By TIOL News Service

MUMBAI, SEPT 25, 2017: THE issue before the Bench is - Whether Officers discharging quasi-judicial functions in the Income Tax Department are necessarily required to decide cases in favour of Revenue or face Departmental action. NO is the answer.

Facts of the case

The Assessee, an IRS officer, was posted as DCIT between the years 1994 and 1996. The CIT randomly selected 100 cases wherein orders were passed by the Assessee for regular inspection and found that they were different from the cases taken up for vigilance inspection. On the basis of inspection in six cases, the CIT recorded adverse entries in the ACR of the Assessee for the year 1995-96. The Assessee made representation seeking expunction of adverse entries in the ACR and for upgradation of the same, which was considered favourably and directions were issued by a Member of CBDT expunging adverse remarks in four columns out of six columns in the ACR for the year 1995-96.

Aggrieved Assessee tendered a representation to the President of India. It was then communicated to the Assessee that the adverse entries made in column 20 of Part III and Column 3 of Part V, recorded in the ACR for the year 1995-96, was expunged. The Assessee also submitted that when he became eligible for promotion to the post of Pr. CIT, a Memorandum of Charge under Rule 16 of Central Civil Services (Classification, Control and Appeal) Rules, 1965 was issued by the CBDT Chairman. The charges levelled against the Assessee were in respect of irregularities in assessment orders passed by him in six cases while he was posted as DCIT. The charge in the second charge sheet was in respect of violation of Rule 3(1)(i), (ii) and (iii) of Central Civil Services (Conduct) Rules 1964.

In Writ, the High Court held that,

Whether officers discharging quasi-judicial functions in the Income Tax Department are necessarily required to decide cases in favour of Revenue or face Departmental action - NO: HC

++ the fact remains that the decision given by the Assessee has been upheld by the judicial forum. Even the appeals presented against the orders passed by the Assessee were disposed of in view of quashing of the block assessment notices and ultimately, the Division Bench of the Madras High Court directed the matters to be remitted back. There may be two different views on interpretation of a particular provision of law or as regards interpretation of the precedence. However, some view taken by the deciding authority, which is not to the satisfaction of the department, cannot form basis for proceeding departmentally against the quasi-judicial authority. If such logic is applied and is accepted as a correct proposition, it would be difficult for the judicial forums to render decisions in the matter, which may lead to disastrous consequences. The delay in taking cognizance of the alleged acts of misconduct or lack of devotion to the duty, itself is a ground for quashing the charges;

++ delay in proceeding against the Assessee caused serious prejudice to him since the matter has been opened up at the stage when the Assessee has come within the zone of consideration for promotion to the higher post. Looking to the gravity of the charges, it must be noted that, in respect of the Memorandum of Charge served upon the Assessee, which is a subject matter of Writ Petition No. 10120/2015, Memorandum of Charge has been served after about 20 years. Out of the six cases mentioned in the memorandum of charge, three cases were the matter of consideration for recording adverse entries against the Assessee. Those adverse entries, recorded at the relevant time, were expunged on consideration of representation / appeal by the Assessee. It is, thus, prima facie clear that the charges were not substantiated and as such, adverse remarks were expunged. So far as other three cases are concerned, the allegation is in respect of lack of devotion to the duty. There is no allegation of corrupt motive or corrupt practice attributed to the Assessee in any of the Memorandums of Charge;

++ so far as second Memorandum of Charge, which has been served after delay of about seven years, is concerned, the department for the first time, raised a contention in respect of lack of jurisdiction invested with the Assessee for deciding the cases. Though the department presented appeals challenging the appellate orders passed by the Assessee, such contention was never raised before any forum. The contention raised by the department, in that regard, is also questionable;

++ the decisions rendered by the Assessee on merit in the matter of Mr. Rakesh Sarin are questioned referring to the interpretation put by the Assessee to certain precedences / case law and the interpretation of the relevant provisions of Income Tax Act. Merely because the interpretation put by the Assessee may not be acceptable to the department, itself cannot be a matter of departmental enquiry. If such view is accepted, it would be highly impossible for the quasi-judicial authorities to take decisions in the matter, which would severely prejudice the administration. The department has not attributed anywhere corrupt motive or dishonest conduct on the part of the Assessee while deciding the matters. The belated Memorandums of Charge served on the Assessee surely causes prejudice to the Assessee. Gravity of the allegations also do not calls for permitting the department to proceed with the belated charges levelled against the Assessee after 20 years and seven years, respectively;

++ for the reasons recorded above, according to us, both the writ petitions deserve to be allowed and same are accordingly allowed. The Memorandums of Charge, served on the Assessee, stand quashed and set aside.

(See 2017-TIOL-2006-HC-MUM-IT)