TMI Blog2022 (8) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... second rule is `audi alteram partem', that is, `hear the other side'. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule i.e. 'he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right' or in other words, as it is now expressed, `justice should not only be done but should manifestly be seen to be done'. Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice. Order without valid reasons - unsustainable - In the present set of facts, we find that despite that material disclosed by the assessee before the respondent Nos.2 and 4 and despite specific stand taken by him that he has not deposited any cash amount in his bank account with Bank of Baroda what to say of Rs.13,67,24,000/-, the aforesaid respondents have neither considered the objection/ reply nor recorded any reasons for its rejection. Thus, right to reason which is an indispensable part of a judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gony then it is not an exercise of power but its abuse. No law provides protection against it. Harassment by public authorities is socially abhorring and legally impermissible which causes more serious injury to society. In modern society no authority can arrogate to itself the power to act in a manner which is arbitrary. In a recent judgment in NABCO PRODUCTS PRIVATE LIMITED [ 2022 (8) TMI 692 - ALLAHABAD HIGH COURT] this Court noticing increasing tendency amongst Assessing Officers, particularly the respondent No.4, i.e. National Faceless Assessment Centre to violate principles of natural justice, non-consideration of replies of assessees under one pretext or the other or rejecting it without recording reasons for rejection and thus expressed the need for evolving an effective system of accountability of erreing officers. Whether complete go-bye to Quashi-Judicial Function provided under the Act, 1961 ? - From the stands taken by the respondent No.1 in the aforequoted paragraphs 7, 8 and 9 of the counter affidavit, it is evident that all settled principles of law, duty to discharge quasi-judicial function and observance of statutory provisions of the Act, 1961 have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1961. Let a circular be issued by the respondent No.1 forthwith clarifying the position. Accountability - 'Sovereignty' and acts of State are two different concepts. The former vests in a person or body which is independent and supreme both externally and internally whereas latter may be act done by a delegate of sovereign within the limits of power vested in him. No civilised system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. No legal or political system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of officers of the State. The need of the State to have extraordinary powers cannot be doubted. But with the conceptual change of statutory power being statutory duty for sake of society and the people the claim of a common man or ordinary citizen cannot be thrown out merely because it was done by an officer of the State even though it was against law and negligent. Needs of the State, duty of its officials and right of the citizens are required to be reconciled so that the rule of law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , order or direction in the nature of Certiorari Quashing the Re-Assessment Order for the Assessment Year 2017-18, Dt. 31.03.2022 [Annexure No.13] which is made in gross violation of law and principles of Natural justice. III. To issue a writ, order or direction in the nature of MANDAMUS declaring that Amendment caused to the Income Tax Act, 1961, vide Section 42 of the Finance Act, 2022, OMITTING Sub-Section 9 of Section 144B of the Income Tax Act, is wholly unconstitutional and bad in law. IV. To issue a writ, order or direction in the nature of CERTIORARI quashing the Order Dt. 30.03.2021 issued under Section 151 of the Income Tax Act, by Respondent No.3 [Annexure No.2 (coll)] and the connected proceedings for Reassessment of Income for A.Y. 2017-18. 3. By order dated 26.05.2022, the relief No.III has been deleted on the statement made by the petitioner's counsel that the Relief No.III is not being pressed. 4. This writ petition was heard at length on 18.05.2022, 26.05.2022, 30.05.2022, 05.07.2022, 14.07.2022 and 05.08.2022 and the judgment was reserved on 05.08.2022. Submissions on behalf of the petitioner:- 5. Learned counsel for the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plete collapse of the system in the Income Tax Department. The deponent of the counter affidavit dated 24.07.2022 filed on behalf of Union of Indiarespondent no.1 is the Principal Chief Commissioner and he does even know basic principles of assessment and quasi judicial function of the assessing officer. If the averments made in paragraph Nos. 6,7,8,9, and 10 of the counter affidavit filed on behalf of the respondent no.1 are accepted, then entire assessment process would be an empty formality. From the state of affairs as are prevailing presently as reflected from the paragraph Nos. 6,7,8,9, and 10 of the counter affidavit filed on behalf of the respondent no.1, it is evident that even basic principles of Rule of law have been given complete goby and assessing officer are under threat of the top level or higher authorities that if they