Case Law Details

Case Name : M/s. Cargo Handling Private Workers Pool Vs. DCIT (ITAT Visakhapatnam)
Appeal Number : ITA Nos. 152 to 156/Vizag/2011
Date of Judgement/Order : 19/07/2011
Related Assessment Year : 1997- 98, 1998- 99, 2005- 06, 2006- 07 & 2007- 08
Courts : All ITAT (5188) ITAT Visakhapatnam (48)

Cargo Handling Private Workers Pool Vs. DCIT (ITAT Vizag)– Since the Income tax Appellate Tribunal is exercising judicial functions, it is now settled that it has all powers of Court, i.e. it can issue summons and exercise all the powers vested in the Income tax authorities under section 131 of the Income tax Act. Hence any proceeding before the Income tax Appellate Tribunal shall be deemed to be judicial proceedings.

It appears to be the impression/ misunderstanding of some tax officials that the orders of the ITAT interpreting the law cannot be binding as it is a fact finding authority. However, this is not correct because the decision of a higher authority in the judicial hierarchy is binding on all the lower authorities below the line. Hence, the AO & CIT (A) are bound by the decision rendered by the jurisdictional Tribunal. Refusal to follow the order of the ITAT would render that authority guilty of committing contempt of Tribunal for which the concerned authority is liable to be proceeded against. If the decision of the Tribunal is found to be unacceptable to the authorities below, the right course to follow is to carry the matter in appeal to the High Court and to seek suspension of the operation of the order of the Tribunal. A person occupying the chair of CIT (A) is expected to be aware of judicial discipline and the binding nature of the Tribunal’s order. To avoid harassment to the assessee and unpleasant circumstances, the CBDT should take appropriate steps to enlighten all officials to ensure that judicial discipline is maintained. Costs u/s 254(2B) can be granted only if frivolous appeals are filed and not in a case like this. However, the assessee is free to take proper steps for initiating contempt proceeding against the CIT(A)

INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM

 ITA Nos. 152 to 156/Vizag/2011

Assessment Years: 1997- 98, 1998- 99, 2005- 06, 2006- 07 & 2007- 08

M/s. Cargo Handling Private Workers Pool

 Vs.

DCIT

ORDER

Per Bench:

These appeals filed by the assessee are directed against the common order dated 31.1.2011 passed by learned CIT(A), Visakhapatnam for the years cited (Supra).

2. (a) The assessee is challenging the order of Learned CIT(A) on various issues with the plea that all the issues raised by the assessee were decided by the Jurisdictional ITAT in the assessee’s own case, vide its order dated 08-01-2010 in ITA Nos.272 to 274/Vizag/2005.

(b) The assessee has also raised following ground seeking cost for not following the order of the Jurisdictional ITAT:

“The learned CIT (Appeals) has committed contempt of the Hon’ble ITAT Vizag Bench by his decision in not following the order of the jurisdictional Bench of ITAT in the same assessee’s case on the same issues and thereby it is prayed that exemplary cost should be awarded in terms of sub¬section (2B) of section 254 of Income tax Act, 1961 for forcing this assessee to file this appeal”.

3. The facts relating to the case are stated in brief. The assessee is a trust formed in January 1994 by two trade associations viz., M/s Visakhapatnam Stevedores Association and M/s Customs clearance and Forwarding Agents Association, with an objective of regulating the employment of private workers in the dock works in Visakhapatnam port. The assessee was granted registration under section 12A of the Act by the then Learned CIT, Visakhapatnam from the date of its inception and there is no dispute that the said registration is still in force. The assessing officer, for the reasons stated in the assessment order of the years under consideration, declined to grant exemption under section 11 to the income of the Act despite the fact that the assessee is having registration granted by Learned CIT under section 12A of the Act. It is pertinent to mention here that the Assessing Officer had denied exemption under section 11 to the assessee on identical reasons for the assessment years 1999-2000 to 2004-05 also and his orders were sustained by Learned CIT(A). The assessee carried the matter in appeal to the Tribunal and this bench of ITAT, vide its order dated 08-01-2010, held that the assessee is entitled to exemption under section 11 of the Act.

