TMI Blog2001 (1) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as under: The Asstt. Director of Investigation (ADI), Hyderabad, upon warrant of authorisation from the competent authority under s. 132 of the IT Act, 1961, on 30th May, 1990, searched at Hyderabad airport one Shri Bharat Kumar B. Doshi, one of the appellant herein and a partner in the firm of M/s Bharat Hardware Iron Stores, Nagpur. The raid at Hyderabad airport resulted in recovery of a sum of Rs. 11.50 lakhs, certain bank cheques and demand drafts and other incriminating material in the custody and possession of Shri Bharatkumar B. Doshi. The said Shri Bharatkumar B. Doshi in his statement on 31st May, 1990, under s. 132(4) of the Act to the ADI, Hyderabad, confessed that the recovered amount of Rs. 11.50 lakhs represented collection of sale proceeds from Hyderabad parties of unrecorded sales of the partnership firm of M/s Bharat Hardware Iron Stores, Nagpur, in which he was a partner. He further confessed that the said cash was the income of the said partnership firm and that the same will be offered for taxation in the firm's assessment for the asst. yr. 1991-92. The recovered amount was seized by the ADI, Hyderabad, and proceedings under s. 132(5) of the IT Act r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of the above named appellants under the provisions of ss. 234A, 234B and 234C aggregated to Rs. 1,82,080. These amounts were added to the tax liability and demand inclusive of interests was raised in terms of s. 156 of the Act after adjusting the prepaid taxes. 6. Curiously, after a lapse of nearly 28 months from the date of passing of the orders under s. 143(1)(a), the Dy. CIT, Special Range, Nagpur (AO), suo motu without any move, application or promoting from any of the above-mentioned appellants passed on 26th May, 1994, three separate orders under s. 154(1)(b) of the Act in the case of each of the above-mentioned appellant-assessees stating therein that there was a mistake in the orders passed on 29th Jan., 1992, under s. 143(1)(a) of the Act in charging interests under ss. 234A, 234B and 234C in the cases of above-mentioned three assessees (appellants herein) because of adjustment of excess seized cash from the firm's assessment to the individual assessments of the assessees (appellants herein). The Dy. CIT, Special Range, Nagpur, considered charging of interests under ss. 234A, 234B and 234C in these three cases as mistakes apparent on record and, therefore, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, Circle 1(2), Nagpur, the deletion of interests by the Dy. CIT in the orders dt. 26th May, 1994, passed under s. 154(1)(b) of the Act was a clear and patent mistake of law apparent on record requiring rectification and amendment. The appellants, due to short time given, submitted no reply whatsoever to the proposed amendment. The Asstt. CIT also issued notice under s. 154 of the Act to the firm proposing to rectify the order, dt. 25th March, 1994, passed under s. 143(3) wherein interests under ss. 234A, 234B and 234C were not charged, though charged in the order, dt. 29th Jan., 1992, passed under s. 143(1)(a) of the Act. In the firm's case also, an order under s. 154 was passed on 17th March, 1998, charging interests under ss. 234A, 234B and 234C of the Act which was challenged by the firm before the CIT(A), Nagpur. 10. Since the appellants did not furnish replies to the show-cause notices issued for rectification of the orders passed by the then Dy. CIT, Special Range, Nagpur, on 26th May, 1994, under s. 154(1)(b) of the Act deleting the interests levied in the cases of above-mentioned two appeals under ss. 234A, 234B and 234C, the Asstt. CIT, Circle 1(2), Nagpur, passed order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be illegal or without jurisdiction. The same are sustainable in law and it is ordered accordingly." 12. The firm preferred an appeal against the said order of the CIT(A) and the same is pending before the Nagpur Division Bench of this Tribunal which is not functioning since 4th June, 2000, as no A.M. has been posted by the President of this Tribunal. The CIT(A) also dismissed the appeals filed by the above-mentioned three appellants herein not giving separate reasons but adopting the reasons given by him in para 7.2 of the order dt. 8th Oct., 1998, in the case of the firm of M/s Bharat Hardware Iron Stores, Nagpur. It is for these reasons that the present appeals came to be filed before this Tribunal by the assessees mentioned above. 