Are Retired Members of ITAT Eligible to Practice before ITAT? Matter once again before ITAT Special Bench
A Special Bench has been constituted by the President of ITAT in ITA 2170/Ahd/2005 in the case of M/s Nanubhai D. Desai, Surat , for deciding the following issue on July 11, 2011:
“Whether Shri Deepak R. Shah, advocate and ex-Accountant Member of the Income Tax Appellate Tribunal, is debarred from practicing before the Income Tax Appellate Tribunal in view of the insertion of Rule 13 E in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963?”
The Special Bench of ITAT will be a three member bench headed by President of ITAT himself along with two Vice Presidents.
This issue is not being dealt with by the ITAT Special Bench for the first time. In fact it has come under the scanner of ITAT Special Bench earlier as well in M/s CONCEPT CREATIONS vs. ADDL CIT (2009-TIOL-571-ITAT-DEL-SB) (date of judgment 15.09.2009), wherein a three member Special Bench of ITAT decided a similar issue in favour of practitioners. Before we delve into the ruling of this Special Bench judgment let us revisit the Rule which generated this controversy.
Rule 13E of Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 reads as follows:
13E. The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal.
In Concept Creations case, the Special Bench dealt with 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 service before the date of Notification, without any retirement benefit?
6. 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? (This question was taken up by the Special Bench at the behest of interveners)
The Special Bench also compared the impugned Rule 13E with sec. 129(6) of the Customs Act, 1962 which is extracted below:
“Section 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.”
The Special Bench took up the following issue as well, amongst others, for its consideration:
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?
After deliberating on the arguments put forth by the counsels on this specific issue of comparison between the two enactments, the Special Bench observed as follows:
“………Having regard to the fact that in the case of P.C. Jain (supra), the Delhi High Court was not at all concerned with any employee who was appointed on temporary post and on a probationary period and resigned from service during the probation period. The instances mentioned in the case of P.C. Jain (supra), do not even deal with such type of cases…………..it must be appreciated that in the case of P.C. Jain (supra), the Hon'ble Delhi High Court proceeded with interpretation for the provision of statute and not a condition of service as has already been discussed earlier. Therefore, what we are basically required to interpret here is Rule 13E which is part of ITAT Members (Recruitment and Conditions of Service) Rules, 1963, as a part of conditions of service. Therefore, the ratio laid down therein may not strictly apply to a case where amendments are to the conditions of service………..”
And finally the Special Bench answered the references (questions framed for consideration) as follows:
1. It does not apply to Members who have retired prior to the date of publication of notification.
2. 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 retires 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. The notification does not apply to members who are appointed on a temporary basis and resign from service without being confirmed during probationary period.
Much earlier, when the Delhi High Court delivered the judgment in P. C. Jain case in TIOL-DDT 1091 17.04.2009, we prophesized,
“By Finance Act 2007, former members of the CESTAT were barred from appearing acting or pleading before the Tribunal. Some of the former Members who have been practising in CESTAT after retiring as Members were aggrieved and approached the Delhi High Court in writ petition.
The High Court found nothing wrong with the bar and held that there was no discrimination; it was not unconstitutional; lawyers had no unregulated right to practice.
There is no such bar for ITAT Members; Why? It will come eventually; a good beginning has been made…”
In fact, when the Law Ministry issued this Notification on June 3, 2009 amending Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 by inserting Rules 13E and 13F , in 22.06.2009 this issue was discussed threadbare and we asked,
“…….But is the current amendment enough to bar the ITAT Members, VPs and President from practising before ITAT? In fact, there is a slight distinction in the provisions incorporated for restricting the President, VPs and Members of ITAT from practising before ITAT when compared with similar provision incorporated for the President, VPs and Members of CESTAT……..While the CESTAT President, VP and Members cannot practice before CESTAT after ceasing to hold office in the CESTAT, ITAT President, VP and Members cannot practice before ITAT only after retirement. So, if a Member, VP or even President of ITAT resigns from his/her post, there is no bar for them to practice before ITAT because the relevant rule only says that they shall not practice before the Tribunal after retirement. Whereas for the Members, VPs and President of CESTAT, even if they resign from their posts, they are not entitled to practice because the relevant provision says 'on ceasing to hold office'. This is certainly a bit unfair considering the fact that both their positions are at par.
This entire episode raises a pertinent question. Do the retired Members of Tribunals need to be told by the Court or declared by the Statute that they are not eligible to practice before the respective Tribunals? When a High Court judge retires from his/her position, if they intend to practice post retirement, they do not practice before any High Court or lower Courts but appear only before the Supreme Court. This not only enhances their stature but also protects the dignity of the Judiciary and the individual alike. Likewise, the retired Members of ITAT or CESTAT or for that matter any Tribunal should have voluntarily refrained from practising before the respective Tribunals or any forum lower to the Tribunals and practice before High Courts or Supreme Court…..”
Finally after the Special Bench delivered its verdict in Concept Creations case on 15.09.2009, in TIOL-DDT 1199 17.09.2009, we asked why there should be discrimination between Members who retired before 03.06.2009 and Members who retired after this date and wondered if ITAT was competent to deal with this issue (though this aspect was dealt with by the ITAT Special Bench, it is felt that the preliminary objection raised by the Departmental Counsel was not adequately answered),
“……..So all those former Members who were practising can happily continue to do so. Only those who retired after 03.06.2009 are barred. Isn't this discrimination? And is ITAT competent to decide the issue? This is certainly not going to be the end of the matter. We will see interesting court battles.”
As regards the factual matrix of the latest reference to the Special Bench, it is not clear as to whether the ex-Accountant Member Mr. Deepak R. Shah, Advocate and Ex-Accountant Member retired or resigned and if he retired, whether the retirement was before June 3, 3009 or not.
While all the pertinent questions on this matter were extensively deliberated by the Special Bench in Concept Creations case and the references therein were answered by the Special Bench, the question as to whether an ex-ITAT member who also happens to be an advocate, could practice before ITAT as a matter of right, has to be deliberated upon in view of the latest notification issued by the Law Ministry bringing into force sec. 30 of the Advocates Act, 1961 with effect from June 15, 2011.
Section 30 of the Advocates Act, 1961 is extracted below for ready reference:
“Subject to the provisions of this Act, every advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends,-
(i) in all courts including the Supreme Court;
(ii) before any tribunal or person legally authorised to take evidence; and
(iii) before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practise.”
As per this provision, an advocate whose name is entered in the State roll shall be entitled as of right to practise before any tribunal or person legally authorized to take evidence, amongst others.
It will be interesting to see how the Special Bench would view this reference in the context of this provision which provides advocates right to practise in all courts as a matter of right and resolve the conflict between section 30 of Advocates Act, 1961 and Rule 13E of Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 .
This brings us to our earlier question as to whether ITAT is competent enough to resolve issues beyond the purview of Income Tax Act, 1961. The ethical issues raised in 22.06.2009 of allowing a Member (retired or resigned) to practice in the forum which employed him/her prior to his/her retirement or resignation also has to be addressed legally/statutorily .
It is also noticed that an ex-Member of CESTAT is still practising before CESTAT in spite of the Delhi High Court judgment in P C Jain case. We will witness interesting court battles ahead. However, to set these matters to rest once and for all, it is time for the Parliament to bring in suitable amendments in the Statutes.