Fiat India Automobiles Ltd vs. ACIT (Bombay High Court)

“Disgraceful & Deplorable Conduct” of ACIT & CIT in seeking to circumvent the law strongly condemned

Pursuant to the assessee’s request, the CIT passed an order dated 22.11.2011 u/s 127(2) transferring the assessee’s case from Mumbai to Pune. Despite the said transfer, the ACIT, Mumbai, issued a s. 148 notice seeking to reopen the assessee’s case. The assessee filed a Writ Petition to challenge the reopening on the ground that the ACIT, Mumbai, had no jurisdiction. Before the Court, the department revealed that the ACIT had written a letter to the CIT requesting that the transfer of the case be cancelled “to circumvent any jurisdictional issue” and that the CIT had passed a “corrigendum order” stating that the transfer order was “temporarily withdrawn for the sake of administrative convenience“. The said “corrigendum order” was passed without hearing the assessee and even a copy thereof was not served on the assessee. HELD by the Court allowing the Petition:

The conduct of the ACIT & CIT is highly deplorable. Once the jurisdiction to assess the assessee was transferred from Mumbai to Pune, it was totally improper on the part of ACIT Mumbai to request the CIT to pass a corrigendum order with a view to circumvent the jurisdictional issue. Making this request was in gross abuse of the process of law. If there was any time barring issue, the ACIT Mumbai ought to have asked his counterpart at Pune to whom the jurisdiction was transferred to take appropriate steps in the matter instead of taking steps to circumvent the jurisdictional issue. It does not befit the ACIT Mumbai to indulge in circumventing the provisions of law and his conduct has to be strongly condemned. Instead of bringing to book persons who circumvent the provisions of law, the ACIT has himself indulged in circumventing the provisions of law which is totally disgraceful. The CIT ought not to have succumbed to the unjust demands of the ACIT and ought to have admonished the ACIT for making such an unjust request. The CIT ought to have known that there is no provision under the Act which empowers the CIT to temporarily withdraw the order passed by him u/s 127(2) for the sake of administrative convenience or otherwise. If the CIT was honestly of the opinion that the order passed u/s 127(2) was required to be recalled for any valid reason, he ought to have issued notice to that effect to the assessee and passed an order after hearing it. Further, though the CCIT agrees that the actions of the CIT and ACIT are patently unjustified and not as per law, he has expressed his helplessness in the matter. It is expected that the CCIT shall take immediate remedial steps to ensure that no such incidents occur in the future. The department shall pay costs of Rs. 10,000 which may be recovered from the CIT & ACIT.