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2015 DIGILAW 282 (GUJ)

Commissioner of Income Tax v. Vallabhdas Vithaldas

2015-03-13

AKIL ABDUL HAMID KURESHI

body2015
JUDGMENT Akil Abdul Hamid Kureshi, J. 1. These references were originally heard by a Division Bench consisting of Justice M.S. Shah and Justice D.A. Mehta. The question pertained to the interpretation of section 263 of the Income-tax Act, 1961 ('the Act' for short) namely what would form the records which the Commissioner could place reliance upon for taking an order of assessment in revision. Learned members of the Bench had difference of opinion and the issue, therefore came to be referred to third Judge in terms of section 259 of the Act. To be able to appreciate the point of divergence between the two learned Judges, one may record in brief the background facts from ITR No. 65 of 1998. The reference arose out of the judgment of the Income Tax Appellate Tribunal dated 18th March 1987. The assessment in the case of the assessee individual was completed under section 143(3) of the Act on 19.2.1985. On 27.8.1981, search operations under section 132 of the Act was carried out at the residential premises of the son of the assessee. During search, cash, gold ornaments and other jewellery were seized. It was claimed that such assets belonged to various members of the family. Two statements of Savitaben Vallabhdas, wife of the assessee were also recorded in which, she claimed that some of the assets belonged to her. Upon scrutiny of the record of assessment, the Commissioner of Income-tax, Rajkot noted that the Income-tax Officer had not taken into consideration the explanation of Girishkumar Vallabhadas, son of the assessee and further that he had not considered the various statements of the persons which were recorded at the time of the search. He, therefore, took the order of assessment in revision. After hearing the assessee, the Commissioner set aside the order of assessment and directed the ITO to make fresh assessment. Such order of the Commissioner was taken in appeal by the assessee. One of the grounds raised by the assessee before the Tribunal was that the record pertaining to search and seizure operations at the premises of the son of the assessee did not form part of the record of the assessee's assessment proceedings and therefore, such documents could not form the basis of any action under section 263 of the Act in case of the assessee. The Tribunal upheld the contention and held that the Commissioner could intervene only on the basis of the record of the assessment proceedings of the assessee and that the statements recorded at the time of search of the premises of the son of the assessee cannot form the basis of any action under section 263 of the Act. In the background of such facts, at the instance of the Revenue, the Tribunal referred for the opinion of this Court, the following question of law: "Whether, in law and on facts, the Appellate Tribunal was right in coming to the conclusion that the basis of intervention by the Commissioner should be part of the records in the assessment proceedings of the assessee and the statements in the search operations regarding the son of the assessee could not be considered as forming part of assessment of the assessee and thus the action was invalid?" 2. Justice M.S. Shah was of the view that the issue was covered by the decision of the Supreme Court in the case of CIT v. Shree Manjunathesware Packing Products & Camphor Works [1988] 231 ITR 53 and noted as under: 'In our view, the aforesaid observations of the Apex Court clearly give the widest meaning to the word "record". It is also pertinent to note that while Section 263(1) uses the word "record", the explanation goes further and states that the record includes all records relating to any proceeding under this Act. The use of the plural "records" and "relating to any proceeding under this Act" do not permit any limitation being placed on the power of the Commissioner that the power under Section263(1) can be exercised only on the basis of the statements which are recorded in the course of search and seizure operations in respect of the very assessee and not in respect of any other person. The Apex Court has in terms overruled the decision of the Calcutta High Court in Ganga Properties v. ITO [1979] 118 ITR 447 on which the Tribunal had relied while passing the order giving rise to these references. 7. As regards the reasoning which appealed to the Tribunal, the word "therein" is not necessarily capable of the interpretation which appealed to the Tribunal. 7. As regards the reasoning which appealed to the Tribunal, the word "therein" is not necessarily capable of the interpretation which appealed to the Tribunal. When the Commissioner examines the record of search and seizure operations in respect of any person, say the respondent-assessees' son as in the instant case, and finds that such person had attributed some undisclosed income to the assessee, it is open to the Commissioner to call for the record in the assessee's case. The exercise of power by the Commissioner under Section 263(1) is obviously in respect of the assessee's case but for the purpose of exercising that power, the examination by the Commissioner is not required to be confined to the record of that assessee's case as such record could be any record relating to any proceeding under the Income-tax Act. There is nothing in the provisions of Section 263(1) to take such a narrow view of the powers of the Commissioner. Any doubt which could arise has been removed by the legislature by inserting through the Finance Act, 1988 an Explanation and further amending it by Finance Act, 1989. The interpretation of the provisions of Section 263(1) read with explanation thereto by the Apex Court in light of the legislative intent leaves no room for doubt. 8. In our view, once there is a pronouncement of the highest Court of the land, the same is binding on all Courts, Tribunals and all authorities in view of Article 141 of the Constitution and it is not open to distinguish the same by referring to certain words of those provisions which were very much before the Supreme Court merely on the ground that some other arguments could have been urged which were not considered by the Supreme Court.' Consequently, since the Tribunal had set aside the order of the Commissioner only on this ground, in his opinion, the matter would have to be remanded before the Tribunal for consideration on merits. 