Case Law Details

Case Name : The Commissioner of Income Tax­-2 Vs M/s. Larsen and Toubro Ltd (Bombay High Court)
Appeal Number : Income Tax Appeal No. 424 of 2012 , 425 of 2012, 483 of 2012
Date of Judgement/Order : 10/07/2014
Related Assessment Year :
Courts : All High Courts (4420) Bombay High Court (802)

The Revenue officers must realize that just like other powers a executive power conferred in them is in the nature of a Trust. They hold office as trustees of the public at large. They deal with public revenue and public money and that cannot be wasted in such frivolous litigation. We, therefore, dismiss these appeals with costs quantified at Rs.1,00,000/­ each. Costs shall be paid to the Maharashtra State Legal Services Authority, Mumbai within a period of four weeks from today.

HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 424 OF 2012 , 425 OF 2012, 483 OF 2012
  The Commissioner of Income Tax­
Vs.
M/s. Larsen and Toubro Ltd

CORAM :­
S.C. DHARMADHIKARI &
B.P. COLABAWALLA,  JJ.
DATE :­ JULY 10, 2014.

P. C.:
When these matters were called out, one of us (Justice B. P. Colabawalla), indicated to both the Assessee and Revenue that he holds shares of Assessee M/s. Larsen and Toubro Ltd, but both the sides fairly stated that the matter may not be removed from our Board. There is no need for Justice B. P. Colabawalla to recuse himself from this matter. It is on that agreed understanding and basis that we have heard both sides.

2. Having heard Mr. Suresh Kumar at some length and perusing with his assistance the orders passed in these Appeals by the Tribunal, we are of the opinion that the Revenue appeal is liable to be dismissed.

3. Imposition of penalty under Section 271(1)(c) of the I. T. Act has been set aside by the Tribunal in all these matters on the findings of fact that merely because the Assessee raised a claim which was eventually disallowed, does not mean that ingredients of clause(c) are satisfied or fulfilled so as to justify imposition of penalty.

4. In doing so, the Tribunal merely followed the dictum of the Hon’ble Supreme Court in several decisions and in the case of Commissioner of Income Tax v/s Reliance Petro­ products Pvt Ltd reported in 322 ITR 158(SC). The penalty has been therefore rightly deleted.

  1. Such a finding essentially based on the facts and circumstances peculiar to the assessee, does not raise any substantial question of law. We are surprised if not shocked that such appeals are being brought before us and precious judicial time is being wasted that too by the Revenue. The least and minimum that is expected from the Revenue officers is to accept and abide by the Tribunal’s findings in such matters and when they are based on settled principles of law. If they are not deviating from such principles and are not perverse but consistent with the material on record, then, we do not find justification for filing of such appeals. We have found that merely expressing displeasure orally is not serving any purpose.

6. Time and again we have to deal with such Appeals. Merely because they are filed that they get listed on the Daily Admission Board. The Advocates filing them and routinely, so also those instructing them do not have authority to withdraw them. Consequently, they are pressed and argued resulting in a hearing, may be brief and an order of this Court dismissing them. Some times there are at least 3­5 such cases on our daily board. We do
not understand why higher officials do not have the courage to take bold decisions particularly of not pursuing such matters upto this court or higher. Because the Assessee is a leading Public Limited Company should not act as a deterrent for them to take a informed, rational decision and subserving larger Public Interest. A realization of this nature is a need of the hour as higher courts do not have to deal with Tax and Revenue matters only but all those involving life and liberty of citizens, their property rights, Rights of Children, Women and Senior Citizens. These rights are also precious and the legitimate expectations of such persons or groups of easy and expeditious justice also have to be fulfilled by the higher judiciary. The biggest litigant, namely, the State ought to be aware of the Pendency of Cases in High Courts of Bombay, Madras, Calcutta and Allahabad for example. If their policies particularly  on litigations are not aimed at reducing frivolous and speculative litigations, then, the least that can be said is that the State has failed to act for public good and in Public Interest. The State is expected to act as a Model Litigant. It must set an example for the Public to follow and we hope that this order acts as a reminder for all concerned to atleast now take remedial steps and measures. It is therefore that despite the persuasive skills of Mr.Sureshkumar, who fervently pleaded not to pass any order imposing costs, that we are constrained to impose costs.

7. The Revenue officers must realize that just like other powers a executive power conferred in them is in the nature of a Trust. They hold office as trustees of the public at large. They deal with public revenue and public money and that cannot be wasted in such frivolous litigation. We, therefore, dismiss these appeals with costs quantified at Rs.1,00,000/­ each. Costs shall be paid to the Maharashtra State Legal Services Authority, Mumbai within a period of four weeks from today.

  1. It would be open for the superior/competent authority to recover the costs personally from the officer responsible and equally take disciplinary action against him if the power to decide about filing such appeals is abused or the decision making authority is utilized to harass innocent Assessees. Every case must be dealt with on its merit and no routine exercise ought to be undertaken merely because the Revenue impact is higher or the status or financial position of the Assessee is influential and strong. That cannot be the only yardstick or criteria.

( B. P. COLABAWALLA, J.)  (S. C. DHARMADHIKARI

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0 responses to “Mumbai HC imposes penalty on I-T department for frivolous litigation”

  1. CA Deepak Soni says:

    Will the Bom High Court come to the rescue of an innocent assessee where he is harassed by the ITO including the CPC by omitting to take any action or taking the wrong action or in the name of computer process the provisions of the law are ignored ?

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