Case Law Details
Union of India Vs N.P. Arora (Rajasthan High Court)
Summary: 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.
The Tribunal ultimately held that the officer had acted in a quasi-judicial capacity and that disciplinary proceedings were not justified. The Union of India challenged this finding before the Rajasthan High Court.
The High Court examined the concept of “misconduct” and referred to several Supreme Court decisions holding that mere error of judgment, negligence, or a wrong decision does not amount to misconduct unless accompanied by lack of integrity, mala fides, recklessness, corruption, undue favour, or conscious disregard of law.
The Court observed that the charge-sheet essentially alleged that the assessment order was incorrect because the assessee was not entitled to the exemption and that the officer had departed from the department’s earlier position. However, there was no allegation that the assessment order was passed due to lack of integrity, bad faith, personal gain, corruption, undue favour, or lack of devotion to duty.
The Court noted that the officer had justified his decision by referring to the ITAT’s orders, the Supreme Court judgment, and evidence indicating investment in plant and machinery and manufacturing activity. The Court found that the view adopted by the officer was a plausible one based on available material and legal precedents. Merely because another view was possible could not convert the decision into misconduct.
The High Court also emphasized that the officer was discharging quasi-judicial functions involving appreciation of facts and interpretation of law. It further noted that the assessment order had subsequently been upheld by the ITAT, demonstrating that it represented a plausible legal view.
Holding that no element of misconduct had been established and that there was no evidence of mala fide intent, undue favour, personal benefit, or conscious violation of law, the Court concluded that the disciplinary action was unjustified. It upheld the Tribunal’s order quashing the charge-sheet and penalty.
Accordingly, the writ petition filed by the Union of India was dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The Union of India has challenged the order dated 21.09.2017 passed by the Central Administrative Tribunal, Jodhpur allowing the OA No. 556/2011 filed by respondent no.1 herein, whereby the charge-sheet dated 27.10.2010 as well as the penalty order dated 10.12.2010 issued against him were quashed and set aside.
2. The dispute relates to the disciplinary proceedings initiated against the respondent no.1, who at the relevant point of time was the Assessing Officer and had passed the assessment order dated 24.12.2009 in respect of M/s Kwal Pro Exports for assessment year 2007-08, granting exemption under Section 10B of the Income Tax Act, 1961 (hereinafter referred as ‘IT Act’). The disciplinary proceedings culminated into the penalty order dated 10.12.2010, imposing minor penalty of reduction of one stage in the time scale of pay for a period of three years w.e.f. 01.01.2011. Aggrieved by the said penalty order dated 10.12.2010, the respondent no.1 approached the learned Central Administrative Tribunal, Jodhpur (hereinafter referred as ‘Tribunal’) by way of filing OA No. 556/2011.
FACTUAL MATRIX
3. Brief facts of the case are that the respondent no.1 was Income Tax Officer in the Office of Income Tax-I, Paota C-Road, Jodhpur and he being the Assessing Officer made assessment of assessee (M/s Kwal Pro Exports) under Section 143(3) of IT Act and has allowed the claim under Section 10B of the IT Act for the assessment year 2007-08. The assesse was a firm and claimed itself to be manufacturer and exporter of the handicraft items. On earlier occasion, the firm’s claim for deduction under Section 10B of IT Act was rejected for the AY 2001-02. Later/ the CIT-1 reopened the said assessment for 2001-02 under section 263 of the IT Act, which was upheld by the learned Income Tax Appellate Tribunal, Jodhpur (hereinafter referred as ‘ITAT’). The Income Tax department has challenged the said order by way of filing appeal before this court. For the subsequent AY also i.e 2002-03 to 2006- 07, the claim was consistently rejected by the tax department, however, the learned ITAT vide its common order dated 29.05.2009 decided that the assessee firm has undertaken business activity amounting to manufacture or production of articles and is eligible for exemption under Section 10B of the IT Act. The department filed appeal under Section 260A of the IT Act against the order dated 29.05.2009, before this Ho’ble Court, which are stated to be pending adjudication and there is no interim order passed in them.