13. Shri S.R. Chhallani, chartered accountant, appeared for the three appellants mentioned above and Shri N.P. Sinha, senior authorised representative of the IT Department, appeared for the AO. Shri S.R. Chhallani made two-pronged attack of the orders passed by the CIT(A) in the cases of three appellants and took me to the reasons given in the appeal order dt. 8th Oct., 1998, in the case of the firm which have been adopted as his reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Dy. CIT, Special Range, Nagpur, suo motu, on his own without any petition, application, move or approach by any of the appellants herein, deleted the interests under the provisions of ss. 234A, 234B and 234C which were charged in orders, dt. 29th Jan., 1992, passed under s. 143(1)(a) in all the three cases. The interest liability under those three provisions was, therefore, reduced because the then Dy. CIT Special Range, Nagpur, was of the opinion that the interests under those three provisions were not lawfully chargeable because of the adjustment of the balance seized cash after adjustment of the demand in the case of the firm of M/s Bharat Hardware Iron Stores. Subsequently, the Asstt. CIT being prompted by the audit party's direction, acted to amend under s. 154 of the Act the orders passed on 26th May, 1994, by the Dy. CIT, Special Range, Nagpur, under s. 154(1)(b) of the Act, suo motu deleting the interests originally charged on 29th Jan., 1992, under the afore-stated three provisions of the Act. Arguing in support of the appeals, Mr. Chhallani submitted that charging of interest, first on 29th Jan., 1992, in orders under s. 143(1)(a), then subsequently deleting those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atable issue and the Hon'ble Supreme Court and various High Courts have clearly held in numerous cases that mistake apparent on recorded under the rectificatory provisions of the IT Act can only be resorted to, to amend or rectify only patent, obvious and clear mistakes of law and facts, and not those mistakes, either of facts or law, on which there is a debate or argument or on which there are conceivably two opinions. Mr. Chhallani relied on the decision of the apex Court in the case of T.S. Balaram, ITO vs. Volkart Bros. Ors. (1971) 82 ITR 50 (SC) and that of the jurisdictional Bombay High Court in the case of CIT vs. Ramesh Electric Trading Co. (1993) 203 ITR 497 (Bom). Reliance was also placed by Shri Chhallani on the order dt. 31st March, 2000, of Nagpur Division Bench of this Tribunal (to which I am a party) in the batch of appeal being ITA Nos. 93, 94, 97 and 170/Nag/97 in the case of Shri Milind D. Mahajan, Nagpur three Ors. a copy of which has been filed by the Senior Departmental Representative Shri N.P. Sinha in the paper book filed on 27th Nov., 2000, and placed from pp 18 to 20. Concluding the arguments, Mr. Chhallani humbly prayed for quashing of the orders pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's counsel Shri Chhallani that the orders passed by the AO under s. 154 were required to be quashed because no reasonable opportunity of being heard was afforded to the appellants before passing orders and further those orders were not required to be sustained as there is a strong debate and argument on the issue whether or not, interests under ss. 234A; 234B and 234C which were deleted by orders dt. 26th May, 1994, and again be reimposed invoking the provisions of s. 154 of the Act. 17. On the ground of reasonable opportunity, I do not wish to labour much in view of the elaborate reasons given by this Tribunal in order dt. 11th Oct., 2000, in batch of appeals of M/s Mehta Steel Industries, 10 Ors vs. Addl CIT Range-2, Nagpur, being ITA Nos. 545 to 555/Nag/98, wherein it has been held by me that if no reasonable opportunity is given to any assessee, then the orders passed by the authorities functioning under the IT Act are illegal, null and void requiring to be quashed. In taking such a view, support has been taken by this Tribunal from the below given decisions of the apex Court: (1) Narendra Singh vs. State of U.P. AIR 1973 SC 552; (2) State of Mysore vs. Abdul Razack Sah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellants (assessees) deleted the interest under the afore-stated three provisions which were originally charged in the main orders, dt. 29th Jan., 1992, passed in all these cases. After considerable lapse of time, the Government audit party intervened and opined that the interest