want to do justice or want to discharge quasi judicial function, they may face disciplinary action. Submissions on behalf of respondent Nos.2, 3 and 4:- 7. Sri Gaurav Mahajan, learned Senior Standing Counsel for the respondent Nos. 2,3 and 4-Income Tax Department submits that against the impugned reassessment order, appeal lie under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, 1961 which was followed by his letter dated 18.11.2021. In paragraphs 4 and 6 in the aforesaid letter dated 18.11.2021, the respondent No.2 has stated as under: 4. Enquiries made by the A.O. as sequel to information collected/received: Information uploaded by the DDIT(Inv.), Unit-3, Kanpur regarding unexplained cash deposits of Rs.13,67,24,000/- in this case, has been examined. Necessary verification was made from the entire details available in the ITR, on the database of ITBA and ITD and therefore, I have sufficient form of Reason to believe to frame my opinion. The Information available with this office has been analyzed and I have framed my opinion after due application of all the facts and mind. 6. Basis of forming reason to believe escapement of Income: In light of the details available on records and on the basis of above facts and findings, I have reason to believe that income of Rs.13,67,24,000/- which is chargeable to tax, has escaped the assessment. Thus, I have reasons to believe that this is a fit case for reopening and there is an escapement of income within the meaning of Explanation 2(a) to Section 147 of the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh with Bank of Baroda is totally baseless and against the facts hence all the proceedings on the basis of this issue are illegal, unconstitutional and unjustified. 3. That the assesse has deposited following sums in cash with other banks: (i) Union Bank of India Rs. 3,41,81,000/- (ii) State Bank of India Rs. 24,000/- The figure of deposit of Rs. 3,41,81,000/- is shown in 26AS and insight portal of the department. 26AS is attached as ANNEXURE-F. Hence the story of deposit of Rs.13,67,24,000/- is baseless and incorrect and all the proceedings on the basis of this information are liable to be quashed. Datewise details of cash deposited with Union Bank of India is attached as ANNEXURE-G. In this connection it is humbly requested that the source and details of cash deposit as per insight postal as referred to in the reasons recorded for initiating the proceedings U/S 148 should be provided to the assesse along with the documentary evidence. 4. That during the year under consideration the assesse has received following cash fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Subject to the above discussion, total income of the assessee is computed asunder: Total Income declared as per : Rs. 11,55,020 return As discussed in para 4.1 : Rs. 13,67,24,000/- Total Assessed Income : Rs. 13,78,79,020/- 6. Subject to the above, the total income of the assessee for the assessment year2017-18 and tax liability thereon are computed on ITBA module. Copy of calculation sheet and notice of demand are annexed herewith forms part of this order. Penalty u/s 271AAC of the I.T. Act, 1961 is initiated for penalty in respect of certain income. 7. The Assessment is hereby made u/s. 147 read with Sec. 144B of the Income-taxAct, 1961 as above and the sum payable or refund of any amount on the basis of the assessment is determined as per the notice of demand. Copy of Assessment Order along with Income Tax Computation sheet from ITBA module, Penalty Notices and Notice of Demand u/s. 156 of the Income-tax Act, 1961 being issued to the assessee. 13. Aggrieved w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the respondent no.1 and Sri Manu Ghildiyal, learned counsel for the respondent nos. 2, 3 and 4. Learned counsel for the petitioner has filed today supplementary affidavit, which is taken on record. This case prima facie shows high handedness and arbitrary exercises of powers by the respondents including the National Faceless Assessment Centre who are not ready to adhere to the basic principles of law and justice. An addition of Rs.13,67,24,000/- has been made in the income of the petitioner for the A.Y. 2017-18 without there being any material disclosing escapement of income by the petitioner. The petitioner has been continuously bringing it to the notice of the respondents that he has not deposited any amount in his bank account i.e. Bank of Baroda and also filed copy of the bank account, a copy of which has also been filed along with supplementary affidavit; and yet the respondents have made addition of Rs. 13,67,24,000/-. Basic principles of rule of law and justice has been deliberately denied to the assessee by the respondents. This prima facie shows conscious attempt to cause serious harassment to the assessee for reasons best known to the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the proceeding under Sections 148 and for passing order under section 147 of the Income Tax Act, 1961 making addition in income of Rs. 13,67,24,000/- is that the petitioner has deposited cash in the Bank account with Bank of Baroda, Shivrajpur Branch, Kanpur. Despite clear denial of the petitioner that no such cash deposit was made by him in the aforesaid Bank, the respondents have not even taken pain to examine his stand and in a most arbitrary and illegal manner, the reassessment order dated 31.03.2022 was passed making addition to Rs. 13,67,24,000/- in the income of the petitioner. The petitioner has filed copy of his Bank account with the Bank of Baroda, Shivrajpur Branch, Kanpur for the F.Y. 2016-17 relevant to the A.Y. 2017-18 which shows that there is no such cash deposit in the aforesaid Bank. Copy of the bank account has already been filed along with certificate of Chartered Accountant with supplementary affidavit dated 30.05.2022, yet the respondents have neither replied the contents of the writ petition nor the contents of the supplementary affidavit. 