FINANCE OFFICER, MAHARISHI DAYANAND UNIVERSITY v. INCOME TAX OFFICER
[Citation -2007-LL-1207-1]

Citation 2007-LL-1207-1
Appellant Name FINANCE OFFICER, MAHARISHI DAYANAND UNIVERSITY
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 07/12/2007
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags judicial discipline • concessional rate • annual return • standard rent • tax at source • plant
Bot Summary: We find from the order of the AO that the pleas of the assessee against the above view of the AO also remained the same in the year under consideration. 30th Dec., 2004 in the instant year, the Tribunal, D Bench, New Delhi adjudicated the dispute in the assessee s own case for the financial year 2000- 01 vide its order in cross appeals in ITA Nos. For the reasons mentioned in the impugned order, the CIT(A) has chosen to follow his own order which stood overruled. The learned counsel for the assessee has vehemently argued that the first appellate authority fell grossly in error by not regarding the order of the Tribunal dt. 4th May, 2005 and after the order of the Tribunal was brought to his notice, the principles of judicial discipline required the CIT(A) to follow the same unreservedly as has been opined by the Hon ble Supreme Court. The Tribunal has reproduced in its order the relevant extract from the precedent which is again based on the decision of the Hon ble High Courts of Andhra Pradesh and Madhya Pradesh in the case of Steel Executives Association vs. Rashtriya Ispat Nigam Ltd. 160 CTR 38 and Officers Association, Bhilai Steel Plant vs. Union of India 139 ITR 937, respectively. We set aside the order of the CIT(A) and hold that the assessee could not be treated as an assessee in default in terms of ss.


This appeal is by assessee against order of CIT(A) dt. 30th Aug., 2005 pertaining to financial year 2001-02. In this appeal, primary grievance of assessee is that CIT(A) erred in holding that assessee is in default under ss. 201 and 201(1A) of IT Act, 1961 (in short Act) for impugned financial year in spite of fact that in immediately financial year, Tribunal had adjudicated issue in favour of assessee. Briefly stated circumstances leading upto present proceedings can be understood as follows. assessee before us is university which was inter alia deducting tax at source on salaries and other benefits paid to its teaching as well as non-teaching staff. AO noted that assessee was providing accommodation to its teaching and non-teaching staff and in turn it was charging standard rent for aforesaid accommodation. standard rent, depending on type of accommodation allotted to employee, was calculated with reference to basic pay. Similar was position in case of assessee for financial year 2000-01. In annual return of salaries furnished under s. 206 of Act, assessee was deducting taxes on basis that accommodation was provided to employees at concessional rate for which 5 per cent of basic pay was being charged. In year under consideration, AO required assessee to show cause as to why difference between rent actually charged and rent which as per AO, university should have charged, be not treated as perquisite paid to employees on which assessee university had failed to deduct requisite tax at source. It is pertinent to note here that reasoning weighing with AO to hold so stood on identical footing to that taken by him during financial year 2000-01. We find from order of AO that pleas of assessee against above view of AO also remained same in year under consideration. Nevertheless, AO treated assessee in default for purpose of ss. 201 and 201(1A) of Act in relation to short deduction of taxes on alleged perquisite allowed to employees. CIT(A) has thereafter sustained stand of AO. grievance of assessee emerges now. Subsequent to order of AO dt. 30th Dec., 2004 in instant year, Tribunal, D Bench, New Delhi adjudicated dispute in assessee s own case for financial year 2000- 01 vide its order in cross appeals in ITA Nos. 4113/Del/2004 and 4185/Del/2004 dt. 4th May, 2005. copy of said order has been placed on record before us in course of hearing. When assessee carried issue before CIT(A) in impugned year, it brought to notice of CIT(A) order of Tribunal dt. 4th May, 2005 (supra). CIT(A), we find, has not followed order of Tribunal although it was on same issue as was before him. Instead, CIT(A) has chosen to follow his own earlier order dt. 9th July, 2004 in case of assessee, ostensibly which was for financial year 2000-01. Curiously, this order of CIT(A) stood overruled by order of Tribunal dt. 4th May, 2005. For reasons mentioned in impugned order, CIT(A) has chosen to follow his own order which stood overruled. To put it in brief, in view of CIT(A), order of Tribunal was incorrect and thus he chose not to apply same to decide controversy on hand. While doing so, no change in legal position has been referred to by CIT(A). In any case, we do not go into merits of controversy since it was common ground between parties before us that similar issue stood adjudicated by Tribunal vide order dt. 4th May, 2005 (supra) in favour of assessee. Therefore, in our considered opinion, issue should have been decided by CIT(A) in light of order of Tribunal. learned counsel for assessee has vehemently argued that first appellate authority fell grossly in error by not regarding