tribunal on factual aspects is final and unquestionable but on points of law an appeal could still lie before the High Court, if the same is substantial in nature. Reference may be made to the ratio of decisions in the case of I.C.I. (India) Pvt. Ltd. Vs. CIT (1972) 83 ITR 710 (SC); and CIT Vs. Mehmoodmian A. Topiwala 213 ITR 615 (Guj.). The order of the Tribunal, although factual, may be construed as one giving rise to a substantial question of law if such order is based on no evidence in support thereof or there is contravention of principles of natural justice, in that event the order itself will be treated as perverse and is likely to be set at naught and there can be no effective disposal of appeal, unless the order of the Tribunal is passed only after hearing the proper parties, duly qualified to appear either for the assessee or for revenue. Reference may be made to the decision of the Apex Court in the case of Chabildas Tribhuvan Das Vs. CIT (1966) 59 ITR 733 (SC). Where there is denial of principles of natural justice in a given case it will give rise to a legal question, as pointed out by the Madhya Predesh High Court in the case of CIT Vs. Abhyeshwar (1999) 153 CTR MP 372. Failure to give proper and effective hearing amounts to denial of opportunity of being herd and is likely to be construed as one being perverse and all such orders are liable to be disturbed. Only on this preliminary ground if the order could be disturbed, there can be no effective disposal of appeal. Therefore, this issue requires to be properly addressed and sorted out in accordance with well laid down principles of law and also the principles of natural justice.
13. Now we will see the facts in the case of ITO Vs. M.K. Mohammed Kunhi (supra), the assessee was imposed with penalty u/s 271(1)(c) of the I.T. Act for concealment of particulars of income. The assessee questioned those penalties before the ITAT and also made an interim prayer for stay of collection of the penalties imposed. The Tribunal declined to order any stay holding that it had no power to grant such a prayer. In fact there were no provisions as the one we have now at that point of time when the prayer for stay was made. The assessee then moved the Kerala High Court under article 226 of the Constitution. The Kerala High Court in the case of M.K. Mohammed Kunhi Vs. ITO (1966) 59 ITR 171, held that the tribunal had the power to stay the proceedings as also the collection of the penalties pending the appeal since that power was incidental and ancillary to its appellate jurisdiction. The Tribunal was consequently directed to dispose of the stay application in accordance with law. The Revenue challenged further. Their Lordships of the Supreme Court observed that the right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the Appellate Tribunal. The Tribunal has been given very wide powers under section 254(1), for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the ITO and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Tribunal is entirely helpless in the matter of stay of recovery, the entire purpose of the appeal get defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the legislature should have left the entire mater to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. Therefore, the Supreme Court in this context observed that powers which have been conferred by Sec. 254 on the Appellate Tribunal which were of widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. They quoted from Domat’s Civil Law (Cushing’s edition), volume 1, at page 88, the following passage, which was as under:
“It is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it.”
14. They also quoted from Maxwell on Interpretation of Statutes, eleventh edition at page 350, and made the following extract:
“where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdictio data est, ea quoque concessa esse videntur, sine quibus jurisdictio explicari non potuit.” An instance is given based on Ex parte Martin that “where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be unless if it could not be enforced.”
15. It is quite interesting to note that their Lordships further proceeded and made the following observation:
“It was said that the general principle was that in a taxing statute the was no room for what could be called the equitable construction, but that principle applied only to the taxing part of the statute and not to the procedural part. It has further been observed that “where the legislature invests an Appellate Tribunal with powers to prevent an injustice, it impliedly empowers it to stay the proceedings which may result in causing further mischief.”
It is well known that the Income-tax Appellate Tribunal is not a court but it exercises judicial powers. The Tribunal’s powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Civil Procedure Code: see Commissioner of Income-tax v. Hazarimal Nagji and Co. and New India Assurance Co. Ltd. v. Commissioner of Income-tax/ Excess Profits Tax.”
16. The Supreme Court upheld that the ITAT has a power to grant the stay although there were no express provisions in the Act, as a part of the incidental or ancillary to its appellate jurisdiction. It was observed by the Supreme Court that when Sec. 254 confers appellate jurisdiction on ITAT , it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as well to prevent the appeal if successful from being rendered nugatory.