6. A short counter affidavit has been filed by the respondents. Even in the shortcounter affidavit, the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l knowledge and contents of paragraphs-3, 4, 5, 6, 7, 8, 10 and 13 sworn on the basis of records, are reproduced below: 3. That in light of the above it is respectfully submitted that the amount of Rs.13,67,24,000/- was reported in Insight Portal of the Department, which uses Data Analytics to collate information gathered in the data- base using various algorithms, and this information was inter alia the basis for reopening the assessment, issuance of notice u/s 148, and re-assessment of the case of the petitioner for Assessment Year 2017-18. 4. That it is further most respectfully submitted that in the case of thepetitioner, the amount showing in Insight portal was Rs.13,67,24,000/, which was reported as Cash Deposits in one or more accounts (other than a current accounts or time deposit) of a person and does not specify the Bank name. This clearly indicated that cash deposits had been detected by the algorithm in the various accounts of the petitioner, and other linked entities, totalling the aforesaid amount. 5. That it is further most respectfully submitted that the amount ofRs.3,41,81,000/- appears to have been taken as Rs.13,67,24,000/-, which is exactly four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner assessee has shown receipts at Rs. 1,73,09,104/- in his Profit and Loss Account while on the other hand the petitioner assessee in response to the Show Cause Notice dated 25.03.2022 has admitted cash deposits of Rs. 3,41,81,000/ which reflects in Form 26-AS of the petitioner also. Thus, this admission of the petitioner reflects that there was escapement of income to the tune of Rs. 1,68,71,896/- which was required to be examined. 19. A counter affidavit on behalf of the respondent Nos.2 and 3 sworn by Arun Kumar Bhatia, Joint Commissioner of Income Tax, Range-1(1), Kanpur dated 25.07.2022 has been filed in which in paragraphs 10, 28 and 31, he stated on the basis of records, as under:- 10. That in order to examine the issue of cash deposit of Rs. 13,67,24,000/in the bank account maintained with Bank of Baroda, Kanpur, the JDIT (Inv.), Unit-III, Kanpur, from where the information pertaining to the said cash deposit was first originated, was requested to furnish detailed/complete investigation report in the matter. The JDIT (Inv.), Unit-1, Kanpur vide letter dated 31.05.2022 has submitted his report in this regard. As per report of the JDIT (Inv.), a Tax Evasion P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that it transpired that the assessee had cash deposit of Rs.13,67,24,000/- during the financial year 2016-17 relevant to A.Y. 2017-18 which is not commensurate with the gross receipts shown by the petitioner in its return of Income [ITR-5] filed for A.Y. 201718...Thereafter, the assessee/petitioner was asked to explain the source of cash deposit of Rs.13,67,24,000/- and the same was added to the income of the assessee under section 68 of the Act, as unexplained cash credits vide order passed u/s.147 r.w.s. 144B of the Act by the NaFAC. 20. In the aforesaid paragraph-10 of the counter affidavit, the respondent Nos.2 and 3 has admitted that information of cash deposit of Rs.13,67,24,000/- was with respect to bank account of the petitioner with Bank of Baroda which first originated from the Joint Director of Income Tax (Inv.) Unit-III, Kanpur who, on request, submitted a verification report vide letter dated 31.05.2022 informing the said cash deposit. In paragrphs 5 and 6 of his counter affidavit, the respondent No.1 has admitted that the information of cash deposit of Rs.13,67,24,000/- is incorrect and the correct figure is Rs.3,41,81,000/-. He stated in paragraph-13 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it would be a case of change of opinion . If the assessment order is non-speaking, cryptic or perfunctory in nature, then it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to change of opinion . If the assessing Authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. (c) The words reason to believe suggest that the belief must be bona fide and must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. His vague feeling that there might have been some escapement of income from assessment is not sufficient. The reasons for the formation of the belief must be based on tangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reassessment order under Section 147 of the Act, 1961 is completely in conflict with the aforequoted principles, powers and limitations on exercise of powers under Section 147/148 by Income Tax Officers/ Authorities