order of Tribunal dt. 4th May, 2005 (supra). learned Departmental Representative, on other hand has not offered any defence to action of CIT(A), but has merely reiterated stand of Revenue with regard to merits of issue. We have given our utmost anxious thought to manner in which CIT(A) has proceeded to dispose of appeal before him. In our view, learned counsel for appellant is quite right in saying that CIT(A) has not afforded due regard that was required to be shown to order of Tribunal dt. 4th May, 2005. fact that order of Tribunal is to be followed as binding precedent by authorities working within its jurisdiction cannot be disputed and is so well settled that it does not require any emphasis from our side at this stage. This principle of judicial discipline has also received unmistaken approval of Hon ble Supreme Court. gainful reference in this regard can be made to decision of Supreme Court in case of Union of India vs. Kamlakshi Finance Corporation Ltd. (1991) 55 ELT 433 (SC). We deem it fit and proper to reproduce hereinafter following extracts of above decision: "The High Court has, in our view, rightly criticized this conduct of Asstt. Collectors and harassment to assessee caused by failure of these officers to give effect to orders of authorities higher to them in appellate hierarchy. It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of quasi-judicial issues before them, Revenue officers are bound by decisions of appellate authorities. order of Appellate Collector is binding on Asstt. Collectors working within his jurisdiction and order of Tribunal is binding upon Asstt. Collectors and Appellate Collectors who function under jurisdiction of Tribunal. principles of judicial discipline require that orders of higher appellate authorities should be followed unreservedly by subordinate authorities. mere fact that order of appellate authority is not acceptable to Department in itself objectionable phrase and is subject matter of appeal can furnish no ground for not following it unless its operation has been suspended by competent Court. If this healthy rule is not followed, result will only be undue harassment to assessee and chaos in administration of tax laws." aforesaid discussion in judgment of Hon ble Supreme Court does not need any further amplification from our side as same is quite eloquent by itself. In this light, we are constrained to consider comments of CIT(A) that "the interpretation taken by Delhi Bench, Tribunal deserves to be repudiated" as act of gross judicial indiscipline. Certainly, earlier view of CIT(A) was contrary to subsequent order of Tribunal dt. 4th May, 2005 (supra) and after order of Tribunal was brought to his notice, principles of judicial discipline required CIT(A) to follow same unreservedly as has been opined by Hon ble Supreme Court. Be that as it may, we have extracted relevant observations of Hon ble Supreme Court, which are authoritative and unambiguous and coming from highest Court of which are authoritative and unambiguous and coming from highest Court of t h e land, we do not find it necessary to add anything from our side to demonstrate wrong approach of CIT(A). approach of CIT(A) was in utter disregard to expected norms of judicial discipline. impression or anxiety of CIT(A) that if he accepted stand of assessee, it would be violative of laws as per his interpretation, cannot be credible reason for him to disregard binding nature of order of higher appellate authority which was pressed into service before him by one of parties. Without going further, we sincerely hope and expect that our aforesaid observations are taken in its proper spirit by Revenue Department. observations of Hon ble Supreme Court, extracted above, in our view, should be kept in mind in future and utmost regard should be paid by adjudicating authorities and appellate authorities to requirements of maintaining judicial discipline and necessity for giving effect to orders of higher appellate authorities which are binding on them. Insofar as merits of dispute are concerned, we find that Tribunal in its order dt. 4th May, 2005 (supra) has made detailed discussion and has considered rival submissions and relevant provisions of law. Tribunal has also taken into consideration its earlier precedent by way of decision of Chandigarh Bench of Tribunal in case of Kurukshetra University in ITA Nos. 64 and 65/Chd/1997 dt. 23rd May, 2002. Tribunal has reproduced in its order relevant extract from precedent which is again based on decision of Hon ble High Courts of Andhra Pradesh and Madhya Pradesh in case of Steel Executives Association vs. Rashtriya Ispat Nigam Ltd. (2000) 160 CTR (AP) 38 and Officers Association, Bhilai Steel Plant vs. Union of India (1983) 139 ITR 937 (MP), respectively. No decision or legal position to contrary has either been brought on record by CIT(A) or even by learned Departmental Representative before us. We, therefore, set aside order of CIT(A) and hold that assessee could not be treated as assessee in default in terms of ss. 201 and 201(1A) for impugned financial year with respect to accommodation provided to employees at concessional rate. In result, appeal of assessee is allowed with above remarks. *** FINANCE OFFICER, MAHARISHI DAYANAND UNIVERSITY v. INCOME TAX OFFICER
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