3. Justice D.A. Mehta was unable to conform to the said opinion. He gave a differing opinion. Relying on several decisions of the Supreme Court including in the case of Malabar Industrial Co. 3. Justice D.A. Mehta was unable to conform to the said opinion. He gave a differing opinion. Relying on several decisions of the Supreme Court including in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83/109 Taxman 66 the learned Judge observed that the Commissioner can assume jurisdiction under section 263 of the Act provided the twin conditions of order of the Assessing Officer being erroneous and being prejudicial to the interest of the Revenue are satisfied. The learned Judge also referred to the provisions contained in the Act for rectifying the mistake in assessment and for reopening a completed assessment to demonstrate that the policy of law is that the finality of an order of assessment should not be lightly disturbed. The learned Judge was of the opinion that the issue at hand was not concluded by the decision of the Supreme Court in the case of Shree Manjunathesware Packing Products Camphor Works (supra). He was of the opinion that the term 'record' used in section 263 would not include the statement of the son of the assessee since there was nothing on the record to show these statements had come on record of the assessee. In his opinion, words "any proceedings under the Act" would not extend to a proceeding not relating to the assessee who was subjected to action under section 263 of the Act. The learned Judge, therefore, concluded as under: "26. For the reasons stated hereinbefore the Appellate Tribunal was right in holding that the basis of intervention by the Commissioner should be part of the record in the assessment proceedings of the assessee and the statement in the search operation regarding the son of the assessee could not be considered as forming part of the assessment of the assessee, and thus, the action under section263 of the Act was invalid. The question referred is therefore answered in the affirmative i.e. in favour of the assessee and against the revenue in both the references." 4. For some reason, the reference to the third member remained dormant for a long time. In the meantime, many developments in law took place giving a whole new dimension to this reference to the third member for his opinion. 5. For some reason, the reference to the third member remained dormant for a long time. In the meantime, many developments in law took place giving a whole new dimension to this reference to the third member for his opinion. 5. Since this reference throws up a couple of interesting questions and since the assessees are not represented, I requested learned advocate Shri Bandish Soparkar to assist me as an amicus who, as is apparent from the materials collected by him, put in considerable time and effort in making research which I highly appreciate. 6. Learned advocates pointed out that after the disagreement between the Members of the Bench, similar issue came up for consideration before this court on two occasions. In the case of CWT v. Lalitchandra M. Patel [2002] 258 ITR 232/123 Taxman 682, a similar question arose in the background of the Wealth Tax Act, 1957. In that case, the Commissioner of Wealth Tax had taken assessment orders passed by the Wealth Tax Officer to be prejudicial to the interest of the Revenue, as the value determined by the District Valuation Officer was higher than the value assessed by the assessee's valuer and that there was gross under-statement. The Commissioner, therefore, under section 25(2) of the Wealth Tax Act, 1957 set aside the assessment made by the Wealth Tax Officer and directed him to recompute the correct net wealth. The assessee carried the matter in appeal before the Tribunal. The Tribunal placed reliance on the decision of the Calcutta High Court in the case of Ganga Properties v. ITO [1979] 118 ITR 447/[1980] 3 Taxman 66 and held that the Commissioner could not have placed reliance on the material which was not on record before the Wealth Tax Officer. The Revenue carried the matter before the High Court. The Division Bench allowed the appeal making following observations: "Having heard the learned counsel for the revenue and having perused the aforesaid decisions, we find considerable substance in the submissions made by Mr. Tanvish Bhatt, learned counsel for the revenue. The Revenue carried the matter before the High Court. The Division Bench allowed the appeal making following observations: "Having heard the learned counsel for the revenue and having perused the aforesaid decisions, we find considerable substance in the submissions made by Mr. Tanvish Bhatt, learned counsel for the revenue. In CIT v. Shree Manjunathesware Packing Products and Camphor Works (supra) the Supreme court interpreted a pari materia provision of Section 263 of the Income-tax Act and held that while calling for and examining the record of any proceeding under Section 263(1), it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. The Supreme Court even held that the decision of this Court i.e. the Gujarat High Court in CWT v. Rajashree S. Parekh taking the contrary view and against which the department's SLPs were dismissed, did not lay down correct law and that the dismissal of the Special Leave Petitions summarily did not mean that the Supreme Court approved the view that was taken by the Gujarat High Court in the case of Rajeshree S. Parekh. The Court explained the legislative history of Section 263 with particular reference to the controversy about the scope of the expression "record" and observed that if on further examining the record and after making or causing to be made an inquiry, the Commissioner considers the order to be erroneous and prejudicial to the interest of the revenue, he can pass the order thereon as circumstances of the case justify and the Apex Court in terms observed that obviously, as a result of the enquiry, the Commissioner may come into possession of new material and he would be entitled to take the new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him. Hence, the Apex Court concluded that it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. 6. Hence, the Apex Court concluded that it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. 6. The Madras High Court followed the aforesaid decision in CWT v. S.V. Sivarathina Pandian (supra) which was concerned with a case similar to the case before us. Following the aforesaid decision, the Madras High Court held that the Commissioner of Wealth-tax was perfectly justified in setting aside the order of assessment and directing the Wealth-tax Officer to redo the assessment, taking into consideration the record relating to the proceedings available at the time of examination by the Commissioner and that the record was not confined to the material available to the Wealth-tax Officer. 7. Following the aforesaid decision of the Apex Court and agreeing with the aforesaid view of the Madras High Court, we are of the same view that the Commissioner of Wealth-tax was justified in setting aside the assessment made by the Wealth-tax Officer and in directing the Wealth-tax Officer to recompute the correct net wealth and tax after considering the valuation made by the Departmental Valuer." 7. Yet again, in the case of CIT v. Arunaben Sumankumar [2003] 259 ITR 386/[2002] 124 Taxman 57 (Guj.), the assessment framed by the Assessing Officer was taken in revision by the Commissioner. The Commissioner found that the assessee had filed a return of net wealth showing certain gold ornaments valued at Rs. 91,988/-. Such return was filed after the residential premises of brother-in-law of the assessee was subjected to search under section132 of the Act. In the return, she had claimed that the ornaments belonged to her. The Commissioner found that the Income-tax Officer had not conducted any inquiry into the source of acquisition of such ornament and therefore, set aside the assessment directing the Assessing Officer to frame fresh assessment in accordance with law. Once again, the Tribunal held that the Commissioner could not have taken action under section 263 of the Act in the case of the assessee on the basis of record in case of other persons. Once again, the Tribunal held that the Commissioner could not have taken action under section 263 of the Act in the case of the assessee on the basis of record in case of other persons. The High Court placing reliance on the decision of Shree Manjunathesware Packing Products and Camphor Works (supra) allowed the Revenue's appeal observing as under: "Following the aforesaid decision, we are of the view that there is nothing in the provisions of the Income-tax Act, 1961 particularly section 263 of the Act or in the aforesaid pronouncement of the Apex Court which would require us to accept the narrow view which appealed to the Tribunal that the record must be of the assessee concerned and that the Commissioner had no power, jurisdiction and authority to take action under Section 263 of the Act in case of the assessee on the basis of the records in the cases of other persons. Our answer to the question is accordingly in the negative i.e. in favour of the revenue and against the assessee." 8. In the background of such developments, the first question that crops up is about the binding effect of such pronouncements. Whether such judgments of the Division Bench of this Court would bind me as a referee Judge or since the ultimate opinion that I may express in these references would be as a culmination of application of judicial mind by three Judges, I am not bound to follow such ratio? 9. Learned counsel Shri PG Desai appearing for the Revenue submitted that the issue has now been concluded by virtue of the decisions of this Court in the case of Lalitchandra M. Patel (supra) and in the case of Arunaben Sumankumar (supra) and that, therefore, this reference to the third Member may be returned unanswered. Shri Soparkar placed decisions and materials before me to suggest that one plausible view would be that since the ultimate exercise would result into declaration of legal proposition by three Judges, the Division Bench judgments would not be binding. He, however, did agree that the third Member's opinion would be without deliberation between three Judges and in that context the present situation is unique. He, however, submitted that none of the aforesaid decisions conclude the issue arising in these references. He, however, did agree that the third Member's opinion would be without deliberation between three Judges and in that context the present situation is unique. He, however, submitted that none of the aforesaid decisions conclude the issue arising in these references. He submitted that in both the cases the record relied upon by the Commissioner pertained to the same assessee whereas in the present case, the Commissioner had placed reliance on the statements which neither formed part of the assessment proceedings of the assessee nor were the statements made by the assessee in connection with some other proceedings. This, according to him, was a vital distinction. 10. Law of precedents does not flow from any statutory provisions. It is a judge made law to give greater predictability and certainty to legal interpretations. If individual judges or benches were free from the binding precedents, the same would lead to great uncertainty and anarchy. Quite apart from the binding effect of the ratio laid down by the Supreme Court which becomes law of the land by virtue of Article 141 of the Constitution, even other courts follow the principle of precedent where one Bench would be bound by the decision of a Bench of coordinate strength or larger Benches. In the case of Chandra Prakash v. State of U.P., AIR 2002 SC 1652 , the Supreme Court observed as under: "The doctrine of binding precedent is of utmost importance in the administration of our judicial system. It promotes certainty and consistency in judicial decisions. Judicial consistency promotes confidence in the system, therefore, there is this need for consistency in the enunciation of legal principles in the decisions of this Court. It is in the above context, this Court in the case of Rabhubir Singh held that a pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or similar number of Judges. It is in the above context, this Court in the case of Rabhubir Singh held that a pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or similar number of Judges. It is in furtherance of this enunciation of law, this Court in the latter judgment of Parija (supra) held that-- "But if a Bench of two learned Judges concludes that an earlier judgment of three learned Judges is so very in correct that in no circumstances can it be followed, the proper course for it to adopt is to refer the matter before it to a Bench of three learned Judges stating out the reasons why it could not agree with the earlier judgment. If, then, the Bench of three learned Judges also comes to the conclusion that the earlier judgment of a Bench of three learned Judges is incorrect, reference to a Bench of five learned Judges is justified." 11. In the case of Union of India v. Raghubir Singh AIR 1989 SC 1933 , a Five-Judge Bench of the Supreme Court observed that in order to guard against the possibility of inconsistent decisions on points of law by different Division Benches that the rule has been evolved in order to promote consistency and certainty in the development of the law and its contemporary status that the statement of the law by a Division Bench is considered binding on a Division Bench of the same or lesser number of Judges. This principle has been followed in India by several generations of Judges. In the case of Rajasthan Public Service Commission v. H.R. Purohit AIR 2003 SC 3476 , it was observed that the earlier decision of Division Bench is binding to a Bench of co-ordinate strength. If the Bench hearing the matter subsequently entertains any doubt about the correctness of the earlier decision, the only course open to it is to refer the matter to a larger Bench. 12. In the case of Purbanchal Cables & Conductors (P) Ltd. v. Assam SEB [2012] 7 SCC 462, however, the Supreme Court drew a distinction between the ratio decidendi of the judgment which would form binding precedent from obiter dicta where an issue directly did not arise and no authoritative pronouncement was made on such an issue. 13. 12. In the case of Purbanchal Cables & Conductors (P) Ltd. v. Assam SEB [2012] 7 SCC 462, however, the Supreme Court drew a distinction between the ratio decidendi of the judgment which would form binding precedent from obiter dicta where an issue directly did not arise and no authoritative pronouncement was made on such an issue. 13. The legal proposition, therefore, that the decision of a Division Bench of this Court would bind another Bench of equal strength is well laid down. It is equally well settled that if the same were to come up for consideration before a Bench of three or more Judges, the Division Bench view would not form a binding precedent. In this context, we may examine the scope of a third Judge to whom such a reference is made. 14. This reference is made in terms of section 259 of the Act, which reads as under: "259. (1) When any case has been referred to the High Court under section 256, it shall be heard by a Bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if any, of such judges. (2) Where there is no such majority, the judges shall state the point of law upon which they differ, and the case shall then be heard upon that point only by one or more of the other judges of the High Court, and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it." In terms of sub-section (1) of section 259, reference to the High Court is to be heard by a Bench of not less than two Judges and would be decided in accordance with the opinion of such judges or majority of them. Sub-section (2) of section259 provides that if there is no such majority, the judges should state the point of law upon which they differ and the case shall then be upon that point only by one or more of other judges of the High Court and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it. 15. 15. From such statutory provisions, it is clear that any reference which is heard by two judges, in case of difference of opinion, the two learned Judges differing thus would state the point of law on which there has been a difference which would be referred to one or more other judges of the same High Court and in terms of the opinion of the majority of all the judges, the issue would be decided. It is clear from such provisions that hearing such reference is vitally different from a Bench of three Judges hearing any case or a point of law which is referred to such a Bench for its opinion. In case of a larger Bench of three or more Judges hearing such an issue, the Bench would be taking a collective decision on the point at issue. Such decision would be made after all the members of the Bench simultaneously hear rival contentions presented by the advocates for the parties appearing before the Bench. The members of the Bench would have the benefit of deliberations inter se all throughout the hearing of such proceedings and even after the hearing his over. It is a long standing convention of this Court that once any issue of considerable importance has been heard by a Bench, particularly a larger Bench, the Judges in the confines of the chamber debate, deliberate and exchange their views and opinions tentatively arrived at during the course of the arguments. Even thereafter, draft opinions may be exchanged. The members of the Bench may put their view points persuading the others to adopt the same. Some may yield to the view point of the other and in some cases, the Judges may ultimately find themselves simply unable to come to a unanimous conclusion. Whether such deliberations ultimately result into any unanimous decision expressed by any one member of the Bench or more even in case of unanimity or whether such deliberations result into any fractured verdict is of no consequence. The decision of the larger Bench would have a binding effect. Even a split decision by three Judges Bench would bind a Division Bench of two or three Judges on any subsequent occasion. 13.03.2015 16. The decision of the larger Bench would have a binding effect. Even a split decision by three Judges Bench would bind a Division Bench of two or three Judges on any subsequent occasion. 13.03.2015 16. In the context of importance of deliberations between members of the Bench, we may refer to the observations made by P.N. Bhagwati, J. in a Constitution Bench judgment in the case of Minerva Mills Ltd. Union of India AIR 1980 SC 1789 . "84. I may point out at this state that the arguments on this question were spread over a period of about three weeks and considerable learning and scholarship were brought to bear on this question on both sides. The hearing of the arguments commenced on 22nd October 1979 and it ended on 16th November 1979. I hoped that after the completion of the arguments on questions of such momentous significance, there would be a 'free and frank exchange of thoughts' in a judicial conference either before or after the draft judgment was circulated by my Lord the Chief Justice and I would either be able to share the views of my colleagues or if that was not possible, at least try to persuade them to agree with my point of view. But, I find myself in the same predicament in which the learned Chief Justice found himself in Kesavanand Bharati v. State of Kerala [1973] Supp SCR 1 : AIR 1973 SC 1461 ). The learned Chief Justice started his judgment in that case by observing. I wanted to avoid writing a separate judgment of my own but such a choice seems no longer open. We sat in full strength of 13 to hear the case and I hoped that after a free and frank exchange of thoughts, I would be able to share the views of some one or the other of my esteemed brothers, but we were over-taken by adventitious circumstances," namely, so much time was taken up by counsel to explain their respective points of view that very little time was left to the Judges "after the conclusion of the arguments, for exchange of draft judgments". Here also, I am compelled by similar circumstances, though not adventitious, to hand down a separate opinion without having had an opportunity to discuss with my colleagues the reasons which weighed with them in striking down the impugned constitutional amendments. Here also, I am compelled by similar circumstances, though not adventitious, to hand down a separate opinion without having had an opportunity to discuss with my colleagues the reasons which weighed with them in striking down the impugned constitutional amendments. Somehow or other, perhaps owing to extraordinary pressure of work with which this Court is overburdened, no judicial conference or discussion was held nor was any draft judgment circulated which could form the basis of discussion, though, as pointed out above, the hearing of the arguments concluded as far back as 16th November, 1979. It was only on 7th May, 1980, just two days before the closing of the Court for summer vacation, that I was informed by the learned Chief Justice that he and the other three learned Judges, who had heard this case along with me, had decided, to pass an Order declaring the impugned constitutional amendments ultra vires and void on the ground that they violated the basic features of the Constitution and that the reasons for this Order would be given by them later. I found it difficult to persuade myself to adopt this procedure, because there had been no judicial conference or discussion amongst the Judges where there could be free and frank exchange of views nor was any draft judgment circulated and hence I did not have the benefit of knowing the reasons why the learned Chief Justice and the other three learned judges were inclined to strike down the constitutional amendments. If there had been a judicial conference or discussion or the draft judgment setting out the reasons for holding the impugned constitutional amendments ultra vires and void had been circulated, it would have been possible for me as a result of full and frank discussion or after considering the reasons given in the draft judgment, either to agree with the view taken by my Lord the Chief Justice and the other three learned judges or if I was not inclined so to agree, then persuade them to change their view and agree with mine. That is the essence of judicial collectivism. That is the essence of judicial collectivism. It is, to my mind, essential that a judgment of a Court should be the result of collective deliberation of the judges composing the Court and it would, in my humble opinion, not be in consonance with collective decision making, if one or more of the judges constituting the Bench proceed to say that they will express their individual opinion, ignoring their colleagues and without discussion the reasons with them and even without circulating their draft judgment so that the colleagues have no opportunity of participating in the collective decision making process. This would introduce a chaotic situation in the judicial process and it would be an unhealthy precedent which this Court as the highest Court in the land - as a model judicial institution which is expected to set the tone for the entire judiciary in the country - should not encourage. Moreover, I felt that it was not right to pronounce an Order striking down a constitutional amendment without giving a reasoned judgment. Ordinarily, a case can be disposed of only by a reasoned judgment the Order must follow upon the judgment. It is true that sometime where the case involves the liberty of the citizen or the execution of a death sentence or where the time taken in preparing a reasoned judgment might prejudicially affect the winning party, this Court, does, in the larger interests of justice pronounce an order and give reasons later, but these are exceptional cases where the requirements of justice induce the Court to depart from the legally sanctioned course. But, there (sic-here?) the court had in fact waited for about 5 1/2 months after the conclusion of the arguments and there was clearly no urgency which required that an order should be made though reasons were not ready; the delay of about 2 1/2 months in making the order was not going to injure the interest of any party since the order was not going to dispose of the writ petition and many issues would still remain to be decided which could be dealt only after the summer vacation. Thus there would have been no prejudice to the interests of justice if the order had been made on the reopening of the Court after the summer vacation supported by a reasoned judgment. Thus there would have been no prejudice to the interests of justice if the order had been made on the reopening of the Court after the summer vacation supported by a reasoned judgment. These were the reasons which compelled me to make my Order dated 9th May, 1980 declining to pass the unreasoned order pronouncing on the validity of the impugned constitutional amendments and stating that I would "prefer to pass a final order in this case when I deliver my reasoned judgment". This order unfortunately led to considerable misunderstanding of my position and that is the reason why I have thought it necessary to explain briefly why I acted in the manner I did." 17. Learned counsel Mr. Bandish Soparkar drew my attention to an article "Transtemporal Separation of Powers in the Law of Precedent" by Randy Beck in which the author made the following interesting comments: "After oral argument, appellate judges typically begin an extended process of continued research and collective deliberation. The development of consensus among a group of judges on a multi-member appellate court may smooth out some of the biases and idiosyncrasies that can lead a single judge to a flawed result. Moreover, multiple judges may challenge one another to consider possibilities an individual judge would overlook. In the Supreme Court, the Justices meet soon after oral argument for a private conference that facilitates this process of personal study and collaborative deliberation The Justices explain their tentative views on the proper outcome of an argued case. The conference results in initial opinion assignments, and the process of study and deliberation continues as the Justices circulate and comment and drafts of majority, concurring, and dissenting opinions. It short, appellate courts such as the United States Supreme Court rely on briefing and argument to enhance the quality of the decisions issued by judges. Inadequate briefing and argument contribute to inadequate judicial opinions. Good briefing and argument do not guarantee good decisions, but they increase the likelihood that judges will produce thoughtful rulings, truthful about the relevant facts, faithful to the applicable law, and useful in accomplishing the goals the legal system seeks to advance." In the same article reference is also made to the remarks by Cardozo, J. as under: "The eccentricities of judges balance one another. One judge looks at problems from the point of view of history, another from that of philosophy, another from that of social utility, one is a formalist, another a latitudinarian, one is timorous of change, another dissatisfied with the present; out of the attrition of diverse minds there is beaten something which has a constancy and uniformity and average value greater than its component elements." The same article also refers to the comments by Evan H. Caminker who observed as under: "The process of collective deliberation can improve autonomous decision making. A collegial sharing of ideas brings multiple possibilities and perspectives to each Justice's attention, and increases the likelihood that she will explore all plausible positions. Moreover, each Justice is encouraged to hone and improve her own positions in response to critical peer scrutiny and persuasion." It can thus be seen that the law of precedent heavily relies on the collective decision making process where multiple legal minds are simultaneously applied assisted by legal research and presentation of legal arguments. When such materials and legal contentions are processed by several judges, the decision that is rendered even if not unanimous has the advantage of input from larger number of legally trained minds. In the present case, unlike a case of larger Bench where three or more judges would be simultaneously hearing a question of law, with the assistance of same set of arguments, I am as a referral judge left to choose between one of the two opinions of the differing judges which, in my opinion, is closer to the correct legal position. This completely robs the process of plurality in the decision making which is the foundation of law of precedent where a judgment of a Bench would bind the Bench of equal or lesser number of judges even if it is not a unanimous opinion. Under the circumstances, I feel bound by the decisions of the later Division Benches on the point which arises directly in the present reference. Independently also, I would have arrived at the same conclusion. I would state my brief reasons for the same. 18. Under the circumstances, I feel bound by the decisions of the later Division Benches on the point which arises directly in the present reference. Independently also, I would have arrived at the same conclusion. I would state my brief reasons for the same. 18. Section 263 of the Income-tax Act, as is well-known, pertains to the power of the Commissioner to call for and examine the record of any proceedings and if he considers that any order in such proceedings passed by the Assessing Officer is erroneous as being prejudicial to the interest of the Revenue, he may revise such decision after giving the assessee an opportunity of being heard. Sub-section (1) of section 263 contains an explanation clause. Clause (b) explains terms 'record' and provides that for the removal of doubts, it declared that for the purposes of the said sub-section, 'record' shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner. One may notice the words "shall include and shall be deemed always to have included" for the original expression "includes" with effect from 1.6.88. The Explanation itself was introduced with effect from 1.10.1984. These legislative changes came up for consideration before the Supreme Court in the case of Shree Manjunathesware Packing Products Camphor Works (supra). It was contended that the Legislature by adding the explanation and widening the definition of the term 'record' has enabled the Commissioner to take into consideration all records relating to the proceedings. It was pointed out that earlier sub-section (1) of section 263 did not contained any explanation. Such explanation was added for removal of doubts. The Supreme Court in this context held and observed as under: 'Earlier Section 263(1) did not contain any Explanation. It enables the Commissioner to call for and examine the record of any proceeding under the Act and pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the Revenue. By the Taxation Laws (Amendment) Act, 1984, an Explanation was added to Section 263(1) for removal of certain doubts but it is not necessary to refer to that explanation as it related to the meaning of the expression "order passed by the Assessing Officer" and, therefore, not relevant for the purpose of this case. By the Finance Act, 1988, the said Explanation was substituted w.e.f. 1st June, 1988. The reason why the Legislature had to make that amendment is stated in the Memorandum explaining the provisions in the Finance Bill of 1988. We will refer to only that part which is relevant for us. It was observed by the Legislature that the provision as it stood then, had given rise to judicial controversy in respect of the following: "48. ** ** ** (a) On the interpretation of the term 'record': it has been held in some cases that the word 'record' in Section 263(1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order was passed by the Assessing Officer. Such an interpretation is against the legislative intent and defeats the very objective sought to be achieved by such provisions, since the purpose is to revise the order on the basis of the record as it available to the Commissioner at the time of examination. To eliminate litigation and to clarify the legislative intent in respect of the provisions in the three Direct Tax Act, it is proposed to clarify the legal position in this regard in the Explanation to the relevant sections. The proposed amendments are intended to make it clear that 'record' would include all records relating to any proceedings under the concerned direct tax laws available at the time of examination by the Commissioner." The relevant part of the Explanation after his substitution read as follows: "Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,-- (b) "record" includes all records relating to any proceeding under this Act available at the time of examination by the Commissioner;...." Thus, by this amendment, definition of the term "record" for the purpose of Section 263, was provided by the legislature. But a doubt regarding the meaning of the term 'record' still persisted and, therefore, a further amendment was made by the Legislature while enacting Finance Act of 1989. The Memorandum explaining the provisions in the Finance Bill, 1989 makes that clear. Paragraph 28 of the said Memorandum reads as under: "28. Under the existing provisions of Section 263 of the Income-tax Act and corresponding provisions of the Wealth-tax Act and the Gift-tax Act, the Commissioner of Income-tax is empowered to call for and examine the record of any proceeding and if he considers that the orders passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of Revenue, he may pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the same or directing a fresh assessment. By the Finance Act, 1988, an Explanation was substituted with effect from 1st June, 1988, to the relevant sections of the Income-tax Act, Wealth-tax Act and Gift-tax Act to clarify that the term "record" would include all records relating to any proceeding available at the time of examination by the Commissioner. Further, it was also clarified that the Commissioner is competent to revise an order of assessment passed by the Assessing Officer on all matters except those which have been considered and decided in an appeal. The above Explanation was incorporated in the Finance Act, 1988, to clarify this legal position to have always been in existence. Some Appellate Authorities have, however, decided that the Explanation will apply only prospectively, i.e. only to those orders which are passed by the Commissioner after 1-6-1988. Such an interpretation is against the legislative intent and it is, therefore, proposed to amend Section 263 of the Income-tax Act, so as to clarify that the provisions of the Explanation shall be deemed to have always been in existence. Amendments on the above lines have been proposed in Section 25 of the Wealth-tax Act and Section24 of the Gift-tax Act also." After that amendment, the relevant part of the Explanation reads as under: "Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,-- (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner;" .. .. .. .. "Therefore, the materials which were not in existence at the time the assessment was made but afterwards came into existence cannot form part of the record of the proceeding of the ITO at the time he passes the order and, accordingly, it cannot be taken into consideration by the Commissioner for the purposes of invoking his jurisdiction under this section, for he is not an appellate authority under this section and exercise only revisional jurisdiction and hence he can only take into consideration the record as it stood before the ITO and the materials in such record for the purposes of ascertaining whether the order in question was erroneous and prejudicial to the interests of the revenue. In other words, any material which comes into existence later on cannot form part of the record of the ITO for the purposes of invoking the Commissioner's power under Section 263(1) of the Act. And it is only after the proceeding is lawfully initiated by the Commissioner on the basis of the record of the ITO that the Commissioner can take into account any material which may come into existence later on in view of the expression "after making or causing to be made such enquiry as he deems necessary" used in the second limb of this section." .. .. .. "It, therefore, cannot be said, as contended by the learned counsel for the respondent, that the correct and settled legal position, with respect to the meaning of the word "record" till 1st June, 1988, was that it meant the record which was available to the Income-tax Officer at the time of passing of the assessment order. Further, we do not think that such a narrow interpretation of the word "record" was justified, in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the Commissioner under Section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him. Moreover, in view of the clear words used in Clause (b) of the Explanation to Section 263(1), it has to be held that while calling for and examining the record of any proceeding under Section 263(1) it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination." 19. Additionally, as noted earlier, this Court in the case of Arunaben Sumankumar (supra) and in the case of Lalitchandra M. Patel (supra) has taken a similar view relying on the decision of the Supreme Court in the case of Shree Manjunathesware Packing Products & Camphor Works (supra). 20. In the case of CIT v. Export House [2002] 256 ITR 603/122 Taxman 879, Division Bench of the Punjab and Haryana High Court in the context of section 263 of the Income Tax Act observed as under: "Even question No. 3 is also of academic interest only. 20. In the case of CIT v. Export House [2002] 256 ITR 603/122 Taxman 879, Division Bench of the Punjab and Haryana High Court in the context of section 263 of the Income Tax Act observed as under: "Even question No. 3 is also of academic interest only. However, the matter now stands concluded by the judgment of the Apex Court in CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53, in which it has been held that the expression "record" in section 263 means the record available at the time of examination by the Commissioner of Income-tax and is not confined merely to the material available to the Income-tax Officer. In the light of this judgment, question No. 3 is answered in the negative, i.e. against the assessee and in favour of the Revenue." 21. Division Bench of the Allahabad High Court in the case of CIT v. Prakashwati [2005] 276 ITR 575/144 Taxman 313, observed as under: "The Apex Court in the case of CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 has held that in view of the clear words used in clause (b) of the Explanation to section 263(1) while calling for and examining the record of any proceeding under section 263(1), it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. Respectfully following the aforesaid decision, we are of the considered opinion that the Tribunal was not justified in limiting the record which was available before the Income-tax Officer at the time of assessment. The Commissioner was well within his jurisdiction to take into consideration the report of the Valuation Officer which was available to him at the time of examination for the purpose of initiating the proceeding under section 263(1) of the Act." The same High Court in the case of CWT v. Smt. Phoolwati Agarwal [2005] 276 ITR 623/145 Taxman 436 (All.) observed as under: "Learned counsel for the Revenue submitted that the record is not confined to what was available before the Wealth-tax Officer at the time of completion of assessment and it will include all such documents, materials which are on record at the time when the Commissioner of Wealth-tax examined and decided to initiate proceeding. He relied upon a decision of the Apex Court in the case of CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 wherein the Supreme Court has held that in view of the clear words used in clause (b) of the Explanation to section 263(1) of the Act, it is to be held that while calling for and examining the record of any proceeding under section 263(1), it is and it was open to the Commissioner of Wealth-tax not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination. The provisions of section 263(1) of the Income-tax Act and section 25(2) of the Wealth-tax Act are analogous. In this view of the matter we are of the considered view that the Tribunal was not justified in holding that the valuation report could not have been taken into consideration by the Commissioner of Wealth-tax. We accordingly answer the questions in the negative, i.e. in favour of the Revenue and against the assessee." 22. Delhi High Court in the case of Globus Infocom Ltd. v. CIT [2014]369 ITR 14/227 Taxman 48 (Mag.)/50 taxmann.com 100 observed as under: "An order is not erroneous, unless the Commissioner of Income-tax hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore Commissioner of Income-tax must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the Commissioner of Income-tax must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the Commissioner of Income-tax can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the Commissioner of Income-tax (see CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC). Nothing bars/prohibits the Commissioner of Income-tax from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous." 23. We may, however, notice that the Andhra Pradesh High Court in the case of MS. Nothing bars/prohibits the Commissioner of Income-tax from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous." 23. We may, however, notice that the Andhra Pradesh High Court in the case of MS. Raju v. Deputy CIT [2008] 298 ITR 373 (AP) distinguished the provisions for the purpose of section 264 of the Act noticing that no such Explanation as was inserted as Explanation under section 263 is found in section 264(1). It was observed that the Explanation was added with words "shall be deemed always to have included". However, the case on hand before the said High Court was arising under section 264 of the Act. Therefore, such distinction was drawn. It can be seen that consistently after the amendment in section 263(1) of the Act by insertion of the Explanation and the decision of the Supreme Court in the case of Shree Manjunathesware Packing Products Camphor Works (supra), the courts have found the power of the Commissioner to take into account any record was wide enough and not confined to the record of the assessee which was before the assessing authority. 24. Learned counsel Shri Soparkar, however, drew my attention to various decisions of different High Courts taking a restricted view of the record in the context of section 154 of the Act. Such decisions are as under: (1) CIT v. Keshri Metals (P.) Ltd. [1999] 237 ITR 165/104 Taxman 360 (SC). (2) E.M. Vishwanathan Chettiar v. Agrl. ITO [1983] 142 ITR 244 (Kar.). (3) Smt. Swaran Yash v. CIT [1982]138 ITR 734/8 Taxman 191 (Delhi). Section 154 of the Act as is well-known is in the nature of power of rectification of mistake. Sub-section (1) thereof clothes the Income-tax authority with a view to rectifying any mistake apparent from the record the power to amend any order passed under the Act, amend any intimation or deemed intimation under section 143(1) or amend any intimation under sub-section (1) of section 200A. The term 'record', therefore has to be seen in the context of the nature of the statutory provision and the power it aims to cloth the Assessing Officer. As noted, the power is for rectification of any mistake apparent from the record. The term 'record', therefore has to be seen in the context of the nature of the statutory provision and the power it aims to cloth the Assessing Officer. As noted, the power is for rectification of any mistake apparent from the record. Such powers are not in the nature of review or revision and can be exercised only for correction of a mistake which is apparent from the record. In this context, therefore, the term 'record' has to be understood as record of the case before the Assessing Officer. Obviously, reference to the mistake apparent from the record cannot have relation to some other record extraneous to the assessment proceedings. This provision, therefore, has an entirely different context where the term 'record' has been used and it does not include any explanation as was inserted in section 263(1) with a historical background noted by the Supreme Court in the case of Shree Manjunathesware Packing Products Camphor Works (supra). Significantly, the explanation was added for all purposes to have been included from the beginning. The decisions relied upon in the context of the term 'record' used in section 154 of the Act, therefore, would render no further help on the controversy on the hand. 25. Under the circumstances, I concur with the view of M.S. Shah, J. and answer the reference as under: The question is answered in the negative, i.e. in favour of the Revenue and against the assessee. The Tribunal will hear the appeal of the assessee on merits on remaining grounds. The matters be placed before the Hon'ble Chief Justice for pronouncement of the judgment by the Division Bench in terms of section 259 of the Act.