Sunday, December 3, 2023

Allahabad High Court directs CBDT to fix accountability, accuses Income Tax officers of violating principles of natural justice

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The Allahabad High Court has directed the Central Board of Direct Taxes (CBDT) to fix their accountability, while making a serious comment on the officers of the Income Tax Department.

The Court has observed that the principles of natural justice are being repeatedly violated by the Income Tax Officers due to the absence of an effective system.

A Single Bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji passed this order while hearing a petition filed by Nabco Products Private Limited.

The writ petition has been filed praying for the following reliefs:

“a) To issue a writ, order or direction in the nature of Certiorari quashing the order dated 30.03.2022 passed u/s 148A(d) of the Income Tax Act, 1961 by the Respondent No 2;

b) To issue a writ, order or direction in the nature of Certiorari quashing the order dated 06.06.2022 passed u/s 154 of the Income Tax Act, 1961 by the Respondent No 2;

c) To issue a writ, order or direction in the nature of Certiorari quashing the notice dated 30.03.2022 u/s 148 of the Income Tax Act, 1961 by the Respondent No 2.”

The Court noted, “A short counter affidavit on behalf of the respondents dated 03.08.2022 has been filed.

“The aforesaid short counter affidavit, the respondents have stated as under:

“4. That at the same time the answering respondents are not in a position to / cannot deny the system generated e-proceedings response Acknowledgment dated 29.03.2022 issued to the petitioner vide Acknowledgement No 469506221290322 by which the petitioner submits that it had e-filed its reply dated 29.03.2022 as has been annexed alongwith the Writ Petition.

  1. That since the reply dated 29.03.2022 of the petitioner was not reflecting in the case history/notings maintained digitally on the ITBA Portal of PAN AAFCA8426N of the petitioner assessee as accessed by the Respondent No 2 on the date of passing of the order as such the Respondent No 2, under the circumstances, had passed the order dated 30.03.2022 issued under Clause (d) of Section 148-A of the Act and the Rectification Application filed u/s 154 of the Act was also decided under the same circumstances.
  2. That under the circumstances as enumerated in the preceding paragraphs the answering respondents most respectfully admit that the orders dated 30.03.2022 and 06.06.2022 impugned in the Writ Petition have been passed without considering the reply of the petitioner dated 29.03.2022 which was placed before the respondent no 2 alongwith the Application filed u/s 154 of the Act by the petitioner.”

“Thus, from the facts as admitted in the short counter affidavit it is undisputed that the impugned order has been passed by the respondents arbitrarily and in gross violation of the principles of natural justice. Therefore, the order dated 30.03.2022 under Section 148 A(d) and the order dated 06.06.2022 under Section 154 of the Act, 1961 both passed by the respondent and the notice dated 30.03.2022 under Section 148 of the Act, 1961, can not be sustained and are hereby quashed”, the Court observed.

It said, “We are frequently coming across cases, where Income Tax Authorities are giving a complete go by to the principles of natural justice. The excuse orally being set up usually by the departmental counsels is that there is some problem in the computerisation system, which is solely controlled by the respondent no 1 i.e the Central Board of Direct Taxes, New Delhi, and they cannot, at their own, correct the system.

Be as it may, the system has been introduced and being implemented by the respondents and, therefore, it is their primary duty to immediately remove shortcomings, if any, in the system. For the wrongs of the respondents, the assessee can not be allowed to suffer and be put to harassment. The prevailing state of affairs clearly reflects that in the absence of any effective system of accountability of the erring officers, the harassment of the assessees and breach of principles of natural justice by the Officers is resulting in an uncontrolled situation.

The practice of frequently violating principles of natural justice, non- consideration of replies of assessees under one pretext or the other or rejecting it with one or two lines orders without recording reasons for rejection, is gradually increasing, which needs to be taken care of immediately by the respondents at the highest level, otherwise prevailing situation of arbitrary approach and breach of principles of natural justice may not only adversely affect the assessees who pay revenue to the Government, but also may develop a perception amongst people/assessees that it is difficult to get justice from the authorities in statutory proceedings.

“For all the reasons aforestated, the impugned order and the notice as aforesaid are quashed. Liberty is granted to the respondents to pass an order afresh under Section 148A (d) of the Act 1961 after affording reasonable opportunity of hearing to the petitioner. The respondent no 1 (Union Of India) is directed to take forth with all required steps to remove shortcomings in the system and develop a system of accountability of erring officers/ employees.

The writ petition is allowed to the extent indicated above, with cost of Rs 50,000, which the respondents shall pay to the petitioner within two weeks by an account payee bank draft or RTGS”, the Court ordered.

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