The Gauhati High Court has held that disciplinary action against CIT (A) could not be initiated for deleting Rs. 120.55 crore income tax addition in a hasty manner. The court held that the gravity of charge against the respondent has been diluted when the ITAT has remanded the matter to the Assessing Officer for deciding the issue afresh.
Vinay Kumar, the respondent/CIT(A) was posted at Kolkata as Commissioner of Income Tax (Appeal) in the year 2008. While discharging his duties as CIT(A)-VI, additional charge of CIT(A)-VIII was given to him during the period from 11.06.2008 to 30.07.2008. The CIT(A) decided and allowed an appeal preferred by an assessee against the assessment order passed by the Assessing Officer for the assessment year 2005-2006 and reversed the finding of the Assessing Officer and allowed sales commission and purchase commission to the assessee which were disallowed by the Assessing Officer.
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The department had preferred an appeal before the Income Tax Appellate Tribunal (ITAT). The ITAT, Kolkata allowed the appeal and reversed the finding of the CIT(A) allowing the sales commission and purchase commission to the assessee to the tune of Rs.120,55,52,350 and affirmed the finding recorded by the Assessing Officer.
The ITAT passed the order without providing opportunity of hearing to the assessee and therefore, the assessee approached the High Court at Calcutta challenging the order passed by the ITAT and High Court at Calcutta disposed of the appeal preferred by the assessee by which it kept in abeyance the order passed by the ITAT and directed the ITAT to take a fresh decision on the appeal filed by the department before it against the order passed by the respondent-CIT(A).
The petitioners alleged that the respondent deleted an addition of Rs.120.55 crore (approx.) in an appeal disposed of by him in haste and the respondent-CIT(A) had failed to maintain absolute integrity. The said Memorandum of charge was served upon the CIT(A)around six months before the retirement. The memorandum of charge was put to challenge by the CIT(A) before the CAT and the CAT set aside the same while relying on a decision passed by CAT.
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The CAT held that though the applicant/CIT(A) may not be immuned from disciplinary proceedings in discharging his duties in his capacity of quasi judicial nature, the basis for initiating the disciplinary proceedings as stated by the respondents that his decision was set aside by the higher authority i.e. ITAT is not an acceptable basis for initiating disciplinary proceedings against the applicant as the system would not be able to function if this is done in a routine manner.
The department contended that the Tribunal has grossly erred in allowing the Original Application filed by the respondent without taking into consideration the fact that it is settled that disciplinary action could be initiated against an officer in respect of judicial or quasi judicial functions and the officer who exercises jurisdiction or quasi judicial powers acting negligently or recklessly could be proceeded against by way of disciplinary action.
The CIT(A) contended that the CAT has not committed any illegality in setting aside the Memorandum of charges issued against him. The order passed by the CIT(A) in the appeal filed by the assessee, though once reversed by the ITAT but later on, pursuant to the direction given by the High Court at Calcutta, the ITAT has decided the issue regarding disallowance of sales commission and purchase commission to the assessee afresh and has remanded the matter to the Assessing Officer for deciding the issue afresh.
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The division bench of Chief Justice Mr. Vijay Bishnoi and Justice N. Unni Krishnan Nair has observed that though the Department was aware about the alleged negligent act of the CIT(A)/respondent since the beginning but has not taken any action against the respondent till passing of a fresh order by the ITAT, pursuant to the direction issued by the High Court at Calcutta.
While dismissing the department’s appeal , the court held that the gravity of charge against the respondent has been diluted when the ITAT has remanded the matter to the Assessing Officer for deciding the issue afresh.
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