3.1 Thereafter, for the assessment year 2007-08, the respondent no.1 has allowed the claim of assessee under Section 10B of the IT Act, citing the learned ITAT’s order dated 29.05.2009 and the judgment passed by Hon’ble Supreme Court in case of Income Tax Officer, Udaipur vs. Arihant Tiles and Marbles Pvt. Ltd., reported in 2010 (2) SCC 699.
3.2 While examining the aforesaid order passed by respondent no.1, the petitioner no.3 vide letter dated 09.02.2010 directed the ITO Ward-1(2) to move proposal under Section 263 of the IT Act. The ITO Ward-1(2) in his letter while examining the matter has also reached to a conclusion that remedial action under Section 263 of the IT Act is necessary and accordingly communicated the same to the CIT vide its letter dated 11.02.2010.
3.3 The petitioner no.3 vide letter dated 08.09.2010 while forwarding the copy of the letter dated 06.09.2010 to the respondent no.1 asked him to file his reply. The respondent no.1 submitted his reply/explanation vide letter dated 08.10.2010. Thereafter, the petitioner no.2 issued a chargesheet dated 27.10.2010 under Rule 16 of the CCS (Conduct) Rules, 1965 (hereinafter referred as ‘CCS Rules’) alleging violation of Rule 3(1) (i) & 3(1)(ii) of CCS Rules.
3.4 On 10.11.2010, respondent no.1 filed his reply to the aforesaid chargesheet stating that the there was substantial change in the facts as assessee firm had invested in plant and machinery and started manufacturing process as well as the fact that he was bound to follow the order of learned ITAT and Hon’ble Supreme Court.
3.5 After considering the entire material and the reply filed by the respondent no.1, the petitioner no.2 passed an order dated 10.12.2010, whereby a penalty of reduction in pay scale by one stage from Rs. 17,470/- to Rs. 16,820/- for a period of three years w.e.f 01.01.2011 was imposed against the respondent no.1 with further direction that the respondent no.1 will not earn increment of pay during the period of reduction.
3.6 Respondent no.1 challenged the chargesheet and the penalty order dated 10.12.2010 before the learned Tribunal on the ground that the penalty was wrongly imposed upon him and it is a major penalty, whereas no misconduct was committed by him. The petitioners replied that the disciplinary proceedings have been initiated by the department as the delinquent had committed misconduct by granting exemption to the assessee under Section 10B of the IT Act, therefore, the penalty order was rightly passed against him and the penalty imposed a minor penalty.
3.7 The learned Tribunal vide its order dated 19.09.2013 quashed the order dated 10.12.2010 observing that the penalty imposed upon respondent no.1 is major penalty in view of Rule 11(v) of the CCS (CCA) Rules, 1965, and cannot be enforced without following procedure laid down under the rules.
3.8 The petitioners challenged the Tribunal’s order dated 19.09.2013 before this Court by way of filing DB Civil Writ Petition No. 7115/2014, whereby this Court vide its order dated 03.12.2014 set aside the order dated 19.09.2013 passed by learned Tribunal and held that the penalty imposed was actually a minor penalty.
3.9 Thereafter, respondent no.1 filed a review application (RA No. 62/2014) before learned Tribunal. On 13.04.2017, learned Tribunal allowed the review application (RA No. 62/2014) stating therein that the crucial element of the matter has not been dealt with as to whether the misconduct was actually committed or not. Accordingly, the order dated 19.09.2013 was recalled by the learned Tribunal and it heard the OA afresh.
3.10 Tribunal allowed the OA No. 556/2011 filed by the applicant-respondent no.1 herein vide order dated on 21.09.2017 while holding that he was functioning in quasi-judicial capacity and disciplinary proceedings were not justified in his case.
Arguments on behalf of the learned counsel for the petitioners: –
4. The learned counsel for the petitioners submitted that the decision of the learned Tribunal to allow the review application was not based upon the parameters laid down under Order XLVII Rule 1 of CPC and the impugned order dated 21.09.2017 is also not in accordance with the law. It is further submitted that the action taken against the respondent no.1 by imposing penalty was justified and it was followed by proper disciplinary proceedings.