17. In the light of the aforesaid principles laid down by the Supreme Court, we will examine the provisions of Sec. 254(1), which mandates the Tribunal to give to both the parties to appeal an opportunity of being heard in the matter. If one of them is denied or a proper person is not allowed, the judicial process itself get derailed and the order of the Tribunal, how so ever strong it is, is liable to be set aside, on the ground that proper opportunity of being heard is not granted to a proper person or an improper person is allowed to argue the mater. So, therefore, in our considered opinion, in the light of the principle laid down by the Supreme Court in the case of M.K. Mohammed Kunhi (supra), The Tribunal has inherent jurisdiction to go into the question, whether the parties who are appearing before it are properly entitled under the law to make appearance. For this purpose they are entitled to go into provisions of Advocates Act, Bar Council Act, Chartered Accountants Act or the Service Regulations or Pension rules or into provisions of I.T. Act. They may also interpret laws of contract, Agency, Company Law, Partnership Law, Allied Laws, Branches of International law or any other allied laws etc. for the purpose. The areas where we are required to look into for this purpose may thus get extended depending upon the facts and circumstances of each case. After all, it must be appreciated the right of appeal provided under the Income-tax Act to the parties is not an empty formality but a part of judicial process, mandated by the law. Be it revenue or the assessee, has substantive right and the Tribunal cannot run away from its basic duty to adjudicate this preliminary issue, when it raised or arises before it as a part of such a judicial process.
18. Although it is not of much importance, Rules 16 and 17 of the Appellate Tribunal Rules, 1963, also provide for filing of proper authorization for appearing before the ITAT. It may be quite possible the Registry officials may raise objection and do not accept the power of attorney of a person filed by the parties when a rule like Rule 13E is raised on a person who claims an opportunity of being heard in the matter. Therefore, it is all the more necessary that the Tribunal has to go into this question and dispose off the preliminary objection in this regard. It may be mentioned, that Jaipur and Bombay Benches of the Tribunal, in the cases cited earlier, have exactly done the same thing when disputes were raised as to the competence of a person claiming to represent before ITAT. In both these cases the competence of person appearing as authorized representative was a departmental representative, protecting the interest of the revenue was in question and the Tribunal adjudicated these issues. Therefore, we entirely agree with the view taken by the Jaipur Bench and the Mumbai Bench in this regard.
19. The Delhi High Court in the case of Taylor Instrument Co. (India) Ltd. Vs. CIT (1998) 232 ITR 771 (Del.) has held that the Tribunal cannot determine whether or not a provision violates Articles of Constitution. The tribunal being a creature of the Income-tax Act, can only confine itself to the provisions of the Act and cannot pronounce upon the constitutional validity or vires of any provision of the Act.
20. We are aware of the limitation. With this caution, we reach a conclusion that the Tribunal is competent to go into the questions as raised in these result of the Notification, which has a direct bearing on the process of hearing.
21. Rule 13E, which is the bone of contention, is inserted by the Notification G.S.R. 389(E) dated 3-6-2009. This is issued by the Ministry of Law and Justice and reads as under:
“13E. The President, the Senior Vice-President, the Vice-President and the Member of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal.”
Broadly stated, this Notification has the effect of denying/ disturbing the specified persons i.e. President, Sr. Vice President, Vice-president and the Members of the Tribunal, to appear and argue the cases before the ITAT, although they may have necessary qualification under the provisions of Section 288 of the Income-tax Act, 1961. Unless a person is duly qualified u/s 288 of the I.T. Act and does not suffer from any of the disqualifications stated under sub-sections (4), (5) and (7) of Sec. 288, the person is entitled to appear before the tribunal on behalf of the assessee or the department. The provision of Section 288 is an act of Parliament. The Notification, stated above, is issued by the President of India in exercise of the powers conferred by the proviso to Article 309 of the Constitution of India. The said Notification has the effect of amending the Income-ax Appellate Tribunal Members (Recruitment and Conditions of Service )Rules, 1963.
22. It was the common argument of all the persons, who appeared for the assessee as well as the interveners, that the Delhi High in Writ Petition © No. 6710/07 in the case of P.C. Jain was concerned with sub-section (6) of Section 129 of the Customs Act, 1962. The said provision was introduced by Section 110 of the Finance Act, 2007 w.e.f. 11-5-2007. The said sub-section read as under:
“129(6) – On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal.”
