|CORAM:||Pramod Kumar (AM), Rajpal Yadav (JM)|
|DATE:||March 11, 2014 (Date of pronouncement)|
|DATE:||March 19, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|ITAT hauls up AO & DRP for “blatantly frivolous & unsustainable” additions. Suggests that accountability mechanism be set up to put a check on AO. Rationale for existence of ineffective DRP questioned|
Pursuant to a scheme of arrangement the assessee transferred its telecom infrastructure assets to Bharti Infratel Ltd for Nil consideration with the result that the WDV of the said assets amounting to Rs. 5,739 crore was written off by debiting the P&L A/c. A corresponding amount was credited to the P&L A/c from the ‘business restructuring reserve’ with the result that there was no net debit to the P&L A/c. The AO & DRP noted that there was no effect on the P&L A/c but still held that an addition of Rs 5,739 crore had to be made to the assessee’s income. On appeal by the assessee to the Tribunal, HELD by the Tribunal allowing the appeal:
… if an action of the AO is so blatantly unreasonable that such seasoned senior officers well versed with functioning of judicial forums, as the learned DRs are, cannot even go through the convincing motions of defending the same before us, such unreasonable conduct of the AO deserves to be scrutinized seriously. At a time when evolving societal pressures demand greater degree of accountability in the governance also, it does no good to the judicial institutions to watch such situations as helpless spectators. If it is indeed a case of frivolous addition, someone should be accountable for the resultant undue hardship to the taxpayer -rather than being allowed to walk away with a subtle, though easily discernable, admission to the effect that yes it was a frivolous addition, and, if it is not a frivolous addition, there has to be reasonable defence, before us, for such an addition.
… Whichever way one looks at these entries, the inescapable conclusion is that the addition made by the AO is wholly erroneous and devoid of any legally sustainable merits.
…. The fact that even such purely factual issues are not adequately dealt with by the DRPs raises a big question mark on the efficacy of the very institution of Dispute Resolution Panel. One can perhaps understand, even if not condone, such frivolous additions being made by the AOs, who are relatively younger officers with limited exposure and experience, but the Dispute Resolution Panels, manned by very distinguished and senior Commissioners of eminence, will lose all their relevance, if, irrespective of their heavy work load and demanding schedules, these forums do not rise to the occasion and do not deal with the objections raised before them in a comprehensive and effective manner.
… While we delete the impugned addition of Rs 5739,60,05,089, we also place on record our dissatisfaction with the way and manner in which this issue has been handled at the assessment stage. Let us not forget that the majesty of law is as much damaged by not rendering justice to the conduct which cannot be faulted as much it is damaged by a wrongdoer going unpunished; not giving relief in deserving cases is as much of a disservice to the cause of justice and the cause of nation as much a disservice it is , to these causes, by granting undue reliefs. The time has come that a strong institutional check is put in place for dealing with such eventualities and de-incentivizing this kind of a conduct.
Hats Off to Hon. Pramod Kumar. Every word is true & must be implemented by Government and if not then by way of Public Interest Litigation.
i FULLY APPRECIATE THE GREAT JUDGEMENT;
IT IS A SETTLED LAW BY SC THAT REVENUE NEED TO PROVE ‘MENs Rea’, EVEN IN SO CALLED ‘CONCEALMENT’S’ RELATED CASES WHERE SEC.271(C)(1) PENALTY APPLIED IN CIT V SURAJ BHAN (2008)203 CTR (P &H)230(20007)294 ITR 489;
ANY BLIND APPLICATION OF PENALTY BY AOs IS FATAL TO HIS NOTICES U/S 143(2) R/W 142(2) AS WELL;
DRP SHOULD NEED TO FUNCTION VERY CAREFULLY, AS THE DRP IS SUPPOSED TO BE SENIOR OFFICERS WHEN THEY HANDLE APPEALS FILED IN FORM 35 BY TAXPAYER; THEIR CASUAL APPROACH WOULD TARNISH THEIR IMAGE, SO THAT THERE WILL BE NO APPEALS TO THEM BUT TAX PAYER WOULD PREFER ART 226 APPROACH BEFORE H C, AS THERE IS NO NEED ONE NEEDS TO GO THROUGH FORM 35 THEN FORM 36, IF DRP FAILS IN ITS ACCOUNTABILITY MECHANISM VERY CAREFULLY THAT MEANS EVERY NOTICE OF AO WOULD SOON GET ASSAILED DUE TO THEIR CASUAL APPROACH THAT ‘DRP’ WOULD SAVE THEM, IS IT NOT ENOUGH FOR DRP.
