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| DATE: | January 8, 2013 (Date of publication) |
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| Click here to download the judgement (GE_India_stay_penalty_await_quantum.pdf) |
S. 271(1)(c) penalty proceedings can be stayed to await decision on quantum appeal so to avoid multiplicity of proceedings & harassment to assessee
In dealing with the assessee’s appeal, the CIT(A) enhanced the assessment by making a disallowance of Rs. 7.53 crores towards bad debts and an upward transfer pricing adjustment of Rs. 5.50 crores. The CIT(A) also initiated s. 271(1)(c) proceedings for concealment of income. The assessee filed an appeal to challenge the CIT(A)’s order and also filed a stay application seeking to restrain him from proceeding with the s. 271(1)(c) penalty proceedings. HELD by the Tribunal in dealing with the stay application:
U/s 275(1)(a), the AO cannot pass an order imposing penalty u/s 271(1)(c) if the relevant assessment is subject matter of appeal before the CIT(A). The same analogy will apply where the CIT(A) initiates penalty and the first appeal is pending before the Tribunal. Accordingly, the assessee’s request that the penalty proceedings should be stayed till the disposal of appeal by the Tribunal is not unreasonable. If the CIT(A) is allowed to proceed with the penalty proceedings, prejudice will be caused to the assessee as it will have to face multiplicity of proceedings. In case the assessee succeeds in the quantum appeal, the penalty order passed by the CIT(A) will have no legs to stand while if the assessee fails in the quantum appeal, the CIT(A) will get ample time of six months to dispose of the penalty proceedings. Therefore, to prevent multiplicity of proceedings and harassment to the assessee, the CIT(A) is directed to keep the penalty proceedings in abeyance till the disposal of quantum appeal by the Tribunal (CIT vs. Wander (Bom) referred)
Yes, it is a wise decision, after all ITAT has judicial member on bench, so judicial approach is surfacing. Problem one man Appeal officer CIT(A) is just an administrator/administrative officer, in the past Administrator has been one who abides by Natural justice principle but today Administrator behaves like a military officer while a civilian officer is not a military officer.
Military officer just goes by his tunnel vision and not like broad vision of a civilian officer of the past.
Tunnel means just only reads the punishing aspects instead of seeing the angle of the accused/respondent, courts have an approach to give ample opportunity to accused or respondents to correctly defend themselves.
Revenue is not a military establishment but out and out civilian work and it is like a district collector sitting on JAMABANDHI to hear all aspects of the poor farmer, here the assessee as both give kist taxes from their earnings and certainly not from government hard work earnings but the word tax means an excise of one’s earnings, and revenue need to know this aspect very much, in a democracy, after all laws and rules passed by legislature is not meant to harass the citizen or assessee but to give him ample time to defend prudentially and so courts go out of the way appointing amicus curie to protect the respondent/defendent, in order to ensure justice seems to have been done and justice is done is the principle.
it only means if government appoints one as CIT(A) it has to see the attitude of the officer, just do not go with so called LL.B degrees, after all lawyering and judging comes in depending upon attitudes of men ,so one seesnot all advocates end up as judges but a minuscule of Advocates and several times we do not suitable judges while recruiting in the service commissions, as service commissions mostly depend on interviews of the person whether he is suitable to the attitude of the position should be and several times very many toppers in examination need not necessarily to recruited for a specified post or positions as positions have different cups of tea to take.
So education degrees/diplomas alone cannot decide one fit to hold positions, so the art of interviewing surfaced. This was explained to me by Mr S.K Chettur as member of Madras service commission (MPSC) at madras in 1966 when i was interviewed for a deputy collector’s job, group ii services. Incidentally SK Chettur was an ICS, who once recruited Mr.Balakrishna Shetty to police service and he ended as Inspector General of Police, then top position in the state and he finally ended as chairman of HSL – Hindustan Ship Yard, vuisakhapatnam in 1970s. He told me he was rejected for a sub inspector post in Madras as in 1950s Madras was a composite state, and he told me in 1973 at vizag see i am not fit for SI’s job but fit to become IG of P and he said every position needs some relevant attitude and if relevant attitude is not there then that person is rejected and he said that way interviews are very helpful.
coming back here every position in revenue needs a different aptitude in the person, so subordinates roles are different while higher ups are different, higher ups need to be courteous to public as also good thinkers and good applications of thoughts, as mistakes are possible by sub ordinates and the higher up ensures whether the sub ordinate’s view is right need to be judged first, and if not correct as per higher up he pulls up the sub ordinate, after all higher up is not a glorified subordinate, so concept of direct recruitment idea surfaced as sub ordinates made a lot of mistakes and offended public in a very great measure, after all without public there is no government and a small part is revenue management, is the theory in public administration concept.
