Mere fact that Order is not Acceptable to dept is not a Ground for not Following It: Bombay HC quashes Order under Income Tax Act [Read Order]

The Bombay High Court has observed that the mere fact that the order is not acceptable to dept is not a ground for not following it. The court held that the revenue officers are bound by the decisions of appellate authorities while disposing of quasi-judicial issues and quashed the Order under the Income Tax Act, of 1961.

M/s. OM Siddhakala Associates, the Petitioner challenged the order passed by Respondent No. 3 rejecting Petitioner’s application filed under Section 264 of the Income Tax Act, 1961 (“the Act”).

The Apex Court in Union of India and Others v. Kamlakshi Finance Corporation Ltd. has held that in disposing of the quasi-judicial issues before them, the 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 etc.   

“The Respondent No. 3 should have realized that the order of Income Tax Appellate Tribunal ( “ITAT” ), Pune was binding upon him and the principles of judicial discipline required that orders of the highest Appellate Authorities should be followed unreservedly by the subordinate Authorities.  The mere fact that the order is not acceptable to the department, in itself an objectionable phrase, can furnish no ground for not following it unless its operation has been suspended by the Competent Court.  If this healthy rule is not followed, the result would only be undue harassment to Assessees and chaos in the administration of tax laws.”, the court viewed.

The division bench comprising Justice K R Shriram & Justice Dr Neela Gokhale quashed and set aside the order and remanded the matter to Respondent No. 3 for de-novo consideration.  Respondent No. 3 shall follow the law as laid down by the ITAT. 

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