3.1 As stated earlier, the assessing officer denied exemption to the assessee for the years under consideration also on identical reasons, which had been decided by the Tribunal. When the appeals filed by the assessee for the impugned years before Learned CIT(A) was heard, the assessee placed a copy of the order of the ITAT cited above. However, the Learned CIT(A), without appreciating the binding force of the jurisdictional Tribunal’s order, went on to make following observations:

(ii) A careful perusal of the order of the Honorable Supreme Court in the case of ACITVs. Surat City Gymkhana ((Supra)) gives the impression that such decision is not an authority for the proposition that grant of registration u/s 12A ofthe Act once done is a fait accompli and bars the assessing officer from dwelling on the same question once again in the assessment proceedings, but an authority for the proposition that the if it had in the past accepted similar order, following  which the latter order has been passed. Even otherwise, the above proposition does not represent correct position of law in as much as a three judge bench of the Honorable Supreme Court in the case of Maharashtra vs. ~igambar [1995 (4) 5CC 683] has held that merely because the state did not prefer an appeal against an earlier order, it does not estop the state from challenging the subsequent orders passed by the High Court adverse to its interest. To err is human. Any authority, howsoever senior, may commit mistake and, therefore, nobody isinfallible. If registration u/s 12A is erroneously granted by the concerned Commissioner, without appreciating that the true import of the declared predominant object is commercial and not charitable in nature, as could be found out during the course of the assessment proceedings, it would be a travesty ofjustice to accept the non-charitable objects coupled with lack of any charitable activity as charitable in nature and confer the benefit of exemption u/s 11 of the Act. In this view of the matter, the then Commissioner of Income-tax, Visakhapatnam, who had granted registration to the appellant trust may have committed an error in overlooking the business nature of the dominant objective of the appellant trust. But justice cannot be sacrificed on the altar of technicalities, and, hence, the action of the assessing officer, in refusing exemption to the appellant on the ground, interalia, of the predominant object being non-charitable in nature is, hereby, strongly, upheld.

(iii) It appears that at the time of hearing of the quantum appeals of the appellant for the assessment years 1999-2000 to 2004-05 before the Honorable Tribunal, the department representative has not been able to advance the arguments relating to the issue in a comprehensive and effective manner so as to plead that the jurisdictional Commissioner who granted registration u/s 12A to the appellant trust had indeed failed to apply his mind properly to the objects professed by the appellant trust and had, thus, erroneously granted registration to the appellant trust as a charitable trust.”

Thus, it can be seen that the Learned CIT(A) has failed to give any concrete decision on the issue of denying exemption to the assessee under section 11 of the Act. However, in the concluding paragraph of his order, the Learned CIT(A) has made following observations:

“Therefore, it is in the fitness of things that the Assessing Officer should take steps to intimate the concerned jurisdictional Commissioner of Income tax about the predominantly commercial objective of supplying of labour force to the stevedores and clearing and forwarding agents for their day to day business activities at Visakhapatnam port and for not having carried out any charitable activity hitherto, for the purpose of cancellation of registration under section 12AA of the Act. Alternatively, the jurisdictional Commissioner may consider taking suo motu cognizance of the lack of charitable activities so far for the purpose of cancellation of registration under section 12AA granted earlier to the appellant trust”.

Hence it is not clear whether or not the Learned CIT(A) is upholding the action of Assessing Officer in denying exemption to the assessee under section 11 of the Act vis-à-vis the reasons given by the Assessing Officer for such denial, despite there being a decision of Jurisdictional Tribunal holding that the assessee is entitled to exemption under section 11 of the Act. With regard to the issue of alleged violation of the provisions of sec.13(1)(c) r.w.s. 13(2) , the Learned CIT(A) apparently did not follow the decision of the ITAT rendered on the very same issue on identical facts.

4. Now the question that arises is whether the Learned CIT(A) can refuse to follow the orders of the jurisdictional ITAT. We feel it appropriate to dwell upon some of the judicial rulings given by various courts on the impugned matter.

5. We shall first discuss about the nature and status of the Income tax Appellate Tribunal in the judicial hierarchy of our country. The Hon’ble Supreme Court, in the case of Ajay Gandhi Vs. B.Singh (2004) (265 ITR 451), has discussed about the status of the Income tax Appellate Tribunal as under:

“The Appellate Tribunal constituted under the Act is not an income tax authority. It is the ultimate fact-finding authority under the Act and only a reference to the High Court or this Court on a question of law from its order can be made (see Udhavdas Kewalram V CIT (1967) 66 ITR 462 (Supreme Court))…. The position of the Appellate Tribunal is the same as of a court of appeal under the Civil Procedure Code and its powers are identical with the powers enjoyed by the appellate court there under (see New India Life Assurance Co. Ltd Vs. CIT (1957)(31 ITR 844 (Bom))…. The Income tax Appellate Tribunal exercises judicial functions and has the trappings of a court.”

