Daechang Seat Co. Ltd. Vs DCIT (ITAT Chennai)
In the case of Daechang Seat Co. Ltd. Vs DCIT at ITAT Chennai, a complex legal dispute has arisen, centering around the concept of ‘conflict of interest.’ This article offers a comprehensive examination of the case, encompassing its historical context, the arguments presented, and the legal framework governing conflicts of interest. We will thoroughly analyze whether a genuine conflict exists and assess its potential repercussions on income-tax proceedings.
Background of the Case: The crux of the matter is the objection raised by Dr. S. Palanikumar, CIT-DR, regarding the participation of advocate Shri I. Dinesh from Shri V. Ramachandran, Advocates, and Shri N Arjun Raj, a Chartered Accountant, in appeals before ITAT. The dispute traces its origins to Dr. Palanikumar’s RTI application, which sought video recordings of virtual hearings but was subsequently rejected. He then escalated the issue to the Central Information Commission (CIC), where Shri I. Dinesh represented ITAT.
The ‘Conflict of Interest’ Allegation: Dr. Palanikumar contended that a ‘conflict of interest’ existed because Shri Dinesh and Arjun Raj represented both ITAT and their clients. This article delves into the principles of administrative law and legal ethics related to conflicts of interest within the legal profession. It explicates that lawyers must avoid conflicts and obtain informed consent from clients when their interests are at risk.
Lack of Financial or Personal Interest Conflicts: The article firmly establishes that there are no financial or personal interest conflicts, either from the lawyers or the ITAT members. It emphasizes that similar situations, where lawyers and ITAT members assume dual roles, are not necessarily indicative of a conflict of interest. It cites an example of the Additional Solicitor General representing both ITAT and the Income-tax Department.
Common Practice of Engaging Counsel: The piece underscores that engaging counsel or having a panel of advocates is a commonplace practice, even in High Court and Supreme Court Registries. It argues that such instances do not inherently indicate a conflict of interest and are an integral part of the legal profession.
Balanced Approach and Resolution: The article advocates for a balanced approach, urging involved parties to resolve issues amicably rather than impeding court proceedings. It criticizes the behavior of Dr. Palanikumar, who obstructed the judicial process with frivolous applications, and calls for proper training of representatives in judicial forums.
Conclusion: The ‘conflict of interest’ dispute in the Daechang Seat Co. Ltd. Vs DCIT case at ITAT Chennai has undergone an extensive and meticulous analysis. While the case raised legitimate concerns, it has been conclusively determined that there is no substantial conflict of interest, and the objections raised were baseless. The article underscores the paramount importance of maintaining an effective and efficient judicial process and discourages the filing of frivolous applications that obstruct the administration of justice. Furthermore, it highlights the pressing need for comprehensive training for representatives in judicial forums to ensure that similar disputes do not hinder the course of justice in the future.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The appeal filed by the assessee in ITA No.1643/CHNY/2019 is directed against the order of the Commissioner of Income Tax IT(TP) No.101/CHNY/2018 (International Taxation), Chennai in No. CIT/IT/CHE/ 113(263)201819 dated 29.03.2019. The assessment was framed by the DCIT, International Taxation -1 & 1(2), Chennai for the assessment year 2014-15 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 07.12.2016. The appeal in IT(TP)A 101/CHNY/2018 is arising out of the order of the DCIT, International Taxation -1 (1), Chennai for the assessment year 2015-16 u/s.143(3) r.w.s. 144C(13) of the Act vide order dated 25.10.2018 pursuant to the directions of the Dispute Resolution Panel, Bengaluru dated 24.09.2018.
2. When these two appeals were called for hearing, the ld. CIT- DR, Dr. S. Palanikumar along with ld. Senior DR, Shri P. Sajit Kumar raised preliminary objection on “conflict of interest” in case these two appeals will be argued by Shri Dinesh Inbavadivu belonging to M/s. V. Ramachandran Advocates. The ld. CIT-DR referred to one letter F.No.CIT-DR/D/ITAT/RTIMatter/2023-24 dated 26.04.2023 whereby they have raised this issue in connection with RTI appeal before Central Information Commissioner(in short ‘CIC’) [appeal filed by Dr. S. Palanikumar] was fixed for hearing on 19.04.2023 at 1.15 p.m., in the premises of NIC Studio, District Informatics Officer, Collectorate, 62, Rajaji Salai, Chennai. The contention of the ld. CIT-DR is that since Shri Manoj Kumar Aggarwal, who is Accountant Member and also CPIO, Income Tax Appellate Tribunal (in short ‘ITAT’) RTI Cell, Chennai engaged one Shri Dinesh Inbavadivu, Advocate and one more Advocate Shri Arjun to represent him in the proceedings before CIC in regard to appeal filed by Dr. S. Palanikumar against the order of CPIO, ITAT, Chennai, there is ‘conflict of interest’. Shri Manoj Kumar Aggarwal, Accountant Member is the CPIO, ITAT, Chennai. The letter dated 26.04.2023 has specifically raised three issues. The contents of the letter and the issues raised therein read as under:-
F. No. /CIT-DR/DITAT/RTI Matter/2023 -24 Date : 26-04-2023
To
Asst. Registrar
ITAT
Chennai
Sir,
Sub: Appointment of private counsels in connection with CIC proceedings -’conflict of interest’ – submission -reg;
Ref: F No. CIC/ITCHN/A/2022/135678 & 135399 dated 29-03-2023
Kind reference is invited to the above-mentioned subject.