23. It was pointed out that Delhi High court was not at all concerned with the interpretation of a provision relating to conditions of service. They were concerned with the provisions of sec. 129(6), which was brought by the Parliament in the statute relating to Customs Act. This is the difference, according to the interveners and the appellant’s advocate. The major issues that fall for our consideration, could be as under:
(i)Whether, there is any difference in the legislative amendment in section 129(6) of the Customs Act, 1962 and Rule 13-E of the Income Tax Appellate tribunal Members (Recruitment and Conditions of service) Rules, 1963. Whether, that really makes any difference?
(ii) Classification of the Members, whether prohibited from appearing before the ITAT. Whether, the said prohibition applies to the ex-Members or the present Members or only the Members who join hereafter.
24. Among the ex-members, there is an important classification, as to the position of resigned Members and the Members who superannuated after their full length of service. The Special Bench has addressed itself on all the above questions. We take up the case of resigned Members and after hearing their arguments dispose of their matters. We will take up the cases of retired Members separately and dispose off their issues. According to us, persons mentioned at (1) to (5) fall under this category of resigned members –
(1) Dr. Rakesh Gupta Advocate; (2) Shri Ved Jain CA; (3) Shri Anoop Sharma Adv.; (4) Shri Salil Kapur Adv.; and (5) Shri Y.K. Kapoor Adv. The case of the resigned Members is quite interesting. We will take facts of each of the resigned Members for a better appreciation.
25. Dr. Rakesh Gupta, advocate, was appointed as an Accountant Member in the ITAT vide his appointment letter dated 20th July 2000. His post itself was advertised to be temporary and the terms and conditions of appointment contained the following:
“1. The said post of Accountant Member in the Income Tax Appellate Tribunal belongs to General Central Service (Group ‘A’) and carries a pay scale of Rs. 22,400-600-26000/-p.m. In addition, you will be entitled to allowance at the rates admissible to Central Govt. Officers of your category, under and subject to the conditions laid down in rules and orders governing the grant of such allowances in force from time to time.
2. The said post is purely temporary and is at present sanctioned upto the 28th February, 2001, but likely to continue thereafter.
3. The appointment carries with it the liability to serve in any part of India.
4. Your conditions of service will be governed by the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 (copy enclosed).
5. In your temporary appointment to the post of Accountant Member, Income Tax Tribunal, you will remain on probation for a period of two years, but the said period may be extended at the discretion of the appointing authority. The appointment may be terminated by the appointing authority at anytime without assigning any reason. N case you want to resign the appointment you will be required to give one month’s notice to the appointing authority.
……
……..
11. Other conditions of the service will be same as are applicable to Central Govt. Servants under the relevant rules and orders in fore from time to time. …
13. Your said appointment to the post of Member in the ITAT will be subject to the final orders in CWP Nos. 6797/99 (K.K. Gupta Vs. UOI) 6798/99 (B.R. Jain Vs. UOI) 7241/99 (Sh. D.K. Tyagi Vs. UOI) 7714/99 (B.R. Mittal Vs. UOI) and 135/2000 (UOI Vs. P.K. Bansal) pending before the High Court of Delhi.
26. Shri Rakesh Gupta, in his compilation, filed copy of the recruitment rules, which were sent to him. He accepted the offer of appointment. He joined the Tribunal on 16-8-2000. He submitted his resignation during the probation itself and the said resignation was accepted from 21-3-2001. the said acceptance, it may be stated was done by the government even by waiving the notice period of one month, as mentioned in the acceptance letter. It may me mentioned that before joining the Tribunal Dr. Rakesh Gupta practiced between 1984 to 2000 and appeared before Delhi Benches of the ITAT in various cases from 1990 to 2000. After he resigned, Dr. Gupta started practicing as an advocate from May 2001 and has been appearing before the tribunal mainly before Delhi Benches of the ITAT regularly since then. It was stated by him that he was never posted at Delhi Benches where he has been practicing. It may be mentioned that before he resigned, he was posted at Hyderabad Benches of the ITAT. The case or Dr. Rakesh Gupta is that he is not hit by Notification No. GSR 389(E) dated 3rd June, 2009 and is entitled to appear for the parties despite Rule 13E of the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service )Rules, 1963, as according to him he is not the one who retired from the service of the Tribunal but he has resigned from service that too during the probation period itself. He was not even confirmed in the service from the post that was always remained temporary during his service and subject to several stipulated uncertain conditions. Only the persons specified in the said Notification who retire from service of the Tribunal are only prohibited. According to him, he has not retied from service but resigned from service. The retirement, according to Dr. Rakesh Gupta, has a definite connotation in the service regulation for which Rule 11 of the Recruitment Rules was relied upon by Shri Rakesh Kumar Gupta, which reads as under:
“The date of retirement of a member shall be the date on which he attains the age of sixty two years and not the last date of the month as in the case of other Government servants.”
