Dispute Resolution Panel

Constitution — Jurisdictional CIT, who had granted approval to the reopening and had supervised the passing of the draft assessment order, should not be a part of the DRP for avoidance of the likelihood of bias, as held by UAHC in Hyundai Heavy Industries Ltd v UOI and Others — In favour of: The revenue (partly); Civil Writ Petition No 1778 of 2010 (M/S).

Validity of s 144C and Rule 3(2) — The mere potential of bias against one of the members of the Panel will not render the provision unconstitutional.

The doctrine of nemo judex in causa sua (no man shall be a judge of his own cause) is subject to the doctrine of necessity. Bias cannot be established merely because one of the members of the DRP was also a jurisdictional CIT if he was not interested, in his personal capacity, in the outcome of the assessment order and the directions issued to the AO were not based on extraneous considerations. As the CIT was only discharging statutory functions provided under the Act, the bias stood excluded on the principles of the doctrine of necessity. Consequently, s 144C and r 3 (2) are not ultra vires.

In the instant case, the DIT-II was exercising supervisory functions and had a hand in the reopening of the assessments under s 147/148 of the Act and was also a member of the Panel considering the draft assessment, which had been made pursuant to the reopening of the assessment. Therefore, the real likelihood of bias cannot be ruled out. Even if the officer is impartial and there is no personal bias or malice, nonetheless, a right-minded person would think that, in the circumstances, there could be a likelihood of bias on his part. In that event, the officer should not sit and adjudicate upon the matter. He should recuse himself. This follows from the principle that justice must not only be done but seen to be done.

Decided on: 21 July 2011.