| COURT: | Delhi High Court |
| CORAM: | S. Muralidhar J, Vibhu Bakhru J |
| SECTION(S): | 147, 148 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Reopening, strictures |
| COUNSEL: | Ex-parte |
| DATE: | October 12, 2015 (Date of pronouncement) |
| DATE: | November 5, 2015 (Date of publication) |
| AY: | 2002-03 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 147/ 148: Dept warned not to harass taxpayers by reopening assessments in a mechanical and casual manner. Pr CIT directed to issue instructions to AOs to strictly adhere to the law explained in various decisions and make it mandatory for them to ensure that an order for reopening of an assessment clearly records compliance with each of the legal requirements. AOs also directed to strictly comply with the law laid down in GKN Driveshafts 259 ITR 19 (SC) as regards disposal of objections to reopening assessment | |
(i) The Court is of the view that notwithstanding several decisions of the Supreme Court as well as this Court clearly enunciating the legal position under Section 147/148 of the Act, the reopening of assessment in cases like the one on hand give the impression that reopening of assessment is being done mechanically and casually resulting in unnecessary harassment of the Assessee.
(ii) The Court would have been inclined to impose heavy costs on the Revenue for filing such frivolous appeals but declines to do so since the appeals are being dismissed ex parte. However, the Court directs the Revenue through the Principal Chief Commissioner of Income Tax (Pr CIT) to issue instructions to the AOs to strictly adhere to the law explained in various decisions of the Supreme Court and the High Court in regard to Sections 147/148 of the Act and make it mandatory for them to ensure that an order for reopening of an assessment clearly records the compliance with each of the legal requirements. Secondly, the AOs must be directed to strictly comply with the law explained by the Supreme Court in GKN Driveshafts (India) Ltd v. Income Tax Officer (2003) 259 ITR 19 (SC) as regards the disposal of the objections raised by the Assessee to the reopening of the assessment.
The Commissioners and Chief Commissioners are approving proposals u/s 147 even though the same were beyond time limit and also in cases where the other CIT in the same case had examined u/s 263 and dropped action. The reopening mechanism is used only to frame charge sheets. This happened in my own case in respect of two assessments. This is the way of some top bureaucrats.
Sir, it is really sad and calls for introspection in the department if time barred issues are reopened or issues decided u/s 263 are reopened u/s148. There is an old Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955. It states: “Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.”
The above circular was quoted with approval by the
Kerala High Court in Parekh Bros. vs CIT (150 ITR 105), the Bombay High Court in Dattatraya Gopal Shette vs CIT (150 ITR 460)
and by the Delhi Tribunal in
Smt Gopi Devi. vs ITO (1989; Taxation 92 (4) – 101).
It is to be expected that the income tax department will follow the CBDT circular reproduced above in letter and spirit to win the confidence of tax payers and have the confidence not to initiate illegal actions which attract adverse comments of judiciary apart from causing needless financial burden on tax payer .
The department has a system of audit to harass the promotee officers for reasons best known to them . They are to them foot mats on which they take off the dirt of their minds . The blue eyed guys are provided with postings where there are no issues that can mar their carriers.They are never given posting where their competence is tested . I think there is an urgent need to audit the performance of the blue eyes boys of the department by an independent body. These avatars make huge assessments which are dragged in the court of law for years and they get the promotions out of turn. The Commissioners/Pr Commissioners take their assessments to the higher appeal forums for safeguarding the ignorance of these officers .What were the grounds on which a Senior Commissioner on whom High court passed stricture s as being inept and whose 200 order s passed under section 263 or equivalent there of were set aside with strictures by the ITAT promoted as Chief Commissioner and posted to Bombay . The High court order is an eye opener and a starting block to initiate action .The Member C B D T did say early in the year some thing to that effect .
Dear Shri Kurien, I do not think it is a question of promotee or direct recruit ( DR) officers. There is internal audit, special audit in the department and on top of it revenue audit by CAG of a large number of orders passed by officers- whether promotee or DR. There is no distinction in this audit and dare I say that as many DRs worked as AC/DC/ jt/addl CIT completing bigger assessments they were hauled up for mistakes pointed out by audit. The case of Sr. CIT getting promoted as CCIT may be as no charge sheet may have been issued to him before the meeting of DPC. Of course , as pointed out by you it seems to be a serious matter and CBDT can be well advised to take urgent action in the matter to avoid future adverse comments/ strictures by courts which will impact the image of the department.
If that be the case how come they got their promotions in due course A major objection is a indication of the way the officer functions .Can you just send me your cell number .
”The case of Sr. CIT getting promoted as CCIT may be as no charge sheet may have been issued to him before the meeting of DPC. Of course , as pointed out by you it seems to be a serious matter and CBDT can be well advised to take urgent action in the matter to avoid future adverse comments/ strictures by courts which will impact the image of the department’.Throw the blame on a junior officers chargesheet him and escape the responsibility . That is what has happened in this case ,records will speak but the CBDT does not want to open their eyes.200 itat orders are no small indication of the inefficiency of the officer capped by the strictures by the High court.Should there be a charge sheet ?!!!!Chargesheets are issued with out even a memo being issued or facts verified . in western countries the matter is entrusted to independent agencies which do a thorough job before recommending a case for promotion .in this case the the Chief Commissioners post. With a flurry of CBI cases against CCIT and Pr.CCIT (and all of them being successful ) is an indication of the extent of the rot that has set in .Gone are the days when Commissioners would be looked at awe for their knowledge of law and administrative skills.
In Samcor’s case the Honourable High Court has advised the Board to issue instructions. Unfortunately their lordships has no occassion to look into the recent circular of CBEC to their officers with regard to effect of judicial pronouncements, the circular with regard to decisions on Sec.40(a)(ia) both of which are contrary to principles of judicial discipline rendered by High Courts. These circulars categorically demonstrate that the CBDT acts as if it is authority on law instead of understanding that it is only their to implement the law and does not make law. Further the Honourable High Court had no occassion to know as to why the Tax department does not follow the judicial pronouncement. The reason is that the CBDT has instructed its officials that even where the department is not accepting the objections raised by the Revenue Audit (C & AG), the officer should keep the issue alive by initiating remedial action. Therefore irrespective of the judicial pronouncements the Officers initiate actions. The second thing is even when the matter is lost by the department at Tribunal level, the matter is carried to High Court as no one would like to get a comment that he has done some favour by not filing appeal (Vigilance angle). Therefore the advise by the Honourable High Court would only by like rain on bull.
“”The reason is that the CBDT has instructed its officials that even where the department is not accepting the objections raised by the Revenue Audit (C & AG), the officer should keep the issue alive by initiating remedial action. Therefore irrespective of the judicial pronouncements the Officers initiate actions. The second thing is even when the matter is lost by the department at Tribunal level, the matter is carried to High Court as no one would like to get a comment that he has done some favour by not filing appeal (Vigilance angle). Therefore the advise by the Honourable High Court would only by like rain on bull””.Vasanth has hit the nail right on the head .The reason why the higher authorities file appeals is to ensure that they are not hit