DRP IS SUPPOSED TO CONTAIN SENIOR OFFICERS OF TAX DEPT , THEY HAVE TO AS A ‘LEGAL DUTY’ ABIDE BY WELL SETTLED PROCEDURES OF ACCOUNTABILITY…. IF NOT WHY TAX PAYERS MONEYS IN EXCHEQUER BE WASTED IN THESE DAYS OF ECONOMIC PROBLEMS WHICH EVERY TAX PAYER FACES IN DAY TO DAY LIFE, IS IT NOT WILL BE ANOTHER QUESTION MAY SURFACE, THAT MAY CAUSE MANY ‘PILS’ IN HC AS ALSO AT S C;
BESIDES, NOW IT IS A SETTLED LAW THAT AL ART 12 SET UP ARE LIABLE FOR DAMAGES FOR NEGLIGENCE, AS ART 372 IS NOT USED AFTER CROWN PROCEEDINGS ACT 1947 IN BRITAIN, WHY BRITAIN NEVER ALLOWED EAST INDIA COMPANY ANY EMINENT DOMAIN PRINCIPLE ONCE CHARTER WAS ISSUED;
THAT WAY KING KNOWS NO WRONG IDEA HAD BEEN DEAD AND BURIED; WHEN SO HOW ART 300A WOULD APPLY 300(2) TO REVIVE ART 372;
IN DEMOCRACY THERE IS NO IDEA OF KING KNOWS NO WRONG PRINCIPLE, THAT EVERY ONE IS JUST LIKE ANY OTHER PERSON SUSCEPTIBLE TO DAMAGES… THERE ARE A LOT OF ‘STARE DESIS’ DECISIONS ARE THERE;
NO LONGER ANY ONE CAN LIVE IN SLUMBER LIKE KUBERA OF RAMAYAN AGE!
ANY ONE WRONGLY AFFECTED ANY WHERE CAN MOVE TORT (NEGLIGENCE) BASED LAWS AS IS DONE ON POLICE ATROCITIES;
REVENUE IS NOT EXEMPTED, THAT DRP SHOULD CLEARLY KNOW.
I COMPLETELY SECOND ITAT (DELHI) DECISION AND COPY OF THE SAME NEED TO BE CIRCULATED TO ‘IRS’ PUBLIC SERVANTS AS APART FROM VICARIOUS LIABILITIES REVENUE NEED TO FACE SERIOUS TORT LAWS IF THE OFFICERS DO NOT STRICTLY FOLLOW INCOME TAX ACT HIGHLY SCRUPULOUSLY BESIDES CBDT GUIDELINES IN ALL SCRUTINY CASES;
ELSE FACE MUSIC MY DEAR REVENUE!
Soon i am publishing three volume book on only sec/271(1)(C) discussing various judgements of High Courts on the anvil of Stare desis decisions of Supreme court of Indi for the benefit of all Assesses as they are targets of Revenue, any one who are charged u/s 271(1) (C) can send facts of their case in relation to the Revenue Notices sections as also accusations by AOs any where in India, without revealing the Assesse names ,( as i will discuss issues on the stare desis decisions) to me on my email id ‘email@example.com , if desired;
May be by year end it may appear on print while internet version as well;
if interested may p[lease send, inorder to get help from me thru book and internet editions only; thanks and regards