27. It was also pointed out that the said rule was amended subsequently vide Notification GSR no. 753(E) dated 29th December, 2005, which reads as under:
“1) Retirement – The date of retirement of –
(a) the President shall be the date on which he attains the age of sixty years.
(b) The Senior Vice President, Vice President and Member shall be the date on which thy attain the age of sixty two years
And not the last date of the month as in the case of other Government servant.
Our attention was further drawn to fundamental rule 56 which applies to other government services, which reads as under:
“F.R. 56. (a) Except as otherwise provided in this rule, every government servant shall retie from service on the afternoon of the last day of the month in which he attains the age of sixty years;
Provided that a Government servant whose date of birth is the first of a month shall retire from service on the afternoon of the last day of the preceding month on attaining the age of sixty years.
[Provided further that a Government servant who has attained the age of fifty-eight ears on or before the first day of May, 1998 and is on extension in service, shall retire from the service on expiry of his extended period of service.
or on the expiry of any further extension in service granted by the Central Government in pubic interest, provided that no such extension in service shall be granted beyond the age of 60 years.”
28. According to Dr. Rakesh Gupta, the retirement can be at superannuation, voluntary retirement on completing prescribed years of service; or a compulsory retirement by employer. According to him, the retirement takes place normally at superannuation or on completion of qualified period of service. In his case and in the cases of four others, there is no retirement but they have resigned from service. The resignation is not the same thing as retirement. This difference, according to him, was noticed by the Supreme Court in the case of UCO Bank & others Vs. Sanwar Mal AIR 2004 SC 2135. In that case, according to Shri Rakesh Gupta, the Supreme Court went through different regulations and opined that the expressions ‘resignation’ and ‘retirement’ have been employed for different purposes and carry different meanings. An employee can resign at any point of time even on the second day of his appointment but in case of retirement he retires only after attaining the age of superannuation or in case of voluntary retirement, on completion of qualifying service. The effect of resignation and retirement to the extent that there is severance of employment is common but in service jurisprudence both the expressions are understood differently. According to him, the decision of the Supreme Court in the case of UCO Bank (supra) takes him and like interveners, out of the purview of Rule 13E of the Income Tax Appellate tribunal Members (Recruitment and Conditions of service) Rules, 1963. Reliance was also placed on the ratio of decision of Rajasthan High Court in the case of Sohan Lal Soni (MANU/RH/0617/2006).
29. Our attention was drawn to the decision of Supreme court in the case of Jaipal Singh Vs. Smt. Sumitra Mahajan & another AIR 2004 SCW 2010 to contend that in the case of resignation the relationship of employer and employee terminates on acceptance of resignation whereas in the case of retirement, voluntary or on superannuation, the relationship continues for the purpose of payment of retirement benefits.