In connection with my two RTI applications and the appeal before CIC, the case was posted for personal hearing on 19-04-2023 at 01.15 PM in the premises of NIC Studio, District Informatics Officer, Collect orate, 62, Rajaji Salai, Chennai. On 17-04-2023, the undersigned was in receipt of a written submission submitted by the counsel before CIC on behalf of CPIO, ITAT. The counsel name was mentioned as Shri Dinesh Inbavadivu.
On the day of hearing, it was surprised to see Shri Dinesh Inbavadivu belonging to M/s V. Ramachandran Advocates none other than an advocate who regularly appear before ITAT Chennai Bench on behalf of his client’s cases. Along with Shri Dinesh Inbavadivu, one more advocate Shri Arjun was also present representing Sri. Manoj Kumar Agarwal, CPIO. He belongs to A S Sriraman Advocates. Both counsels, Shri Dinesh Inbavadivu and Shri Arjun have been presenting the case on behalf of CPIO, ITAT, Chennai.
During the proceedings, it was only these two advocates who have spoken and presented the case on behalf of the Respondent and the Respondent, Sri. Manoj Kumar Agarwal, CPIO chose to remain silent. Since these advocates Shri Dinesh Inbavadivu of M/s V Ramachandran Advocates and Shri Arjun of Sriraman Advocates are regularly appearing before ITAT, Chennai in representing their clients against Revenue, it is my duty to bring the following observations and reservations to your kind perusal;
a). As the said counsels have been appointed by CPIO, ITAT and they have represented CPIO of ITAT, there is direct case of ‘conflict of interest’ as they being the counsels of the ITAT, Chennai cannot be presenting their clients cases before the members of the ITAT, who are again their clients
b). It is a case of ‘conflict of interest’ and it will jeopardize the interest of revenue in Income tax appeal proceedings before ITAT, Chennai.
c). To maintain the neutrality and impartiality it is brought on record that the above-mentioned advocates cannot represent their clients before ITAT, Chennai from date of appointment of these counsels by ITAT, Chennai.
Yours sincerely,
Sd/-
(S. Palanikumar)
Commissioner of Income-tax (DR)
D’ Bench, ITAT, Chennai
Copy submitted to,
1. Chief Commissioner of Income Tax-1, Chennai for kind information
2. CIT-DR, ITAT-1, 2 and 3, Chennai for kind information
3. Sr. AR, ITAT-1,2,3 and 4, Chennai for kind information
2.1 The ld.CIT-DR before us argued, on the issue of “conflict of interest”, that in the present case Shri Dinesh Inbavadivu and Shri Arjun are the advocates appearing on behalf of their clients in Income-tax appeals pending in ITAT and they are representing their assessee on day to day basis against Revenue and if ITAT engages these two advocates for representing its case before CIC, naturally, it will become direct case of “conflict of interest” for Revenue. It was contended by ld.CIT-DR that RTI appeal filed by him before CIC against dismissal of RTI application by CPIO, ITAT, Chennai and in the proceedings before CIC, New Delhi, representation on behalf of ITAT, Chennai by Shri Dinesh Inbavadivu of M/s. Ramachandran Advocates and Shri Arjun of Sriraman Advocates along with CPIO was narrated before the Bench. The written submissions dated 01.05.2023 filed by Senior AR, Shri P. Sajit Kumar, ITAT, Chennai in connection with appeal in ITA No.195/CHNY/2018 posted for hearing on 01.05.2023 in ‘C’ Bench was also brought to the notice of Bench. The ld. Senior DR in the letter vide para 6 has raised the issue that if the Tribunal has given vakalath to these counsels namely Shri Dinesh Inbavadivu and Shri Arjun, then in the interest of upholding the dignity, neutrality and the independence of the Tribunal, the above two mentioned counsels may be excused from presenting the cases of their clients before the existing Members of ITAT. Further, if the vakalath of these counsels have been given in the capacity of the individual Members of the Tribunal, then such Member may recuse himself from hearing the case presented by his own counsel or ex-counsels. The ld.Senior DR also pointed out vide letter para-7 that it was expected on their own motion, conscious of such action and its implications and without anybody having to point or even if no other person is of know of such actions, recuse themselves from hearing a case presented before them by their own client. The ld.CIT-DR filed written submissions consisting of 8 pages dated 16.05.2023 along with 8 annexures, which are as under:-