5.1 In the case of ITAT Vs. V.K.Agarwal (235 ITR 175 (S.C)), the respondent (Ex-Law Secretary, Ministry of Law and Justice, Government of India) initially raised a technical objection about the status of the Income tax Appellate Tribunal. The observations made by Hon’ble Supreme Court in this regard (at page 182) are extracted below:

“Before examining the conduct of the first respondent, we would like to deal with the technical objections which were raised before us on behalf of the first respondent. The first respondent had initially contended that the Income tax Appellate Tribunal was not a court, and was also not a court subordinate to the Supreme Court. Hence, the Supreme Court had no jurisdiction to issue a suo motu notice of contempt in respect of a matter pertaining to the Income tax Appellate Tribunal. However, subsequently, learned senior counsel for the first respondent conceded that the Income tax Appellate Tribunal did perform judicial functions and was a court subordinate to the High Court. Hence there is no need to examine any further, the contention that the said Tribunal is not a court.”

In the said case, the Hon’ble Supreme Court further held as under:

“This court has consistently held that the Supreme Court has power under this article to punish, not merely for contempt of itself, but also for contempt of all courts and Tribunals subordinate to it. In the case of Delhi judicial Service Association, Tis Hazari Court, Delhi Vs. State of Gujarat, AIR 1991 Supreme Court 2176; (1991) 3 SCR 936, this court examined at length the power of this court under article 129 to punish for contempt. This court first examined the jurisdiction of the Supreme Court and held (at page 970 and page 2194 of AIR 1991 Supreme Court): “There is therefore no room for any doubt that this court has wide power to interfere and correct the judgment and orders passed by any court or Tribunal in the country. In addition to the appellate power, the court has special residuary power to entertain appeal against any order of any court in the country. The plenary jurisdiction of this  court to grant leave and hear appeals against any order of a court and Tribunals confers power of judicial superintendence over all the courts and Tribunals in the territory of India including subordinate courts of Magistrate and District Judge. This court has, therefore, supervisory jurisdiction over all courts in India.” Examining the powers of a court of record, it came to the conclusion that a court of record has inherent power to punish for contempt of all courts and Tribunals subordinate to it in order to protect these subordinate courts and Tribunals…..

It was also submitted before us by learned senior counsel for the first respondent that although this court may have jurisdiction to punish for contempt, that jurisdiction should not be exercised in the present case. The appropriate authority to take action would be the High Court. We do not see much force in this submission. The Income tax Appellate Tribunal, although it may have Benches in different parts of the country, is a national Tribunal and its functioning affects the entire country and all its Benches. Appeals also lie ultimately to this court from the decisions and references made by the Tribunal. The mere fact that by this court taking suo motu cognizance of the contempt, the first respondent would not be able to appeal to any other court, cannot be a ground for not exercising the power to punish for contempt of a national Tribunal.”

5.2 Since the Income tax Appellate Tribunal is exercising judicial functions, it is now settled that it has all powers of Court, i.e. it can issue summons and exercise all the powers vested in the Income tax authorities under section 131 of the Income tax Act. Hence any proceeding before the Income tax Appellate Tribunal shall be deemed to be judicial proceedings.

6. Next we shall dwell upon the judicial rulings about the binding nature of orders passed by the Income tax Appellate Tribunal. The Hon’ble MP High Court in the case Agarwal Warehousing and Leasing Ltd. Vs. CIT (257 ITR 235) has held that the orders passed by the tribunal are binding on all the tax authorities functioning under the jurisdiction of the tribunal. While so holding, it followed the decision of the Hon’ble Supreme Court in the case of UoI Vs. Kamlakshi Finance Corporation Ltd (AIR 1992 Supreme Court 711, 712) 55 ELT 433 (S.C) which has ruled as under:

“It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of appellate authorities. The order of the Appellate collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the Department – in itself an objectionable phrase – and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to the assessees and chaos in administration of tax laws”.

The Hon’ble M.P High Court further observed in clear terms as under:

“Obviously, the Commissioner of Income tax (Appeals) not only committed judicial impropriety but also erred in law in refusing to follow the order of the Appellate Tribunal. Even where he may have some reservations about the correctness of the decision of the Tribunal, he had to follow the order. He could and should have left it to the Department to take the matter in further appeal to the Tribunal and get the mistake, if any, rectified.”

6.1. The Hon’ble M.P High Court in the case referred (Supra) has placed reliance on the decision of Hon’ble Supreme Court in the case of Kamalakshi Finance Corporation Ltd (Supra). We fell it pertinent to extract the relevant observations made by Hon’ble Supreme Court in the said case, which is given in the book of Sampath Iyengar’s “Law of Income tax” 10th edition (at page 212), for the purpose of obtaining clarity on the impugned issue:

“The learned Additional Solicitor General submits that the learned judges have erred in passing severe strictures (1990) 47 ELT 231 (Bom) against the two Assistant Collectors who had dealt with the matter. He submitted that these officers had given reasons for classifying the goods under heading 39.19 and not 85.46 and could do no more. He submitted that they acted bona fide in the interests of Revenue in not  accepting a claim which, they felt, was not tenable. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. The impression or anxiety of the Assistant Collector that, if he accepted the assessee’s contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35E confers adequate powers on the department in this regard. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under section 35E(1) or (2) to keep the interests of the department alive. If the officers’ view is the correct one, it will no doubt be finally upheld and the revenue will get the duty, though after some delay which such procedure would  entail. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessee public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need  for giving effect to the orders of the higher appellate authorities which are binding on them.”

Further in Khalid Automobiles Vs. UoI (1995) (4 SCC (Suppl.) 652), the Hon’ble Apex Court held that an order of Tribunal was binding on the Assessing officer and the first appellate authority and the failure to follow the same may constitute contempt of Tribunal’s order. Similar views have been expressed in Sales tax matters in Rajendra Mills ltd Vs. Jt. CIT (1971) 28 STC 483 (mad), Senthil Raj Metals Vs. GTO (1990) 79 STC 38 (Mad).

6.2 The jurisdictional Hon’ble Andhra Pradesh High Court, in the case of State of Andhra Pradesh Vs. Commercial Tax officer and another (169 ITR 564) had an occasion to discuss about the binding nature of the decision of High Court. It held that the Tribunals functioning within the jurisdiction of a particular High Court in respect of whom the High Court has the power of superintendence under article 227 are bound to follow the decisions of the High Court unless, on an appeal to the Supreme Court, the operation of the judgment is suspended. It further held that it is not permissible for the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal has been filed in the Supreme Court which is pending or that steps are being taken to file an appeal. The Jurisdictional High Court, at page 571, has made a reference to the decision of Hon’ble Bombay High Court in the case of Subramanian, ITO Vs. Siemens India Ltd (1985) (156 ITR 11) and the relevant observations are extracted below:

“Reference may also be invited to the decision of the Bombay High Court in Subramanian, ITO Vs. Siemens India Ltd (1985)(156 ITR 11). The question that arose for consideration in this case is whether the Income tax officer is bound by the decision of a single judge or a Division bench of the court within whose jurisdiction he is operating even if an appeal has been preferred against such decision and is pending. The following observations of the Bombay High Court may be extracted (p 12):

“So far as the legal position is concerned, the Income tax officer would be bound by a decision  of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is functioning, irrespective of the pendancy of any appeal or special leave application against that judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. Where there is a conflict between different High Courts, he must follow the decision of the High Court within whose jurisdiction he is functioning, but if the conflict is between decisions of other High Courts, he must take the view which is in favour of the assessee and not against him. Similarly, if the Income tax Appellate Tribunal has decided a point in favor of the assessee, he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee.”

There cannot be any dispute that the ratio of the decision of Jurisdictional High Court equally applies to the orders passed by the ITAT also vis-à-vis the authorities down below.

6.3 It is apposite to extract following observations made by Hon’ble Jurisdictional A.P. High Court in the case of State 0f Andhra Pradesh Vs. CT0, referred (Supra), as we also come across numerous instances of such kind of observations as noted by Hon’ble High Court.

“In recent times, we are coming across innumerable cases where the authorities observe with impunity that they cannot follow the decisions of this court on a variety of grounds, such as:

(a) that an appeal was actually filed in the Supreme Court against the judgment of this court and is pending in the Supreme Court.

(b) that a special leave petition is filed in the Supreme Court seeking leave to appeal against the judgment of this Court and the special leave petition is pending in the Supreme Court;

(c) that the Department has not accepted the decision of this Court and is taking steps to file an appeal before the Supreme Court.

We have noticed observations to the above effect in the orders passed by the Commercial Tax Authorities, including the Head of the Department, Commissioner of Commercial Taxes, Income-Tax Officers, including the Head of the Department, the Commissioner of Income-tax, Central Excise and Customs Authorities, including the Collector of Central Excise and Customs and a host of other authorities. The question for consideration is whether the authorities below can refuse to follow the judgments of this court on the above grounds”.

“It is clear from the judicial pronouncements above referred to that the authorities and the tribunals functioning within the jurisdiction of this court in respect of whom this court has the power of superintendence under article 227 are bound to follow the decisions of this court unless, on an appeal, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decision of this court or to refuse to follow the decisions of this court on the pretext that an appeal is filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the tribunal refuses to follow any decision of this court on the above grounds, it would be clearly guilty of committing contempt of this court and it liable to be proceeded against”.

6.4 The Hon’ble Calcutta High Court considered the issue of hierarchical discipline in the case of Voest-Alpine Ind. GMBH vs. ITO & Others (246 ITR 745). In that case the Income Tax Officer while assessing the income of identical nature did not follow the decision rendered by Tribunal in an earlier year in which it was held that the income of the foreign company is not taxable in India. The Hon’ble High Court considered the action of the assessing officer as an act of “Hierarchical indiscipline”. The relevant observations made by Hon’ble Calcutta High Court are extracted below:

“I have gone through the impugned notices as well as the impugned order passed by the Income Tax Officer concerned. I have no manner of doubt that the Income-tax Officer concerned had assessed income-tax on the same income which was fetched from the consultancy services.

I find the specific finding of the learned Tribunal that this income is not taxable and I also find from the finding of the learned Tribunal that the amount which was paid by way of advance tax is liable to be refunded. The learned Tribunal painstakingly considered all the points advanced before him on behalf of the Department.

Since the reference has been refused by the court so also previously by the Tribunal, at the present moment the findings of the learned Tribunal have reached finality. In my view, the venture which has been undertaken by the Income-tax Officer for making an assessment is absolutely an act of hierarchical indiscipline. This exercise is nothing short of setting the Tribunal’s judgment at naught. It is a well settled principle of law that the junior incumbent is supposed to obey and carry out the order and/or observations made by the superior authority, be it a judicial forum or a quasi-judicial forum or even in any administrative field.

Therefore, I hold that the impugned order passed by the Income-tax Officer is wholly without jurisdiction and the same is liable to be set aside and I hereby do so”.

6.5 The Hon’ble Bombay High Court in the case of Bank of Baroda Vs. H.C. Shrivatsava and Another (256 ITR 385) has also dealt with the impugned issue and the relevant observations are extracted below:

“At this juncture, we cannot resist observing that the judgment delivered by the Income-tax Tribunal was very much binding on the Assessing Officer. The Assessing Officer was bound to follow the judgments in its true letter and spirit. It was necessary for judicial unit and discipline that all the authorities below the Tribunal must accept as binding the judgments of the Tribunal. The Assessing Officer being an inferior officer vis-à-vis the Tribunal, was bound by the judgment of the Tribunal and the Assessing Officer should not have tried to distinguish the same on untenable grounds. In this behalf, it will not be out of place to mention that “in the hierarchical system of courts” which exists in our country, “it is necessary for each lower tier” including the High Court, “to accept loyally the decisions of the higher tiers”. “It is inevitable in a hierarchical system of courts that there are decisions of the supreme Appellate Tribunal which do not attract the unanimous approval of all members of the judiciary. But the judicial system only works if someone is allowed to have the last word, and that last word once spoken is loyally accepted”. The better wisdom of the court below must yield to the higher wisdom of the court above as held by the Supreme Court in the matter of Asst. CCE Vs. Dunlop India Ltd (1985) 154 ITR 172″.

7. It appears to be the impression/misunderstanding of some of the tax officials that the orders of ITAT interpreting the law cannot be binding as it is a fact finding authority. However, from the foregoing discussions, one can understand that that the decision of the higher authority in the judicial hierarchy is binding on all the lower authorities below the line. Hence the learned CIT(A) and the assessing officer would be bound by the decision rendered by the jurisdictional Income tax Appellate Tribunal. Refusal to follow the order of the ITAT would render that authority guilty of committing contempt of Tribunal for which the concerned authority is liable to be proceeded against.

8. As held by Hon’ble M.P High Court in the case of in the case Agarwal Warehousing and Leasing Ltd, (Supra), the Learned CIT(A), in the instant case, has committed judicial impropriety and also erred in law in refusing to follow the order of the Appellate Tribunal. Being an authority in the higher hierarchy of the Income tax Department, that too holding appellate charge, the Learned CIT(A), in our view, should not have committed this kind of judicial impropriety.

9. Whenever a decision of the Income tax Appellate Tribunal is found to be unacceptable to the authorities below, the right course to follow is to carry the matter in appeal to the High Court and in case of urgent necessity, to seek suspension of the operation of the order of the Tribunal appealed against. If the Hon’ble High Court suspends the operation of the order appealed against, then the tax authorities are under no obligation to follow the order so suspended till the matter is decided by the Hon’ble High Court.

10. It is not the case that the tax authorities are required to be given guidance on this aspect. In the case of a person occupying the chair of Commissioner of Income tax (Appeals), it is normally expected that he is aware of judicial discipline and also binding nature of the order of the Income tax Appellate Tribunal.

11. However, it is possible that the law of judicial discipline discussed above may be lost sight of by some tax officials. Hence, it would be beneficial to all if the same is brought to the notice of all tax officials in periodic intervals so that this kind of unpleasant happenings can be avoided. Accordingly, we direct the learned CIT (Departmental Representative) to bring this order to the notice of the Chief Commissioner and Central Board of Direct Taxes so that they, being the authorities having superintendence over the tax authorities, may take appropriate steps to enlighten all the officials in order to ensure enforcement of judicial discipline in them, which would avoid considerable harassment, if any, to the assessee public.

12. The assessee has sought appropriate costs in terms of sub-section (2B) of sec. 254 of the Act. However, we notice that the said sub-section was introduced only to discourage filing of frivolous appeals. Hence, in our view, we cannot invoke the said sub-section in the instant case. However, the assessee is free to take proper steps for initiating contempt proceeding against the concerned Learned CIT(A).

13. In the instant cases, the appeals have been preferred by the assessee only because the Learned CIT(A) has rendered his decision without following the decision of this tribunal. It cannot be denied that we would be required to revisit all the issues on which we have already rendered our decision, while it is the duty of the Learned CIT(A) to pass orders in terms of the earlier decision of the ITAT so long as the same is not suspended/ reversed by Hon’ble High Court. Hence we deem it proper to set aside all the issues to the file of Learned CIT(A) in order to enable him to pass appropriate orders by duly following the orders passed by the ITAT in the assessee’s own case referred (Supra) for other years. Accordingly we set aside the impugned common order of Learned CIT(A) and restore all the issues to his file for adjudicating them afresh by following the decision of ITAT referred supra. Needless to mention, the assessee should be given necessary opportunity of being heard.

14. In the result, all the appeals of the assessee are treated as allowed for statistical purposes.

Pronounced in the open Court on 19th July, 2011.

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Category : Income Tax (27605)
Type : Judiciary (11759)
Tags : ITAT Judgments (5371)

3 responses to “CIT (A) Guilty of ‘Contempt’ For Not Following ITAT Verdict”

  1. CA.Rajendrakumar Jain says:

    With changing time it is becoming imperative for us that ,we professionals should be aware about the concepts like” judiciary discipline” . In CA curriculum we are lacking training of this type of legal process , hence CA’s don’t resort for such excesses by the tax officials , your this article will help fellow professionals to learn about such terms and show to the tax officers how arbitrary use of power assessee can use against them

  2. CA JP Agarwal says:

    With due respect to judiciary, I am of the opinion that judiciary is to be blamed for gross disrespect by govt. officials because govt. officials know that all delays are usually condoned ( may be in the name of public interest) and even the gravest penalty for contempt is usually unconditional apology and that too very rare.

    I in my practice in incometax dept. for last 3 decades, have not seen officials follow higher courts decision in right spirit. If the official is generous he may observe that the facts of the case are different than the ………. Case cited, otherwise the best thing would be to keep silence.

    The courts loose sight of the fact that the public at large is penalized first for seeking justice and secondly for lapses of the other party (even govt) in form of contempt proceedings. The costs awarded are almost unrealistic and negligible considering the actual costs and damages suffered.

    If the courts starts awarding exemplary costs and damages, litigation in India would not be advantageous to the parties and may come down substantially.

    In fact contempt is criminal and should be dealt accordingly and the offenders treated as criminals.

  3. AP Agrawal says:

    The appellant claimed costs only under the Act, which were rightly declined by the Tribunal. But the Tribunal does have an anciliary power of imposing costs, which has been confirmed by the Supreme Court. I also imposed costs on a similar recalcitrant ACST who declined to follow the tribunal’s order and forced the appellant to file appeal. The Department carried the matter of power of imposition of costs and the exercise thereof in the Delhi High Court and then the Supreme Court but without success.

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