Union of India Vs N.P. Arora (Rajasthan High Court)
The Union of India challenged an order of the Central Administrative Tribunal (CAT), Jodhpur, which had quashed a charge-sheet dated 27.10.2010 and a penalty order dated 10.12.2010 issued against an Income Tax Officer who, as Assessing Officer, had allowed an assessee’s claim for exemption under Section 10B of the Income Tax Act for Assessment Year 2007-08.
The disciplinary proceedings arose from an assessment order dated 24.12.2009 passed in favour of an assessee engaged in the manufacture and export of handicraft items. In earlier assessment years, the department had consistently rejected the assessee’s claim under Section 10B. However, the Income Tax Appellate Tribunal (ITAT), through a common order dated 29.05.2009, held that the assessee’s activities amounted to manufacture or production and that the assessee was entitled to the exemption. Appeals filed by the department against the ITAT’s decision were pending before the High Court without any interim orders.
While allowing the exemption for AY 2007-08, the Assessing Officer relied on the ITAT’s order and the Supreme Court’s judgment in Arihant Tiles and Marbles Pvt. Ltd. Thereafter, disciplinary proceedings were initiated against him on the allegation that he had deviated from the department’s consistent stand, caused revenue loss, and weakened the department’s case in pending appeals. A penalty of reduction by one stage in the pay scale for three years was imposed.
