1. In the case of Commissioner of Income Tax-6, Mumbai vs Maersk Global Service Centre (I) Pvt. Ltd (TS-260-HC­2014 (BOM)-TP), the revenue was in appeal before the Bombay High Court, questioning the orders both of the Commissioner (Appeals) and the Income Tax Appellate Tribunal. The burden of the revenue’s song was that, in view of the infirmities of the Assessing Officer’s (AO’s) order, the Commissioner ought to have remanded the case back to him for a fresh consideration. Finding that the Commissioner had considered all aspects, including those alleged to have been ignored by the AO (in other words, the Commissioner himself corrected the omission of the AO by undertaking the exercise that the AO had omitted to do) and passed a reasoned order, the Tribunal had negated the appeal and upheld the Commissioner’s order. While dismissing the appeal, the High Court said:

To our mind, the order of the Tribunal is not vitiated by any serious legal infirmity nor is it perverse, rather it is unfortunate that a detailed and properly reasoned order of the First Appellate Authority and the Second Appellate Authority is being challenged and that too on such grounds by the revenue. We would highly appreciate the parties not discrediting the Tribunal or the First Appellate Authority in this manner. The complaints about unfair treatment or breach of principles of natural justice ought to be backed and supported by some material which would demonstrate serious prejudice and loss. A technical objection of nature will not carry the case of either parties (sic) any further. It would mean that a speaking order or the record is disputed or challenged by oral complaints across the bar before this Court. Nothing is going to be achieved by such an approach and in the least by the revenue. In these circumstances and finding that the present appeals are brought by the revenue on frivolous complaint of breach of principles of natural justice, we are constrained to dismiss them with costs. That is because we are also wasting precious judicial time by hearing such appeals and perusing the record.”

2. In M/s RGL Converters Vs Commissioner of Central Excise Delhi-I (2014-TIOL-2305-CESTAT-DEL), while upholding the taxpayer’s appeal, the CESTAT felt compelled to award costs to the appellant and direct a copy of their order to be sent to the CBEC and Secretary (Revenue). This was a case involving failure of judicial discipline on the part of original and appellate officers of the department in not following a judicial precedent binding on them and the consternation of the Tribunal is clearly reflected in the following observations:

10. It is axiomatic that judgments of this Tribunal have precedential authority and are binding in all quasi-judicial authorities (Primary or Appellate), administering the provisions of the Act, 1944. If an adjudicating authority is unaware of this basic principle, the authority must be inferred to be inadequately equipped to deliver the quasi-judicial functions entrusted to his case. If the authority is aware of the hierarchical judicial discipline (of precedents) but chooses to transgress the discipline, the conduct amounts to judicial misconduct, liable in appropriate cases for disciplinary action……

12. Nevertheless, the primary and the lower appellate Authorities in this case, despite adverting to the judgment of this Tribunal and without concluding that the judgment had suffered either a temporal or plenary eclipse (on account of suspension or reversal of its ratio by any higher judicial authority), have chosen to ignore judicial discipline and have recorded conclusions diametrically contrary to the judgment of this Tribunal. This is either illustrative of gross incompetence or clear irresponsible conduct and a serious transgression of quasi-judicial norms by the primary and the lower Appellate Authorities, in this case. Such perverse orders further clog the appellate docket of this Tribunal, already burdened with a huge pendency, apart from accentuating the faith deficit of the citizen/assessee, in departmental adjudication……

15. In the circumstances and since the Authorities below have adjudicated against the assessee, despite and clearly contrary to the binding precedent and thereby subjected the assessee to an avoidable litigative trauma and the accompanying expenditure, we allow the appeal with costs of Rs.1 0,000/- payable by Revenue to the appellant – assessee within one month from the date of receipt of this order.

16. We direct that copies of this order be communicated to the Central Board of Excise and Customs and to the Secretary (Revenue), Ministry of Finance, Government of India, for information.”

3. Yet another example is furnished by the ITAT order in the case of ITO – 9(1)(4) vs. M/s Growel Energy Co. Ltd (ITA No. 338/Mum/2011). This was a departmental appeal filed against an order of Commissioner (Appeals) in which he had upheld the party’s appeal against the AO’s assessmentThe Tribunal found the appeal ill-considered, ill-prepared and baseless and dismissed it, with costs awarded to the assesse while making some stinging remarks on the AO who preferred it and the Commissioner who authorised it. To quote:

At the outset, it may be mentioned that the Income Tax Officer, who is the appellant herein, as well as the Commissioner of Income Tax, who has authorized the AO to prefer an appeal, did not apply their mind in the correct perspective and in a very lacklustre and routine manner filed the appeal which, in turn resulted in wastage of time which would be highlighted at appropriate places……………………………………………………………………………. ”

“A plain look at the findings of the CIT (A) clearly indicates that the AO was desperate to make an addition under Section 40(a)(ia) of the Act thereafter under Section 69C of the Act by stretching the language of the section to an extent where no person with a reasonable understanding of law would not have applied Section 69C in the said context. However, he chooses to file a further appeal and seeks permission of the Commissioner, who has immediately granted permission. At this juncture it may be noticed that the power is vested with the Commissioner of Income Tax and not with the AO because the Legislature, in its wisdom, thought that a superior/senior officer can take a more balanced decision so as to avoid filing frivolous appeal in a routine manner. However, even the Commissioner has not given his reasons as to why he has authorized the AO to file an appeal on this issue.”

Noticing a basic error in the grounds of appeal on account of casualness in drafting, which led to an opposite meaning from the grounds of appeal being conveyed, the Tribunal observed:

“…., Neither the learned DR cared to look at the grounds, nor the AO intended to change the ground of appeal. Even if it is assumed that the AO seeks to challenge the order passed by the CIT (A) on this issue, even before us no material, whatsoever, was placed to show as to under which provision of law addition can be made…”

“Having heard the learned DR and the learned counsel for the assessee in this regard, we are of the firm view that the AO has raised a soul-less ground which deserves to be dismissed in-limine. We could have saved a lot of time had the Commissioner not given his authorization on such frivolous issues. On the contrary, it is incumbent upon the Commissioner, as a supervisory authority, to admonish the AO for making an addition without basic understanding of legal posiion…”

“Having regard to the circumstances of the case, we are of the firm view that the order passed by the learned CIT(A) does not call for any interference. We hold accordingly…”

“As we have already mentioned, on account of improper action on the part of the Commissioner of Income Tax, as well as the AO, the assessee had to engage a counsel and incur substantial expenditure to defend its case. Therefore, we award a token cost of Rs. 5000 upon the Commissioner of Income Tax who has given the authorization and cost of Rs. 10,000 upon the AO who has filed this appeal.

The said payment should be made to the assessee within one month from the date of receipt of this order. Registry is also directed to mark a copy to the Chairman CBDT so that in future the Income Tax Commissioners who are responsible for filing appeals before the Tribunal, would take proper care to scrutinise the issues before authorising the AO to file appeals before the Tribunal. With these observations, the appeal filed by the Revenue is treated as dismissed with costs.”

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2021