30. Our attention was further drawn to Clause 26 of the Central Services (Pension) rules, wherein it is provided that resignation from a service or a post entails forfeiture of past service. According to him, once resignation is accepted and past service has been forfeited, he could not possible be put in the same bracket with those who continue to receive benefits on the basis of their past service with the Government even after retirement or reemployment as provided in the said regulation. Thus, past service rendered by him, it was strongly argued, is non est as the same has been forfeited after resignation as provided in the aforesaid rules. Thus, according to him, this must be appreciated in the light of the fact that he was not even confirmed in service and was still on probation and that too on temporary post. After the resignation, there could be no question of the said notification being applicable to him as within the said provisions of Rule 13E he could not be treated as a person who has retired. A temporary post is a post sanctioned for a limited time. These posts are over and above the permanent strength and are sanctioned to cope with temporary rush of work or to discharge special functions, which are not of a permanent nature. Our attention was drawn to the decision of the Supreme Court in the case of Kedarnath Vs. State of Punjab AIR 1972 SC 873 held that the phrase “likely to continue” with a temporary post does not mean an assurance that the post will be permanent. In fact in the case of Kedarnath Bahl Vs. State of Punjab AIR 1979 SC 220, the Supreme Court held that there could be no question of confirmation if the post itself is temporary. It was again argued by Shri Rakesh Kumar Gupta that during probation there is no question of right to the post. The Hon’ble Supreme Court in the case of Purshottam Lal Dhingra Vs. UOI AIR 1958 SC 36 at page 42 have elaborated the concept of ‘probation’ in these words:
“an appointment to a permanent post in government service on probation means ……. That the servant so appointed is taken on trial”.
31. Dr. Rakesh Kumar Gupta argued that in his case even the appointment as not to a permanent post. Our attention was further drawn to the decision of the Supreme Court in the case of State of U.P. Vs. Kaushal Kishore Shukla (1991) 1 SCC 691 wherein it has been held that probationer does not acquire any substantive right to the post and his right to continue would arise only on confirmation. The Supreme Court in the case of Purshottam Lal Dhingra’s case (supra) has held that before confirmation a probationer has no right to hold the post. To the same effect is the decision of Supreme Court in the case of S.P. Vasudeva Vs. Stat of Haryana AIR 1975 SC 2292 as also the decision of Apex Court in the case of State of U.P. Vs. Akbar Ali Khan AIR 1966 SC 1842. In the latter case it was held that so long as a person continues as a probationer, he acquires no substantive right to hold the post; and in the first case, according to Dr. Gupta, it was held that adhoc or temporary employee has no right to the post. In view of the aforesaid decision of the Supreme court in so many cases, it cannot be said that he is the one who retired from service within the meaning of Rule 13E of the said Notification. He also took another objection that on the terms and conditions on which the offer of appointment was made to him or even the application was called, Rule 13-E was not there in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of service) Rules, 1963, meaning thereby he could not be subject to any rule that was not there in the said Recruitment Rules when he joined the service or at least when he resigned from the service. Had these conditions been shown to be there, he would not have even joined the service. Our attention was also drawn to the decision of the Supreme Court in the case of State of Gujarat Vs. Raman Lai (1983) 2 SCR 287, wherein it was stated that legislation cannot ignore the march of events over a period of time and the rights accruing thereby. After all, notification or the law must satisfy the requirements of the constitution today taking into account the accrued or acquired rights of the parties as on date. The law cannot say, twenty years ago the parties had no right. A legislature cannot legislate today with reference to a situation that obtained twenty years ago and ignore the march of events and the constitutional rights accrued in the course of the twenty years. That would be most arbitrary, unreasonable and a negation of history. He also relied on the decision of Supreme Court in the case of P.D. Aggarwal Vs. State of U.P. AIR 1987 SC 1676. It was pleaded that amendment of rule, like the one that is being made, cannot take away the vested rights and any such amendment must be reasonable. Dr. Gupta referred to the decision of the Apex Court in the case of Satish Chandra Vs. UOI AIR 1953 SC 250 on the point of “conditions of service” being governed by the contract and contended that although the government can enter into contracts and impose special terms that some one would be ineligible to practice, the special term must exist at the time when he joined the service and such term must be accepted to become effective whereas in his case it was pleaded that there was no term at the time when the accepted or when he relinquished, hence no question of acceptance on his part. Even the state, according to him, is bound by the term or absence of term. Reliance was also placed on the decisions of Supreme Court in the cases of State of M.P. Vs. Shardul Singh (1970) 3 SCR 302; and I.N. Subba Reddy Vs. Andhra University (1976) 3 SCR 1013, wherein it has been held that the expression “conditions of service” means all those conditions which regulate the holding of a post by a person right from the time of his appointment till his retirement and even beyond it in matters like pension.
32. Next attention was drawn to the decision of Supreme Court in the case of State of Punjab Vs. Kailash Nath (1989) 1 SCC 321, wherein their Lordships have held that the term “conditions of service” would include the following:
