AJAY GANDHI AND ANR. versus B. SINGH AND ORS

Citation: [2004] 1 S.C.R. 164 · Decided: 05-01-2004 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Directions issued

Judgment (excerpt)

A 
B 
AJAY GANDHI AND ANR. 
v. 
B. SINGH AND ORS 
JANUARY 5, 2004 
[V. N. KHARE, CJ AND S.B. SINHA, J.] 
Income Tax Act, 1961-Sections 252, 254 and 255-Delegation of 
Financial Powers Rules, 1958-Rule I-Income Tax Appellate Tribunal-
C President exercising powers of transfer of judicial and accountant members 
to places where different Benches functioning since its inception-Finance 
Ministry directing seeking of prior approval of Ministry for postings and 
transfers of members-Validity of-Held: Since independence of Tribunal is 
essential this long standing practice should prevail-More so, when Central 
Government opines that power of transfer and posting is part of administrative 
D function of President as ancillary power of consti/lltion of benches-However, 
President cannot have unguided, unfettered and unlimited jurisdiction as same 
may be flawed with grave consequences, thus, to follow guidelines issued--
Also, President to consult senior Vice-President in such matters. 
President of the Income Tax Appellate Tribunal (IT AT) has been 
E exercising the power of transfer of judicial and accountant members to 
places where different Benches are functioning, since its inception. After 
a long period, Finance Ministry in exercise of its powers under Rule 10 of 
Delegation of Financial Powers Rules, 1958 read with office memorandum 
and in partial modification of the department letter, directed the President, 
F ITAT to submit all proposals for postings and transfers of members 
including Senior Vice~President and Vice-Presidents of IT AT to the 
Ministry for prior approval. 
Before this Court, it was contended that as there are 48 Benches of 
the Tribunal and having regard to the provisions contained in sub-section. 
G (1) of Section 255 read with sub-section (5) of the Income Tax Act, 1961 
thereof, the President is to constitute Benches; that by necessary 
implications, President alone had the power to transfer the members 
thereof; and that as the President of the Tribunal had been exercising the 
said power since the inception of the Tribunal, no interference therewith 
was called for. 
H 
164 
j 
·"' ( 
AJAY GANDHI v. B. SINGH 
165 
Respondent contended that the Central Government has the A 
necessary administrative control over the Tribunal having regard to the 
power to constitute the same; that the power of appointment of a member 
of the Tribunal would include a power of his transfer and posting; and 
that such a power of the Central Government is implicit from the scheme 
of the Act. 
Allowing the Transferred Cases, the Court 
HELD: 1.1. The Central Government admittedly never exercised its 
purported power of transfer and posting in its capacity as an employer 
B 
or otherwise. Even from the impugned order the source of power had not C 
been traced from the provisions of the Income Tax Act but to the 
Delegaiion of Financial Powers which have no nexus therewith. By reason 
of amendment to certain circular letters also, the Central Government 
cannot confer upon it such statutory power of transfer and posting of the 
members of the Appellate Tribunal. Furthermore, ha\'ing regard to the 
fact that Central Government had acted sub silentio and even allowed the D 
President to delegate his power to constitute benches to various Senior 
Vice-Presidents over a number of years is itself a pointer to the fact that 
the Central Government was also of the opinion that the power of transfer 
and posting is a part of the administrative function of the President as an 
ancillary power of constitution of benches. 1173-F-G-H; 174-A) 
1.2. The independence of the Tribunal is essential; for maintaining 
E 
its independence any power which may be conferred upon the executive 
authority must be proved to be in the interest of imparting justice. This 
long standing practice should be allowed to prevail over the impugned 
order. However, by reason thereof, the President cannot be said to have F 
an unguided, unfettered and unlimited jurisdiction as the same may be 
flawed with great consequences. Therefore, certain guidelines have to be 
followed as under: 
(i) Initial posting of a member. shall be done by the Government in 
consultation with the President of ITAT. Postings to different benches shall G 
be done by the President having regard ordinarily to the following: 
(a) A member save and except for sufficient and cogent reasons 
shall not be posted at a place where he had earlier been 
practising as an advocate or a Ch

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