DIT vs. Credit Agricole Indosuez (Bombay High Court) (No. 1)

The manner in which the appeal has been filed and prosecuted with regard to the proposed questions 1, 2 and 3 was casual and callous, as the following facts would demonstrate:

(i) In respect of Question No.1 the Revenue sought to agitate an issue contrary to its stand before the Tribunal. The Revenue’s prayer before the Tribunal, was to declare that interest income earned on NOSTRO account is taxable. The impugned order of the Tribunal granted the Revenue’s prayer and held that interest earned on NOSTRO account is taxable. Before us, the question framed/agitated was that the Tribunal erred in granting interest on NOSTRO account. It is beyond comprehension as to how a party can be aggrieved by an order that grants its prayer.

(ii) Question Nos.2 and 3 as framed, were conceded by the Revenue at the hearing before the Tribunal. Nevertheless, the Revenue sought to challenge what has not been contested before the Tribunal. This without even a whisper as to why the concession made before the Tribunal was not correct or that subsequent decisions of Court makes the concession before the Tribunal not sustainable in law.

(iii) The Appeal memo has been signed by a senior officer of the Revenue viz. Director of Income-tax (IT) and he has also directed the Asst. Director of Income-tax (IT)I(2), Mumbai to file this appeal. Either there is no application of mind to the order of the Tribunal before filing of this appeal or the Revenue is deliberately seeking to keep the pot boiling, so that uncertainty is kept alive. It shows the casual attitude of the Revenue in filing appeals. This is not the first of its kind. We had earlier also passed orders disapproving this conduct of the revenue, but there is no improvement. If filing of such appeals on questions (1), (2) and (3) by the Revenue without justification is unacceptable, the counsel for the Revenue persisting in arguing those questions of law taking valuable time of Court is further objectionable. Such frivolous appeals add to the burden of the Court and thoughtless prosecution of these takes time of the Court which could be utilised for more meritorious (debatable) cases.

(iv) The manner in which sometimes the unmeritorious appeals are persisted by the advocates for the Revenue reminds us of the famous observations of Mr.Justice Crampton in R v O’Connell (1844) 7 ILR 261 @ 312 “Another doctrine broached by another eminent counsel I cannot pass by without a comment. That learned counsel described the advocate as the mere mouthpiece of his client, he told us that the speech of the counsel was to be taken as that of the client; and thence seemed to conclude that the client only was answerable for its language and sentiments. Such, I do conceive, is not the office of an advocate. His office is a higher one. To consider him in that light is to degrade him. I would say of him as I would say of a member of the House of Commons – he is a representative, but not a delegate. He gives to his client the benefit of his learning, his talents and his judgment; but all through he never forgets what he owes to himself and to others. He will not knowingly misstate the law – he will not wilfully misstate the facts, though it be to gain the cause for his client. He will ever bear in mind that if he be the advocate of an individual, and retained and remunerated (often inadequately) for his valuable services, yet he has a prior and perpetual retainer on behalf of truth and justice; and there is no Crown or other licence which in any case, or for any party or purpose, can discharge him from that primary and paramount retainer.”
(Emphasis supplied)

(v) Undoubtedly, an Advocate has to fearlessly put forth his client’s point of view, however the same has to be tempered /guided by truth and justice of the dispute. In matters of tax, justice requires that there must be certainty of law which presupposes equal application of law. Thus where the issue in controversy stands settled by decisions of this Court or the Tribunal in any other case and the Revenue has accepted that decision, then in that event the Revenue ought not to agitate the issue further unless there is some cogent justification such as change in law or some later decision of an higher forum etc. then in such cases appropriately the appeal memo itself must specify the reasons for preferring an appeal failing which at least before admission the officer concerned should file an affidavit pointing out the reasons for filing the appeal. It is only when the Court is satisfied with the reasons given, that the merits of the issue need be examined of purposes for admission. (Please see ITA No. 37/2013 CIT vs. M/s. Procter and Gamble Home Products Ltd dated 19/1/2015; ITA No.269/2011 CIT vs. SBI dated 4/2/2015; ITA No.330/2013 Director of I.T. vs. CitiBank NV dated 11/3/2015).

(vi) Filing of appeal under Section 260A of the Act is a serious issue. The parties who seek to file such appeals (which are normally after two tires of appeal before the Authorities under the Act) must do so after due application of mind and not raise frivolous / concluded issues. This is certainly expected of the State.

The Registry has informed us that out of 4784 appeals from the order of the Tribunal filed in this Court during the period 01/01/2014 to 01/06/2014 the appeals filed by the Revenue are 3968 and only 816 by the class of Assessee as a whole.

(vii) We direct the Registry and also the Counsel appearing for the Revenue to forward a copy of this order to CBDT. What could possibly be done is to provide an inhouse committee of senior officers of the Revenue to review decisions taken in respect of appeals already filed and pending. If it is found that questions raised are covered by any decision of this Court or Apex Court or it relies upon an earlier decision of the Tribunal which has been accepted by the Revenue as no appeal there from has been filed then they could be separately classified. On completion of the above exercise such appeals could be either withdrawn and/or dismissed as not pressed.