Personal fine imposed on PrCITs for filing frivolous appeals waived by division bench of High Court. A fine of Rs. 50000/- each was imposed on 2 PrCIT and one ACIT.
The Income Tax Department (appellant) had filed an intra-Court appeal against the order passed by the Single Judge of the High Court, who while dismissing the writ petition filed by the appellant had imposed the costs of Rs. 50,000/- personally to be recovered from the officers concerned, who sanctioned the filing of petition and who filed the petition.
ABCAUS Case Law Citation:
ABCAUS 23011 (2018) (04) HC
The Income Tax Appellate Tribunal (ITAT) while considering the prayer of the respondent assessee for stay against the demand of Rs. 22.17 crores arising from Transfer Pricing Adjustment made on account of the expenditure towards Advertisement, Marketing and Promotion (AMP), observed that the issue was a debatable one; and hence, after finding a prima facie case, directed the assessee to make a further payment of Rs. 2 crores above the payment of 15% of the demand in question already made and stayed the balance demand for a period of 90 days or till disposal of the appeal.
However, the orders passed by the Tribunal were sought to be questioned by the appellant in a writ petition invoking the extraordinary jurisdiction of the High Court under Articles 226/227 of the Constitution before the Single Judge who was of the view that the Tribunal was entitled to pass an interim order and which was fair and reasonable and not prejudicial to the Department, particularly when the appeal filed by the assessee was set down for final hearing.
The Single Judge, expressed concern that the Department had been filing such petitions without any rhyme or reason and called upon the Chief Commissioner of Income Tax to file his affidavit as to for what reason filing of such writ petition was considered necessary and as to why exemplary costs be not imposed in the matter.
The Hon’ble Single Judge came down heavily on the Income tax Department. He went on to observe that the dogged approach of the Revenue in multiplying litigations in the Constitutional Courts by filing frivolous writ petitions wastes the precious time and public hour which in turn depriving the Courts to devote time to causes of poor and important matters. Not respecting the orders passed by the statutorily created ITAT shows lack of judicial and hierarchical discipline. First raising illegal and high pitched demands and then coercively recovering the same showing scant regard to ITAT and invoking writ jurisdiction is nothing but utterly irresponsible and unfair behaviour.
The Hon’ble Single Judge remarked that the Revenue, instead of pursuing hearing of the appeal before the ITAT, chose to file the writ petition which was absolutely misconceived remedy. He questioned if the Income Tax Officials tried to prove their superior wisdom over the wisdom of the Tribunal by seeking intervention of the High Court?
Being not satisfied with the submissions made, he dismissed the writ petition and imposed a fine/costs of Rs. 50,000/- to be paid by each of the Principal Commissioner of Income Tax who filed the affidavit and the Principal Commissioner of Income Tax who sanctioned the filing of the appeal and also the Assistant Commissioner of I T who had filed the appeal. It was clarified that those costs shall be paid personally and not from the Government funds.
Aggrieved by the order and remarks passed by the Single Judge, the Revenue had filed this inter court appeal. The instant inter court appeal was heard by a division bench headed by the Chief Justice.
The Income Tax Department submitted that the writ petition against the order of Tribunal was filed bona fide, particularly in view of the findings recorded against the assessee by the officers concerned. It was also stated that the Department felt constrained to file the writ petition for want of consistency in the Tribunal’s approach in the matters of stay. It was submitted that in any case, imposition of personal costs on the officers concerned was not called for in the present case. It was further submitted that several observations made by the Single Judge may cause prejudice to the case of the Department before the Tribunal. Accordingly, the Department prayed for setting aside of such observations as also waiving the costs imposed.
The respondent assessee did not opposed the prayer made on behalf of the ITD that the observations made in the order impugned be not considered prejudicial to their case before the Tribunal and for waiving of the costs. It was however, maintained that the interim order as passed by the Tribunal called for no interference.
The Hon’ble High Court opined that they were not at variance with the Single Judge on the basics that indiscriminate filing of the writ petitions in relation to the interim orders need to be eschewed and the matters should not be unnecessarily dragged in the higher Courts but, on the facts and circumstances of the present case where, as against the impugned demand of Rs. 22.17 crores, the Tribunal granted the stay with deposit of Rs. 2 crores in addition to Rs. 3.32 crores; and looking at the issues involved, as regards expenditure towards AMP, it was difficult to deduce that the writ petition was filed in an entirely irresponsible manner or that the income tax authorities should be penalized in monetary terms on that count.
The Hon’ble High Court opined that interest of justice shall be served with the clarification that the observations occurring in the impugned order would only be considered as being relevant for the purpose of the consideration of the matter for interim relief and by waiving the costs imposed. It would, however, be expected of the authorities concerned to take necessary steps so as to guard against filing of frivolous petitions, as indicated and observed by the Single Judge.
Accordingly the appeal was allowed to the extent as above.
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