5. It is further submitted that the chargesheet was issued under Rule 16 of the CCS Rules which prescribes the procedure for imposing minor penalty. The respondent no.1 was given show-cause notice and opportunity to file reply. Subsequently, said penalty was imposed after examining the reply filed by the respondent no.1 and following the provisions of CCS Rules. A reasoned order was passed by the petitioners, which was confirmed by this Court in the DB Civil Writ Petition no. 7115/2014.
6. Learned counsel for the petitioners argued that the learned Tribunal has made error in quashing the disciplinary proceedings. The penalty has rightly been inflicted upon the respondent no.1 as he failed to maintain absolute integrity and devotion to the duty as it was his duty to act in protecting the revenue interest of the State. Respondent no.1’s actions jeopardized the consistent stand of the department in pending appeals. Learned counsel for the petitioners stated that the department has also pointed out in the chargesheet that there were discrepancies in the order sheets at page no. 3 and 4 of the assessment order.
7. Learned counsel for the petitioners submitted that the learned Tribunal has ignored the facts that the respondent no.1 has caused loss to the revenue by giving exemption under Section 10B of the IT Act to assessee. The respondent no.1 has given undue advantage to the assessee. The respondent no.1 was fully aware of the approach of the department towards assessee’s previous assessment in denying his claims and pending appeals against the order of learned ITAT. The learned Tribunal has also ignored the fact that the respondent no.1 has deviated from his own decisions of previous assessments of the same assessee.
8. Learned counsel for the petitioners argued that assessment order was passed without considering vital aspects of the assessee’s business as well as applicability of Section 10B of the IT Act. Department had taken consistent stand that the business activities of the assessee were not of manufacturing and production of articles as the assessee was purchasing finished/semi-finished items from the market and exported the same. The respondent no.1’s reliance upon the judgment of hon’ble Supreme Court in Arihant Tiles and Marbles Pvt. Ltd (supra) is mis-placed as the said judgment was not applicable to the case of assessee because the issue therein was of different articles as well as different raw materials used for different procedure.
9. Learned counsel has also relied upon the judgments in Union of India and Ors. vs K.K. Dhawan, reported in (1993) 2 SCC 56 and Union of India vs Duli Chand, reported in (2006) 5 SCC 680.
Arguments on behalf of the learned counsel for the respondent no.1:
10. Learned counsel for the respondent no.1 has submitted that the impugned chargesheet and entire subsequent proceedings are not sustainable in the eyes of law as the respondent no.1 has not committed any misconduct and he has followed legal precedents while passing the assessment order.
11. Learned counsel for the respondent argued that even the impugned charge-sheet and subsequent penalty order was passedby petitioner no.2, who could not act as disciplinary authority in accordance with the provisions of CCS Rules. Thus, the Tribunal had rightly quashed these impugned orders.
12.The assessment order dated 24.12.2009 was passed after considering all the relevant factors to grant exemption under Section 10B of the IT Act. The respondent no.1 in his replies filed before the authorities concerned, mentioned that the facts of the assessee’s case in assessment year 2007-08 had undergone substantial change as the process of manufacturing was done with the aid of plant and machinery installations. It was evident from the purchase and sale vouchers that the finished goods were different from raw materials purchased. Respondent no. 1 also explained that the legal position has also changed, if compared to previous assessment years.
13. Furthermore, respondent no.1 had also pleaded that he was acting as quasi-judicial officer and passed the assessment order according to record available in annual return of assesse, which was also not considered by the department.
14. The petitioners’ allegation of misconduct on the part of respondent no.1 is baseless because the assessment order passed by respondent no.1 was restored by the learned ITAT vide order dated 27.08.2012 while holding that the said order was passed after considering the relevant factors and applicable provision, respondent no.1 has applied his mind to the facts and circumstances and passed a well reasoned order.
Analysis
15. Heard both the learned counsel for the parties and perused the material available on record.
16. The issue that arises for consideration in the present case is as to whether the act of respondent no.1 can be termed as ‘misconduct’ whereby he allowed the assessee’s claim of granting exemption under Section 10B of the IT Act.
17. As far as misconduct is concerned, the same has not been defined under the CCS (Conduct) Rules, 1965.
18. The Hon’ble Supreme Court in The State of Punjab v. Ex-Constable Ram Singh, reported in (1992) 4 SCC 54 dealt with the definition of misconduct and has observed as under:-
“5. Misconduct has been defined in Black’s Law Dictionary, Sixth Edition at page 999 thus:
“A transgression of some established and definite rule of action, a forbidden act, a dereliction from duty, unlawful behavior, wilful in character, improper or wrong behavior, its synonyms are misdemeanor, misdeed, misbehavior, delinquency, impropriety, mismanagement, offense, but not negligence or carelessness.”
Misconduct in office has been defined as:
“Any unlawful behavior by a public officer in relation to the duties of his office, wilful in character. Term embraces acts which the office holder had no right to perform, acts performed improperly, and failure to act in the face of an affirmative duty to act.”
P. Ramanatha Aiyar’s Law Lexicon, Reprint Edition 1987 at page 821 defines ‘misconduct’ thus:
“The term misconduct implies a wrongful intention, and not a mere error of judgment. Misconduct is not necessarily the same thing as conduct involving moral turpitude. The word misconduct is a relative term, and has to be construed with reference to the subject matter and the context wherein the term occurs, having regard to the scope of the Act or statute which is being construed. Misconduct literally means wrong conduct or improper conduct. In usual parlance, misconduct means a transgression of some established and definite rule of action, where no discretion is left, except what necessity may demand and carelessness, negligence and unskilfulness are transgressions of some established, but indefinite, rule of action, where some discretion is necessarily left to the actor. Misconduct is a violation of definite law; carelessness or abuse of discretion under an indefinite law. Misconduct is a forbidden act; carelessness, a forbidden quality of an act, and is necessarily indefinite. Misconduct in office may be defined as unlawful behaviour or neglect by a public officer, by which the rights of a party have been affected.
6. Thus it could be seen that the word ‘misconduct’ though not capable of precise definition, on reflection receives its connotation from the context, the delinquency in its performance and its effect on the discipline and the nature of the duty. It may involve moral turpitude, it must be improper or wrong behaviour; unlawful behaviour, wilful in character; forbidden act, a transgression of established and definite rule of action or code of conduct but not mere error of judgment, carelessness or negligence in performance of the duty; the act complained of bears forbidden quality or character. Its ambit has to be construed with reference to the subject matter and the context wherein the term occurs, regard being had to the scope of the statute and the public purpose it seeks to serve. The police service is a disciplined service and it requires to maintain strict discipline. Laxity in this behalf erodes discipline in the service causing serious effect in the maintenance of law and order.”
19. The Hon’ble Supreme Court in Union of India and Ors. vs J Ahmed, reported in (1979) 2 SCC 286 has held that the mere error of judgment or negligence does not constitute misconduct unless it is such a degree as to reflect lack of integrity or devotion to duty. Thus, there must be mala fide intent or recklessness or moral turpitude. The relevant portion of the said judgment is as follows:
“10. It would be appropriate at this stage to ascertain what generally constitutes misconduct, especially in the context of disciplinary proceedings entailing penalty.
11. Code of conduct as set out in the Conduct Rules clearly indicates the conduct expected of a member of the service. It would follow that conduct which is blameworthy for the government servant in the context of Conduct Rules would be misconduct. If a servant conducts himself in a way inconsistent with due and faithful discharge of his duty in service, it is misconduct (see Pierce v. Foster [17 QB 536, 542] ). A disregard of an essential condition of the contract of service may constitute misconduct [see Laws v. London Chronicle (Indicator Newspapers [(1959) 1 WLR 698] )].
This view was adopted in Shardaprasad Onkarprasad Tiwari v. Divisional Superintendent, Central Railway, Nagpur Division, Nagpur [61 Bom LR 1596] , and Satubha K. Vaghela v. Moosa Raza [10 Guj LR 23] . The High Court has noted the definition of misconduct in Stroud’s Judicial Dictionary which runs as under:
“Misconduct means, misconduct arising from ill motive; acts of negligence, errors of judgment, or innocent mistake, do not constitute such misconduct.”
In industrial jurisprudence amongst others, habitual or gross negligence constitute misconduct but in Utkal Machinery Ltd. v. Workmen, Miss Shanti Patnaik [AIR 1966 SC 1051 : (1966) 2 SCR 434 : (1966) 1 LLJ 398 : 28 FJR 131] in the absence of standing orders governing the employee’s undertaking, unsatisfactory work was treated as misconduct in the context of discharge being assailed as punitive. In S. Govinda Menon v. Union of India [(1967) 2 SCR 566 : AIR 1967 SC 1274 : (1967) 2 LLJ 249] the manner in which a member of the service discharged his quasi judicial function disclosing abuse of power was treated as constituting misconduct for initiating disciplinary proceedings. A single act of omission or error of judgment would ordinarily not constitute misconduct though if such error or omission results in serious or atrocious consequences the same may amount to misconduct as was held by this Court in P.H. Kalyani v. Air France, Calcutta [AIR 1963 SC 1756 : (1964) 2 SCR 104 : (1963) 1 LLJ 679 : 24 FJR 464] wherein it was found that the two mistakes committed by the employee while checking the load-sheets and balance charts would involve possible accident to the aircraft and possible loss of human life and, therefore, the negligence in work in the context of serious consequences was treated as misconduct. It is, however, difficult to believe that lack of efficiency or attainment of highest standards in discharge of duty attached to public office would ipso facto constitute misconduct. There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence. Leaving aside the classic example of the sentry who sleeps at his post and allows the enemy to slip through, there are other more familiar instances of which a railway cabinman signals in a train on the same track where there is a stationery train causing head-on collision; a nurse giving intravenous injection which ought to be given intramuscular causing instantaneous death; a pilot overlooking an instrument showing snag in engine and the aircraft crashes causing heavy loss of life. Misplaced sympathy can be a great evil (see Navinchandra Shakerchand Shah v. Manager, Ahmedabad Coop. Department Stores Ltd. [(1978) 19 Guj LR 108, 120] ). But in any case, failure to attain the highest standard of efficiency in performance of duty permitting an inference of negligence would not constitute misconduct nor for the purpose of Rule 3 of the Conduct Rules as would indicate lack of devotion to duty.”
20. The MP High Court in Roop Singh Alawa vs State of M.P. and Anr., reported in 2025 SCC OnLine MP 3833 has held that when no corruption or extraneous consideration is proved, the act of passing an erroneous judicial order would amount only to an error of judgment and not grave misconduct. The relevant paragraphs of the judgment are as follows:
“18. In Krishna Prasad Verma v. State of Bihar, (2019) 10 SCC 640, the Supreme Court has held that high Court has role as guardian and protector of the district judiciary and misconduct is different from erroneous order. Erroneous order will be part of the service record of the judicial officer but cannot perse be deemed as misconduct unless they are passed for erroneous reasons or illegal gratification etc. In the said case decided by the Hon’ble Supreme Court, the judicial officer had granted bail despite rejection of the bail application by the High Court and the order being available in his file, but skipped his attention, but had promptly cancelled the bail once the order of the High Court was brought to his notice. The only difference between the said case and the present one before us is that in this case the Trial Judge rejected the application for cancellation for bail too. However, in the present case, the application for cancellation of bail was subsequently rejected by the petitioner. Therefore, this case is a case of error of judgment, and very thinly crossing the line of not maintaining judicial discipline, though the same seems to be under a mistaken belief that the petitioner was still having liberty to consider the repeat bail application in terms of liberty granted while deciding the second bail application by the High Court, which was never expressly withdrawn, but was impliedly withdrawn, by allowing subsequent bail applications filed before it to be rejected/withdrawn as not pressed.
19. In the case of Abhay Jain v. High Court of Rajasthan, (2022) 13 SCC 1, the Supreme Court was considering the case of a probationer Judicial Officer who had granted bail to an accused despite rejection by the High Court and the prosecution had failed to bring the fact to notice of the judicial officer concerned. It was held that it may be a case of negligence, but not misconduct, moreso when the bail order was not challenged by the prosecution or any other party. The penalty of discharge was set aside with 50% backwages.
20. In K.C. Rajwani v. State of M.P., 2022 SCC OnLine MP 1550 this court dealt with the case of judicial officer wherein the allegation against the judicial officer were passing erroneous orders who otherwise had a unblemished career and there were no complaints as regard his integrity in performance of duties and he enjoyed very good reputation. There was no doubt in the integrity of the said judicial officer. On these grounds the major penalty granted to the judicial officer concerned was set-aside.
21. In the present case though it is a case of error of judgment and erroneous order passed by the trial judge, but it is also a case very thinly crossing the line of judicial indiscipline which appears to be under a mistaken belief/impression, as noted by us above. Even no extraneous or ulterior motive was proved in the enquiry.”
21. The same aspect has been recently dealt with by the Hon’ble Apex Court, in the case of “Nirbhay Singh Suliya v. State of Madhya Pradesh & Anr. (2026) 3 SCC 325, the relevant portion of which reads as under:-
“32. As held in R.R. Parekh [R.R. Parekh v. High Court of Gujarat, (2016) 14 SCC 1], it should be borne in mind that inference of misconduct or about extraneous considerations having actuated, the decision cannot be drawn merely from a hypothesis that a decision is erroneous. It has been held that a wrong decision can yet be a bona fide error of judgment and inadvertence is consistent with an honest error of judgment. Ultimately, it is not the correctness of the verdict but the conduct of the officer in question which is determinative.
33. It is apposite to recall the observations of this Court in Union of India v. K.K. Dhawan [Union of India v. K.K. Dhawan, (1993) 2 SCC 56], which has been followed in P.C. Joshi v. State of U.P. [P.C. Joshi v. State of U.P., (2001) 6 SCC 491]. This Court in K.K. Dhawan (supra), while illustrating certain cases for which disciplinary action can be initiated, took care to administer a note of caution also. In K.K. Dhawan (supra), this Court held:-
“28. Certainly, therefore, the officer who exercises judicial or quasi-judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a Judge. Accordingly, the contention of the respondent has to be rejected. It is important to bear in mind that in the present case, we are not concerned the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer. The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act. But we have no doubt in our mind that the Government is not precluded from taking the disciplinary action for violation of the Conduct Rules. Thus, we conclude that the disciplinary action can be taken in the following cases:-
i. Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty;
ii. if there is prima facie material to show recklessness or misconduct in the discharge of his duty;
iii. if he has acted in a manner which is unbecoming of a government servant;
iv. if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers;
v. if he had acted in order to unduly favour a party;
vi. if he had been actuated by corrupt motive, however small the bribe may be because Lord Coke said long ago “though the bribe may be small, yet the fault is great”.
29. The instances above catalogued are not exhaustive. However, we may add that for a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted. Here, we may utter a word of caution. Each case will depend upon the facts and no absolute rule can be postulated.”
34. This Court held that merely because the order is wrong, disciplinary action is not warranted and that each case will depend upon the facts and no absolute rule can be postulated. What is significant to notice is that even though in the illustrated case [para 28 (iv)] K.K. Dhawan (supra), cases of omission of prescribed conditions which are essential for the exercise of statutory powers may in a given case furnish a ground for disciplinary enquiry, it is not an absolute rule and each case will depend upon the facts. As observed in R.R. Parekh (supra), the disciplinary authority (Uploaded has on to 14/05/2026 examine at 10:54:16 whether AM) there has emerged from the record, one or more circumstances that indicate that the decision which forms the basis of the charge of misconduct was not an honest exercise of judicial power.”
22. Coming to the facts of the case in hand, a bare perusal of the statement of charge forming part of the charge-sheet issued against the respondent no.1/original applicant would reveal that the allegation in the present case pertains to the assessment order being faulty, inasmuch as the assessee was allegedly not entitled to deduction under Section 10-B, and that the delinquent had deviated from the consistent stand taken by the Department, thereby causing revenue loss to the Department and weakening the case of the Department before the this Court. There was no allegation whatsoever that the order had been passed due to lack of devotion to duty or on account of lack of integrity. Although the charge-sheet refers to violation of Rule 3(i)(ii) of the CCS (Conduct) Rules with regard to maintaining absolute integrity and devotion to duty, however, the gravamen of the charge does not disclose any such allegation.
22.1 The respondent no.1, in his reply, had specifically referred to the assessment order having been passed subsequent to the decisions rendered for the earlier assessment years by the learned ITAT vide orders dated 29.05.2009 and 17.08.2009, whereby the stand of the Department was negatived and the assessee was found entitled to exemption under Section 10-B. Meaning thereby, the assessee was treated as a manufacturing unit by the learned ITAT. The respondent no.1 had also referred to the judgment passed by the Hon’ble Apex Court in the case of Arihant Tiles & Marbles (supra) case while emphasizing that the work undertaken would amount to a manufacturing process.
22.2 The delinquent/original applicant/respondent No.1 had further submitted that the bills demonstrated that the assessee had invested in plant and machinery and that the final product exported was entirely different from the raw material, inasmuch as processing, polishing, chemical coating, coal tar, etc. were being used, indicating that the activity undertaken amounted to a manufacturing process, there being substantial value addition and the finished product being entirely distinct from the raw material received by the assessee. He had thus justified the distinction between the previous assessment years and the assessment year in question in his reply and had further emphasized that, in view of the orders passed by the learned Tribunal as well as the Hon’ble Apex Court, the respondent no.1 was bound to follow the same, failing which he would have exposed himself to contempt proceedings.
22.3 This Court would not like to embark upon the issue as to whether the process undertaken by the assessee amounted to a manufacturing process or whether the delinquent was justified in concluding that the assessee, having invested in plant and machinery, was undertaking manufacturing activity. However, it is evident that the view taken by the respondent no.1 was a plausible view and cannot be said to be a view taken in abstract without any supporting material. Thus, merely because another view was possible, the same would not amount to misconduct. More so, the assessment order reflected bona fide application of mind supported by cogent reasons and, therefore, none of the ingredients pertaining to lack of integrity or lack of devotion towards duty are made out in the facts of the present case.
23. It is admitted position that the respondent no.1 was discharging quasi-judicial functions while passing the assessment order and such functions involve not just the appreciation of facts but the interpretation of law and application of judicial mind.
24. The fact that the assessment order has already been upheld by the learned ITAT, there remains no doubt as to the intention of the respondent no.1 and it cannot be said that the assessment order was legally unsustainable. Affirmation from the appellate tribunal represents a plausible legal view.
25. As per the discussion above and taking into account the aforesaid judgments, it is apparent that the assessment order passed by the respondent no.1 was a quasi judicial decision taken by him after consideration of facts and circumstances of the case in hand. Disciplinary action against quasi judicial orders is permissible only where decision is followed by mala fide intent with the view to grant undue benefit or where there is conscious violation and disregard to the provisions of law. The petitioners have failed to place on record any evidence of ill intention or proof of personal gain or any undue advantage being given by the respondent no.1. At best, even if we assume hypothetical error, it was already negated by the learned ITAT vide order dated 27.08.2012, affirming the assessment proceedings undertaken by the respondent no.1.
26. True it is that in the case of Union of India v. K.K. Dhawan, as relied upon by learned counsel for the petitioner, the Hon’ble Apex Court, in para No.29, has laid down the yardstick for initiation of disciplinary proceedings against a delinquent officer. However, the same has been dealt with in detail in the recent judgment of the Hon’ble Apex Court in the case of Nirbhay Singh Suliya case, wherein it has been clearly observed that a mere error of judgment would not amount to misconduct. Learned counsel for the petitioner has failed to point out that the applicant had acted in a manner unbecoming of his reputation, lack of integrity, good faith, or devotion towards duty, or had acted with gross negligence with a view to grant undue favour to a party. In the facts of the present case, none of the ingredients constituting misconduct stand established and, therefore, the learned Tribunal was justified in passing the impugned order.
27. Accordingly, the present Civil Writ Petition, being bereft of merit, is therefore dismissed.
28. No order as to costs.
29. All pending applications also stand disposed of.
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