under the Act, 1961. The impugned reassessment order has been passed by the respondent No.4 in complete breach of principles of natural justice. Natural Justice:- 23. In paragraphs 27 and 28 of the writ petition, the petitioner has specifically stated that it exercised its right to be heard in the matter by requesting for a hearing through video conferencing within the time stipulated by the respondents-authorities yet even opportunity of hearing through video conferencing was denied. In support of its submissions, it also filed a screen shot asking for hearing through video conferencing which has been annexed as Annexure 12 of the writ petition. The respondent No.4 has not denied the contents of paragraphs 27 and 28 while replying it in paragraph 15 of his counter affidavit dated 23.07.2022. The reasons assigned by him is that the limitation was going to expire on 31.03.2022. The show cause notice was issued by the respondent No.4 on 25.03.2022, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Natural justice has been variously defined by different Judges, for instance a duty to act fairly, the substantial requirements of justice, the natural sense of what is right and wrong, fundamental justice and fair-play in action. Over the years by a process of judicial interpretation two rules have been evolved as representing the principles of natural justice in judicial process, including therein quasi-judicial and administrative process. They constitute the basic elements of a fair hearing, having their roots in the innate sense of man for fair-play and justice which is not the preserve of any particular race or country but is shared in common by all men. The first rule is `nemo judex in causa sua' or `nemo debet esse judex in propria causa sua' that is no man shall be a judge in his own cause. The second rule is `audi alteram partem', that is, `hear the other side'. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule i.e. 'he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right' or in other words, as it is now expresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this court. 31. In the case of Udhav Das Kewat Ram Vs. CIT 1967 (66) ITR 462, Hon'ble Supreme Court held that Tribunal must consider with due care all material facts and record its findings on all contentions raised before it and the relevant law. 32. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice. Highlighting this rule, Hon'ble Supreme Court held in the case of The Secretary Curator, Victoria Memorial v. Howrah Ganatantrik Nagrik Samity and ors., JT 2010(2)SC 566 para 31 to 33 as under : 31. It is a settled legal proposition that not only administrative but also judicial order must be supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence renders the order to be unsustainable. Hon'ble Supreme Court in the case of Chandana Impex Pvt. Ltd. Vs. Commissioner of Customs, New Delhi , 2011(269)E.L.T. 433 (S.C.)(para 8) held as under : 8. Having bestowed our anxious consideration on the facts at hand, we are of the opinion that there is some merit in the submission of learned counsel for the appellant that while dealing with an appeal under Section 130 of the Act, the High Court should have examined each question formulated in the appeal with reference to the material taken into consideration by the Tribunal in support of its finding thereon and given its reasons for holding that question is not a substantial question of law. It needs to be emphasised that every litigant, who approaches the court for relief is entitled to know the reason for acceptance or rejection of his prayer, particularly when either of the parties to the lis has a right of further appeal. Unless the litigant is made aware of the reasons which weighed with the court in denying him the relief prayed for, the remedy of appeal will not be meaningful. It is that reasoning, which can be subjected to examination at the higher forums. In State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority to take the action or to pass the order impugned. (ii) Where vires of an Act, Rules, Notification or any of its provisions has beenchallenged. (iii) Where an order prejudicial to the writ petitioner has been passed in violationof principles of natural justice. (iv) Where enforcement of any fundamental right is sought by the petitioner. (v) Where procedure required for decision has not been adopted. (vi) Where Tax is levied without authority of law. (vii) Where decision is an abuse of process of law. (viii) Where palpable injustice shall be caused to the petitioner, if he is forced toadopt remedies under the statute for enforcement of any fundamental rights guaranteed under the Constitution of India. (ix) Where a decision or policy decision has already been taken by the Government rendering the remedy of appeal to be an empty formality or futile attempt. (x) Where there is no factual dispute but merely a pure question of law or interpretation is involved. 