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| DATE: | June 9, 2011 (Date of publication) |
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| Click here to download the judgement (shramjivi_recovery_harrassment_costs.pdf) |
AO directed to pay costs for “recovery harassment”
The assessee, a credit co-operative society, contravened s. 269SS & 269T because of which penalty u/s 271E was levied. The CIT(A) confirmed the levy of penalty. Before service of the CIT(A)’s order, the assessee’s bank account was attached u/s 226(3). The assessee filed a stay application and claimed that as the assessee had to bear costs owing to the illegal action of the AO, costs had to be awarded to it. HELD upholding the assessee’s plea:
The AO’s order of attaching the bank account of the assessee even before the service of the CIT(A)’s order was wrong in view of (a) the CBDT’s letter dated 25.3.2004 advising that penalties u/s 271-D & 271-E for violation of s. 269-SS & 269-T should not be indiscriminately imposed without considering s. 273-B, (b) the CCIT’s direction that demand arising out of penalties imposed u/s 271-D & 271-E should be stayed in cases of co-operative credit societies, (c) UOI v/s Raja Mohammed Amir Mohammed AIR 2005 SC 4383 where concern was expressed over dangerous attitude developing amongst Executive resulting in institutional damage & (d) KEC Interntional Ltd 251 ITR 158 (Bom) where it was held that generally coercive measures may not be adopted during the period provided by the Statute to go in appeal. Accordingly, the assessee was unnecessarily subjected to harassment by the actions of the lower authorities. It is thus a fit case for imposing costs u/s 254(2B) on the Revenue to compensate the harassment caused by the officers of the Revenue at fault.
IN LINE WITH THE RATIONALE BEHIND IN THE HC CASE (BHRC), ONE IS PROVOKED TO LOUDLY WONDER,- WHETHER, IN ALL SUCH CASES OF GROSS NEGILIGENCE, SHOULD NOT THE ‘COSTS’ BE IMPOSED ON THE ERRING OFFICERS, AND COLLECTED FROM THEIR PERSONAL ACCOUNTS,- NOT ON THE ‘REVENUE’- FOR THEN IT WOULD GET PAID OUT OF THE ‘PUBLIC MONIES’ FOR NO FAULT OF THE ‘PUBLIC’ AT ALL!
I think there should not be any provision for recovery till the case is decided in appeal. Only in exceptional cases where amount payable is Rs. 1 crore or more there should be provisional attachment or the assessees can be asked to provide security for atleast 50% of amount involved. This will eliminate harrassment due to recovery for a large number of tax payers.