CIT vs. Larsen and Toubro Ltd (Bombay High Court)

Frivolous appeals by dept results in harassment to assessee & wastage of judicial time. Dept to pay costs of Rs. 3 Lakhs. Costs may be recovered from, disciplinary action taken against, concerned official

The Tribunal deleted the levy of penalty u/s 271(1)(c) by following the judgement of the Supreme Court in Reliance Petroproducts 322 ITR 158 (SC). On appeal by the department to the High Court HELD dismissing the appeal:

(i) We are surprised if not shocked that such appeals are being brought before us and precious judicial time is being wasted that too by the Revenue. The least and minimum that is expected from the Revenue officers is to accept and abide by the Tribunal’s findings in such matters and when they are based on settled principles of law. If they are not deviating from such principles and are not perverse but consistent with the material on record, then, we do not find justification for filing of such appeals. We have found that merely expressing displeasure orally is not serving any purpose;

(ii) Time and again we have to deal with such Appeals. Merely because they are filed that they get listed on the Daily Admission Board. The Advocates filing them and routinely, so also those instructing them do not have authority to withdraw them. Consequently, they are pressed and argued resulting in a hearing, may be brief and an order of this Court dismissing them. Some times there are at least 35 such cases on our daily board. We do not understand why higher officials do not have the courage to take bold decisions particularly of not pursuing such matters upto this court or higher. Because the assessee is a leading Public Limited Company should not act as a deterrent for them to take a informed, rational decision and subserving larger Public Interest. A realization of this nature is a need of the hour as higher courts do not have to deal with Tax and Revenue matters only but all those involving life and liberty of citizens, their property rights, Rights of Children, Women and Senior Citizens. These rights are also precious and the legitimate expectations of such persons or groups of easy and expeditious justice also have to be fulfilled by the higher judiciary. The biggest litigant, namely, the State ought to be aware of the Pendency of Cases in High Courts of Bombay, Madras, Calcutta and Allahabad for example. If their policies particularly on litigations are not aimed at reducing frivolous and speculative litigations, then, the least that can be said is that the State has failed to act for public good and in Public Interest. The State is expected to act as a Model Litigant. It must set an example for the Public to follow and we hope that this order acts as a reminder for all concerned to at least now take remedial steps and measures. It is therefore that despite the persuasive skills of Mr. Sureshkumar, who fervently pleaded not to pass any order imposing costs, that we are constrained to impose costs;

(iii) The Revenue officers must realize that just like other powers an executive power conferred in them is in the nature of a Trust. They hold office as trustees of the public at large. They deal with public revenue and public money and that cannot be wasted in such frivolous litigation. We, therefore, dismiss these appeals with costs quantified at Rs.1,00,000/each (for three appeals);

(iv) It would be open for the superior/competent authority to recover the costs personally from the officer responsible and equally take disciplinary action against him if the power to decide about filing such appeals is abused or the decision making authority is utilized to harass innocent Assessees. Every case must be dealt with on its merit and no routine exercise ought to be undertaken merely because the Revenue impact is higher or the status or financial position of the Assessee is influential and strong. That cannot be the only yardstick or criteria.