37. The above principles are supported by law laid down by Hon'ble Supreme Court in the case of Himmatlal Harilal Mehta v. State of Madhya Pradesh, AIR 1954 SC 403, Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dispel any doubt which a citizen has against a high-handed or palpable illegal order which may be passed by the assessing authority. (Emphasis supplied by us) No Factual Dispute:- 39. That apart, we find that there is no factual dispute involved in the present writ petition that the information which was made basis for recording reasons to believe for escapement of income of the petitioner to tax, was unfounded and the cash deposit which has been shown by the petitioner in its bank account with Union Bank of India has not been disputed at all. That apart, the original assessment of the petitioner was made under Section 143(3) of the Act, 1961 in which Form 26AS as it existed at all relevant point of time, reflects the cash deposit by the petitioner in the Union Bank of India amounting to Rs.3,41,81,000/- which the petitioner assessee has always admitted and has shown in its books of accounts and a copy of statement of deposit was also filed by the petitioner before the respnodent No.4 during reassessment proceedings but arbitrarily the respondent No.4 baselessly assumed cash deposit in the bank account with Bank of Baroda amounting to Rs.13,67,24,000/- whereas a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (Emphasis supplied by us) Respondents Stand Whether complete go-bye to Quashi-Judicial Function provided under the Act, 1961:- 42. The respondent No.1 has filed the counter affiavit dated 24.07.2022. In paragraph-1 sworn on personal knowledge, it has been stated that the deponent of the counter affiavit has stated that he has read the writ petition, its annexures, stay application, affidavit and the orders dated 18.05.2022, 26.05.2022, 30.05.2022 and the order dated 14.07.2022 passed by this Court and is acquianted with the facts deposed and has been authrorised by the Central Board of Direct Taxes, New Delhi to file the counter affidavit on behalf of the respondent No.1. Paragraphs-7, 8 and 9 of the counter affiadvit filed on behalf of the respondent No.1, i.e. Union of India have been sworn on the basis of records. Paragraphs-7, 8 and 9 of the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 or 147 of the Act, 1961 would remain an empty formality, inasmuch as the Assessing Officer would create liability on assessees only on the basis of data fed in the data base/ portal of the department and would not like to adjudicate the matter in accordance with law so as to take risk of initiation of disciplinary proceedings against himself. 46. By no stretch of imagination or the provisions of the Constitution or the law evolved so far by judicial decisions, the stand so taken by the respondent No.1 in paragraphs 7 and 8 of the counter affidavit can be justified or conceived. It appears that either the deponent of the aforesaid counter affidavit namely Sri Shishir Kuamr Jha, Principal Chief Commissioner of Income Tax, U.P. (West) and Uttarakhand Region at Kanpur has stated the real state of affairs prevailing in the income tax department or has shown extreme negligence while making statement on oath on record in paragraphs 7 and 8 of the aforeaid counter affidavit. Quasi-Judicial Function:- 47. In State of H.P. vs. Raja Mahendra Pal and others, (1999) 4 SCC 43 (Paras-8 and 9), Hon ble Supreme Court explained the quasi-judicial acts and observed that these acts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is required by the statute to act judicially. 48. In the case of Orient Paper Mills Ltd. vs. Union of India, (1970) 3 SCC 76 (paras-4 and 5), Hon ble Supreme Court explained the duty cast upon an authority while exercising quasi-judicial function and held as under: It is apparent from the judgment referred to above and numerous other decisions of this Court delivered in respect of various taxation laws that the assessing authorities exercise quasi-judicial function and they have duty cast on them to act in a judicial and independent manner. If their judgment is controlled by the directions given by the Collector it cannot be said to be their independent judgment in any sense of the word. .......................... (Emphasis supplied by us) 49. In the case of Nareshbhai Bhagubhai and others vs. Union of India and others, (2019) 15 SCC 1, Hon ble Supreme Court held that necessary requirement of quasi-judicial function is to pass a reasoned order after due application of mind. It further held as under: 21. In the present case, it is the undisputed position that no order as contemplated in the eyes of law was passed by the Competent Authority in deciding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l function. Hon ble Supreme Court further held that it is one thing to say that while making the orders of assessment the Assessing Officer shall be bound by the statutory circulars issued by CBDT but it is another thing to say that the assessing authority exercising quasi-judicial function keeping in view the scheme contained in the Act, would lose its independence to pass an independent order of assessment. If the Assessing Officer passes an order at the instance or dictate of the higher authority, it shall be illegal. 52. For all the reasons aforestated, the stand so taken by the respondent No.1 in paragraphs-7 and 8 of the counter affidavit deserves to be rejected and is hereby rejected and it is directed that the respondent No.1 or other authorities under the Act, 1961 shall not interfere with the quasijudicial function and discharge of statutory duties by the Assessing Officers unless permitted by the Act, 1961. Let a circular be issued by the rspondent No.1 forthwith clarifying the position. 