So judicial means really one need to be judicious and that is what way tribunal is reinforced by a judicial member concept. So supreme court also said recently you cannot fill up all judicial positions by civil servants and way it advised governments as non judicious decisions lead to a lot of litigation in every sphere, while judicious civil servants indeed very less in number so too even judges are also not too many available but sparingly given from honorably retired judges to man judicial member posts in several tribunals.
So Tribunal view is indeed right.
My view does not cast any aspersions on any butv my own experience as a professor of psychology to address 21 IGPs/DGPs/POLICE COMMISSIONERS DRAWN FROM ALL OVER INDIA, WHERE WE FOUND HOW THESE DEFICIENCIES PLAY ON THEM. THIS I ADDRESSED IN 2005 AT Mumbai university as then union home minister wanted to upgrade the police force.
truth is when your own top itself lacks certain attitudes how can you help?
Confidential report was filed with then home minister.
So a lot of desirable attitude based qualities are needed in different positions is the fact. This does not mean all public servants are bad but when you wrongly assign jobs how can you blame the poor public servant is the million $ question before us today!
Natural justice is essential to tone up the law and rules, so audi alteram partem is vital principle in natural justice that way all institutions of the world are essentially are essentially governed by that principle. see for instance the courts religiously follow ‘hearing’ process that is vital in every case without exception.
Administrator anywhere has to follow ‘audi alteram partem ‘ principle, a failure on the part of administrator if he works on bland law and rules, as administrator is not a robot but he is a human being and if any one to become administrator he need to be humane first, so the principle of Rajadharm came into being that is in English language we call it ‘Quality of Mercy’ for it seasons justice meaning seasons = tempering justice depending on facts and circumstances of any issue, so one need to see as administrator the facts and circumstances of the issue on hand. So Administrator has to apply his mind in a more healthy way or manner, so discretion need to be healthier not sickly and hence the Administrator’s role is not that of robot but applications of mind based not applications of mechanical way like machine, so we appointed human beings as Administrators every where while giving broad spectrum of guiding laws ad rules that is laws and rules are guiding factors to him or her while applying he has to think a lot on the law and rules before applying as laws and rules are always double edged weapons. Laws and Rules are like guns and the using f gun is not at the hands of constable but with his higher up and so command rule surfaced.
So any public servant before application of law or rules have to think a lot on implications, as he uses on public, may be the Assessee and the Assessee also pays several direct and indirect taxes to public exchequer and from that all government administrators right from lowest grade level to the highest grade level and so IPC u/s 21 called a government servant as a public servant, as he n fact is the servant of the public that is citizen or even subject in monarchy. So public sevant has enormous accountability and responsibility to citizen/subject of a country.
Administrators many a time fail in dispensing natural justice, so we had Appeals internal, courts/tribunals external lest administrator fails, just because accountability of State to citizen is most empirical function of any state, as conceived by Constitutions, though constitution insulates the pubic servant with laws and rules but yet Administrating public servant need to be very careful while he applies the laws and rules, as he is accountable with responsibility of citizens who only elect representatives as legislators with clear mandate that representative cannot misuse powers granted to him by citizens. So the representative legislator and his representative necessary be directly accountable to citizen, as a front office man unlike back office legislator and his other representatives.
So public servant’s accountability just bulges several times and several degrees so he has to see he never fails and fails he is assisted by internal Appellate mechanism / then tribunals and then courts who meticulously look into the facts and circumstances of each and every issue and dispense justice.
Thus Constitutional courts surfaced to ensure no failure in duties of public officer so he became public servant who is also to give very responsible function to citizens as his public duties, that means he also gets that benefit under law as a citizen too so there is clear equity in place, so he has dual role one as a public servant and as a citizen is it not. So duty to citizen is sacrosanct.
So no public officer can afford to be lackadaisical in his public duties. So he has to ensure proper application of his mind on the laws and rules applicable and when a public officer commits least mistake in application of laws ad rules normally get promoted and if not his promotion is detained and therefore every public officer need to carefully apply laws and rules which are double edged, is it not?