| COURT: | ITAT Delhi |
| CORAM: | Diva Singh (JM), N. K. Saini (AM) |
| SECTION(S): | 253 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | strictures |
| COUNSEL: | K. P. Ganguli |
| DATE: | August 7, 2015 (Date of pronouncement) |
| DATE: | August 13, 2015 (Date of publication) |
| AY: | 2004-05, 2006-07, 2009-10 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| Strictures passed against the Dept for ‘mischievous adamancy to attempt to mislead the Tribunal’, ‘obduracy and adamancy in filing meritless appeal’, ‘travesty of justice’, ‘Mocking at the system by filing the appeals’, ‘grave assault on the trust and reputation of fair play enjoyed by the tax administration’ etc | |
(i) We are pained to address the serious damage done by this deliberate, mischievous and selective reference to facts by such responsible persons which grievously damages the public faith and belief in the honest fair play of the tax administration. The conscious and selective reference to facts demonstrates that at the very stage of filing of the appeal its fate and conclusion was known for which specific purpose the facts were attempted to be obfuscated. The filing of present appeal with complete knowledge of its fate by the Revenue only reflects the mischievous adamancy to attempt to mislead the Tribunal and waste the time of the Court and the officers concerned. The present appeal as a part of a search cannot be a case of non-application of mind where the grounds presumably proposed by the AO have been approved carelessly. To our minds the present appeal is a prime example of meritless litigation for reasons best known to the few departmental officers having powers of directing authorization for filing appeals. This over confidence of the concerned Departmental officers in filing an appeal completely devoid of merit prima facie shows that these officers endowed with the onerous task of handling Department’s actions in litigation matters have willfully and deliberately failed to exercise their powers mindfully as required of them as per law and thereby abused government machinery to initiate a litigation which entails financial costs and tarnishes the image of the Department and also strains the government resources.
(ii) This obduracy and adamancy of the concerned officers in filing a meritless appeal only because officially they are entitled/empowered to do so, strikes a blow to the blind faith reposed in them by the tax administration in always acting fairly as evident from the orders passed in the Remand proceedings and the order of the CIT(A) in the present appeals. However only because of the conduct of few Departmental officers who appear to be unconcerned or rather mock the sincere efforts made by CBDT with impunity unmindful of the consequences to the system by their sense of entitlement the reputation of the tax administration suffers, this needs to be addressed at the earliest. The entitlement of always believed to be acting in good faith cannot be abused by irresponsibly setting in motion the entire justice delivery system where admittedly there was no grievance to the AO. The Assessing Officer including all the officers in the tax administration are functionaries of “the State” exist for “the State” and perform the functions of “the State”. For this specific purpose they are entrusted with vast powers to discharge “the State functions”. In the discharge of their onerous duties and responsibilities these officers are armed with wide and sweeping powers.
(iii) The officers who have authorized the filing of the appeals and have filed the appeals have made a travesty of justice. Mocking at the system by filing the appeals and highlighting the apathy of the Department by issuing specific instructions from time to time that necessary due diligence and caution is not being exercised while granting authorization for filing appeals and to pursue litigation only in deserving cases. Filing of an appeal by an Assessing Officer is a right which is vested by the statue in the “State” herein the tax department i.e. the Assessing Officer as and when he is aggrieved by the order of the First Appellate Authority can file an appeal before the ITAT. However, where as in the present case, admittedly the Assessing Officer, consciously and carefully after due and proper enquiry carried out by issuance of notices u/s 133(6) to the concerned persons/parties and considering the material comes to the conclusion that he is satisfied by the claim of the assessee on verification, then in such a situation the filing of the present appeals cannot be justified and can only be termed as a farce. We are aware that the tax administration has put in place robust checks and balances to ensure that the filing of appeals is not done carelessly and as per the procedures set in place the grounds to be raised by the Assessing Officer have to be duly approved by a Senior Commissioner of Income Tax. The evidence that the said exercise in the facts of the present case has been done is on record. The said exercise in the facts of the present appeals has been reduced to a mere ritual cannot be ignored. Thus in the face of the above precedent where costs of Rs.10,000/- have been awarded to the assessee by the Co-ordinate Bench having giving our serious consideration to the same in the facts of the present case where the Revenue has indulged in frivolous meritless litigation, we desist from awarding costs considering the statement of the Ld. CIT DR that due care shall be taken in future. It is our earnest hope and endeavour that having invited the attention of the Chairman, CBDT to this grave assault on the trust and reputation of fair play enjoyed by the tax administration the malaise is immediately addressed. We have taken cognizance of the fact that the present cases are group of appeals in a search case, however where the issue is given up by the AO in the remand proceedings in such an eventuality the mischievous manner of filing the appeals needs careful attention as the Revenue in the appeals before the ITAT cannot be allowed to waste the time of all concerned where the issue for all intents and purposes has been given up by him.
When ITAT after such stricture had not impose any cost, whether we aspect that CBDT will take any specific action against the erred officers.
In general CBDT repeatedly instructing the officers for not to lodge appeal for the sack of filing and examine the merit of the case before filing.
Unless such incidence not got recorded on the service records of the officer concerned, there will no change in the attitude.
Each and every time when the judicial forum raise concern about carelessness of the officers in filing appeals without any merit, the officers or the authorized representative assure the judge that such incidence will not be repeated.