53. In view of the statement made by the respondent No.1 in paragraph10 of the counter affidavit, we direct as under: (i) The respondent No.1 shall ensure that all necessary ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell Co. Ltd. v. Broome13 on the principle that, an award of exemplary damages can serve a useful purpose in vindicating the strength of law'. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. That is provided by the rule of law. It acts as a check on arbitrary and capricious exercise of power. In Rookes v. Barnard14 it was observed by Lord Devlin, 'the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service'. A public functionary if he acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. He who is responsible for it must suffer it. Compensation or damage as explained earlier may arise even when the officer discharges his duty honestly and bona fide. But when it arises due to arbitrary or capricious behaviour then it loses its individual character and assumes social significance. Harassment of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries. (Emphasis supplied by us) 56. 'Sovereignty' and acts of State are two different concepts. The former vests in a person or body which is independent and supreme both externally and internally whereas latter may be act done by a delegate of sovereign within the limits of power vested in him. No civilised system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. No legal or political system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of officers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phs of this judgment, it is evident that the respondents have acted arbitrarily, without jurisdiction, in breach of principles of natural justice and abused the power conferred under the Act, 1961 and thus created a huge demand of income tax of Rs.16,90,61,731/-. We have also found that the reassessment proceedings were without jurisdiction. The information on the basis of which the reassessment proceeding was initiated against the petitioner, has been admitted by the respondent to be incorrect. Despite every effort made by the petitioner and the evidences filed by it to establish that there has been no escapement of income to tax and the information on the basis of which reassessment proceeding has been initiated is unfounded, respondents have not even looked into the reply and evidences filed by the petitioner and even his request for personal hearing through video conferencing was denied. Only a day's time was granted to the petitioner to submit reply to the show cause notice in reassessment proceedings which the petitioner submitted within time and yet his request for hearing through video conferencing was declined by the respondent No.4. This shows a complete failure to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commends to us, when it is noticed that the High Court has meticulously examined and correctly found that no fault or intent to evade tax could have been inferred against the writ petitioner. However, as commented at the outset, the amount of costs as awarded by the High Court in this matter is rather on the lower side. Considering the overall conduct of the petitioner No.2 and the corresponding harassment faced by the writ petitioner we find it rather necessary to enhance the amount of costs. Upon our having made these observations, learned counsel for the petitioners has attempted to submit that the questions of law in this case, as regards the operation and effect of Section 129 of Telangana Goods and Services Tax Act, 2017 and violation by the writ petitioner, may be kept open. The submissions sought to be made do not give rise to even a question of fact what to say of a question of law. As noticed hereinabove, on the facts of this case, it has precisely been found that there was no intent on the part of the writ petitioner to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequential proceedings are hereby quashed and following directions are issued:- (i) The respondent No.1 shall ensure that all necessary steps are taken within one month and a mechanism is developed and is put in place within one month so that assessees may not be harassed and may not suffer on account of own fault of the department in its data-base/ portal. (ii) The Respondent No.1 shall provide a mechanism and put it inplace within one month from today that the information fed on database/ portal is verified in reality and not as an empty formality as has been done in this case by the Deputy Director of Income Tax (Inv.), Unit-III, Kanpur, before initiating proceedings under Section 148A/148/147 of the Act, 1961 so that on one hand bona fide assessees may not face harassment and on the other hand tax evaders may not escape due to lapses of departmental officers. (iii) The respondent No.1 shall consider to develop a mechanism ofthe accountability of the officers who either do not observe stautory provisions of the Act, 1961 or fail to discharge their quasi-judicial function or act in complete breach of principles of natural justice. (iv) A circular be issued forthwith ..... X X X X Extracts X X X X X X X X Extracts X X X X
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