under the afore-stated three provisions was rightly charged in the orders passed on 29th Jan., 1992, under s. 143(1)(a) and that the successor Dy. CIT, Special Range, Nagpur, committed an illegality in suo motu invoking his powers under s. 154(1)(b) and deleting those interests which were originally charged in the orders passed on 29th Jan., 1992, in all these cases. It is on the basis of the issue raised by the audit party that the new Dy. CIT woke up from his slumber and passed orders in March, 1998, in all these cases invoking again the provisions of s. 154 of the Act and amending thereby the earlier suo motu orders passed on 26th May, 1994, by his superior officer and directing his office to once again charge interest under the provisions of ss. 234A, 234B and 234C and send revised demand. All these cumulative acts commending from 29th Jan., 1992, and culminating on 25th March, 1998, clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny such order, as has been done by him, which gave rise to first appeals before the CIT(A) and later on second appeals before this Tribunal. The CIT(A), Nagpur, ought to have allowed the appeals by quashing those orders which were impugned before him in first appeal instead of dismissing it. In my considered opinion, the orders passed by the Asstt. CIT under s. 154 in these three cases are, therefore, patently illegal and void being outside the scope and purview of the provisions of s. 154 and were not required to be passed. Since the CIT(A) failed to quash the same, I hereby quash the same for these reasons also. 19.2.1 do not agree with the CIT(A) that the Dy. CIT through orders passed on 26th May, 1994, under s. 154(1)(b) waived the interests which were originally charged in the orders dt. 29th Jan., 1992. The interests were deleted by the Dy CIT but not waived. I agree with the CIT(A) that the powers of waiver only vest with the Chief CIT and not with any other IT authorities below him. 20. Before closing this case, I deem it my legal duty as a Judicial Officer of an important Revenue Appellate Tribunal to say something about the illegality and reckless and negligent act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities which can reveal and unfold the mysterious illegal act of the then Dy. CIT, Special Range, Nagpur. 22. Their Lordships of the Hon'ble Supreme Court in the case of Union of India Ors. vs. K.K. Dhawan 1993 AIR SC 1478 at p. 1484 in para 28 have laid down tests for initiation of disciplinary action against an authority for misconduct in discharge of judicial or quasi-judicial functions. I extract below the relevant paragraph: "28. Certainly, therefore, the officer who exercise judicial or quasi-judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a Judge. Accordingly, the contention of the respondent has to be rejected. It is important to bear in mind that in the present case, we are not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer. The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act. But we have no doubt in our mind that the Government is not precluded from taking the disciplinary action for violation of the Conduct Rules. Thus, we conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants herein are hereby vacated and cancelled. Consequently, the orders passed under s. 154 by the Asstt. CIT., Nagpur, in all the three cases are hereby quashed, (ii) The amounts of interest under ss. 234A, 234B and 234C and interest under s. 220(2) of the IT Act, 1961, if any paid by the appellants or collected by the AO during the pendency of appeals, shall be refunded to the appellants herein not later than 28th day of February, 2001; (iii) The CIT, Vidarbha Region, Nagpur, shall pay to each of the appellants herein a sum of Rs. 7,500 (rupees seven thousand-five hundred) (total Rs. 22,500) not later than 28th day of February, 2001, towards the costs as provided in s. 254(2B) of the IT Act, 1961; (iv) In the event of failure to pay to the appellants the amount as specified in (ii) and (iii) above, the appellants shall be entitled to receive interest at the rate of 18 per cent per annum from 1st day of March, 2001, till the date of payment; (v) The amounts payable to the appellants herein as ordered in (ii) and (iii) above shall be recovered by the Disbursing Officer of the Central Government from the salary and other emoluments and allowance payable to the then Dy. CIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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