In my opinion even imposing the fees will not change the position as the amount of Rs. 10000/- has no value and such incidence must be recorded in the service record of the concerned officer.
CA Goutam had rightly said.
Government does not deserve leniency but tough punishment as the officials turns deaf ear to such observation of courts and treats it with contempt as they know ultimately the courts takes a liberal view.
stricture of honourable courts are good in reading by tax payers but no guarantee that such action will not be repeated by dept
as per dept officers if no appeals filed cbdt take them for ride if big tax amt–hence cbdt be directed for simple clear cut rules –
–officers be demoted/token rs1000 deduction from salary for 12 months
It is wrong to say that CBDT desires to file appeal in every case. Those are CITs/CCITs who do not read the ORDERS themselves, dependent upon juniors ; and who do not know the Law completely are resorting to unnecessary appeals. They prefer to err on safer side.
Mere passing strictures is not enough. The Ld.Members should have awarded cost to the RPG Credit.. recoverable from the salary of the CIT who authorised the appeal. It should also have recommended Disciplinary Proceedings against the CIT concerned. At least now the CBDT should invoke Rule 56(j) of the Fundamental Rule against the CIT concerned. Central Vigilance Commissioner should be apprised of the ITAT Order and I am sure the Present CVC (who was the Chairman of the CBDT) will certainly take action.
CBDT is issueing from time to time Instructions regarding filing of appeals to the ITAT, HC and the SC. These Instructions remain on paper only and so far no erring officer is punished nor his Promotion stopped. CBDT thinks that once Instructions are issued, its duty is over. This is the reason why Addl.CITs/CITs/CCITs are not bothered about the consequences of not following Board’s Instructions. It is also possible that erring CITs were Batchmates or colleagues of Board Members once upon a time and therefore Board Members do not take action. It is more likely that the CITs/CCITs/Board Members themselves do not read Orders of the CIT(A)/ITAT/HC/SC ; and they leave these Orders to their Sub-ordinates to scrutinise. I have seen very few CITs reading orders of the CIT(A)/ITAT.
Before 10 years I had an occasion to represent 66 appeals before the CIT(A). All these appellants were Retired Employees of the PSU Banks who had taken Voluntary Retirement. Issue involved was whether VRS Compensation is “Salaries” eligible for Relief u/s. 89(1) of the IT Act. The AO disalllowed Relief, but the Ld.CIT(A) allowed the claim. In NONE of these cases Tax Effect was more than Rs.25000/-. However Department preferred appeals in all these cases before the ITAT; while as per Instructions no appeal was to be filed where Tax Effect was less than Rs. two lakhs. The appellants had no money to pay Advocate’s fees; and on my request my friend (M.Mani) represented the cases before the ITAT free of fees. The ITAT dismissed all these appeals of the Department. Department didnot stop here ; it filed Appeals before the Nagpur Bench of the Bombay High Court. Again the assessees expressed inability to pay Advocates’ Fees before the High Court. Again I approached Shri M.Mani to attend HC hearing FREE OF COST; and he obliged. The Court also appointed Amicus Curie. All these Departmental Appeals were Dismissed by the Hon’ble High Court; and these 66 cases are reported in (2007) 210 CTR (Bom) 471. Did the CBDT ever cared to ascertain Tax Effect in each of these cases ? The CCIT who preferred the Appeals has Retired peacefully. I have written this lengthy letter to show how the Department is behaving in unfair and irresponsible manners with poor assessees. I have served the department for about 40 years and I can quote so many such instances.
Waghela is right when he says the CITs do not read the orders but are dependent upon their juniors. In the IT department, higher level officers have practically no accountability and their job is simply to drive their juniors. Most of the CITs have no practical experience in the field and they get their promotion by sheer seniority. Appeals are filed based mainly on the basis of tax effect involved. No amount of rebukes by the appellate courts also bother them because in practice no action is taken by the CBDT on the actions suggested by the Courts. No action is taken even on the audit objections raised by the C & AG involving crores and crores of rupees if the official involved is of a higher level.
Shri Bhaskaran,
According to the existing Instructions they have to take actions on the Audit Objections within limitation period, even if the Objection is not acceptable to the department. Action taken on the audit objection is required to be intimated to the C&AG. Since C&AG is watching progress of audit objections, AOs are taking actions.
Many of the appeals are arising out assessments done on audit objection. Internal instruction is that remedial action should be taken on such objection even though the department does not accept the same. sadly the audit party is not well conversant of the position of law and judicial precedents. This results in infructuous action and many of the senior officers have expressed their anguish on such objections
Will the CAG order for a system audit of the objections raised by the party and ultimate outcome of the same ? This will show the effectiveness of audit and also help in formulating a remedial measure to avoid frivolous objection.
Many of the appeals are arising out assessments done on audit objection. Internal instruction is that remedial action should be taken on such objection even though the department does not accept the same. sadly the audit party is not well conversant of the position of law and judicial precedents. This results in infructuous action and many of the senior officers have expressed their anguish on such objections. No duplicate comment
Will the CAG order for a system audit of the objections raised by the party and ultimate outcome of the same ? This will show the effectiveness of audit and also help in formulating a remedial measure to avoid frivolous objection.