Rakesh Kumar Dhaniwal, Howrah V. PCIT, CENTRAL, KOLKATA-2, Kolkata

ITSSA 23/KOL/2016

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2593 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: MANISH TIWARI
• Keywords: Revision of order; Initiation of penalty proceedings; Reasonable cause; Reason to believe
• Section: 273B; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY, JUDICIAL MEMBER IT(SS)A NO.23/KOL/2016 ASSESSMENT YEAR:2011-12 RAKESH KUMAR DHANIWAL FLAT NO. 2D, BLOCK NO. GB- 2, GANGES GADEN,106, K.C. SINGHA ROAD, SHIBPUR, HOWRAH-711102 [ PAN NO. ADLPD 3496 K ] / V/S . PRINCIPAL CIT, CENTRAL, KOLKATA-2, AAYKAR BHAWAN, POORVA 110, SHANTIPALLY, KOLKATA- 107 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI MANISH TIWARI, FCA /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 05-10-2016 /DATE OF PRONOUNCEMENT 26-10-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THE ASSESSEE HAS FILED THIS APPEAL DISPUTING THE OR DER OF COMMISSIONER OF INCOME TAX CENTRAL KOLKATA PASSED U/S 263 OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE F. NO. PCIT CENTRAL, KOL-2/263/2015-16/7895-97 DATED 28.03.2016 BY WHICH THE LD. CIT HAS SET ASIDE THE A SSESSMENT ORDER DATED 28.03.2014 PASSED U/S 153A/143(3) OF THE ACT FOR ASSESSMENT YE AR 2011-12 WITH A DIRECTION TO REDO THE ASSESSMENT IN RESPECT OF THE ISSUE MENTION ED THEREIN. IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 2 SHRI MANISH TIWARI, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI RADHEY SHYAM, LD. DEPARTMENTAL REPRESENTAT IVE APPEARED ON BEHALF OF REVENUE. 2. THE ONLY INTER-CONNECTED ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE REVISION ORDER PASSED U/S 263 OF THE ACT BY LD. CIT FOR HOLD ING THE ORDER OF ASSESSING OFFICER U/S153A/143(3) OF THE ACT IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. 3. THE FACTS ARE THAT IN THIS CASE, A SEARCH AND SE IZURE OPERATION WAS CONDUCTED ON 18.06.2011 AT THE OFFICE PREMISES OF ASSESSEE. DURI NG THE COURSE OF SEARCH, ASSESSEE HAS DISCLOSED INCOME OF 1 CRORE AS INCOME FROM OTHER SOURCE BESIDES OTHER REGULAR INCOME. THE ASSESSEE OUT OF INCOME OF RS. 1 CRORE H AS DECLARED A SUM OF 60 LAKH AS INCOME FROM OTHER SOURCES PERTAINING TO THE YEAR UN DER CONSIDERATION. THE RETURN INCOME WAS ACCEPTED AS ASSESSED INCOME. FURTHER, AO INITIATED THE PENALTY PROCEEDINGS U/S 271(1) OF THE ACT WHICH WAS DROPPE D AS THE YEAR UNDER CONSIDERATION IS SPECIFIED PREVIOUS YEAR WITHIN THE MEANING OF SEC. 271AAA OF THE ACT. THEREFORE, THE PROVISION OF SEC. 271AAA ARE AT TRACTED TO THE INSTANT CASE AND THE PROVISION OF SEC. 271(1)(C) OF THE ACT WOULD NOT BE APPLICABLE. ULTIMATELY, THE PENALTY PROCEEDINGS U/S. 271(1)(C) WAS DROPPED. HOWEVER, LD . CIT IN HIS IMPUGNED ORDER U/S. 263 ISSUED A SHOW CAUSE NOTICE ON 05.02.2015 SEEKIN G CLARIFICATION HOLDING THE ORDER OF AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON INITIATION OF PENALTY PROCEEDINGS U/S. 271AAA OF TH E ACT. THERE WAS NO COMPLIANCE FROM THE SIDE OF ASSESSEE FOR THE ABOVE STATED NOTI CE. ACCORDINGLY, LD. CIT IN HIS ORDER U/S 263 OF THE ACT HELD THE ORDER OF AO AS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AFTER HAVING RELIANCE IN THE CA SE OF CIT VS. ASSOCIATES CONTRACTOR CORPORATION 145 TAXMANN 356. IT WA HELD BY HON'BLE ALLAHABAD H IGH COURT HELD THAT NON INITIATION OF PENALTY PROCEEDINGS BY THE ASSESS ING AUTHORITY IN THE COURSE OF ASSESSMENT PROCEEDINGS RENDER THE ORDER OF AO IS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. AGGRIEVED, BY THIS ORDER OF LD. CIT ASSESSEE PRE FERRED AN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 3 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, INITIATION OF PROCEEDING U/S 263 OF IT ACT, 1961 ON 05.02.2015 IS AUTHORITIES BELOW-INITIO VOID SINCE IT DOES NOT SPEAK ANY ERROR IN COMPUTING TOTAL INCOME DETERMINED IN ORDER U/S 153A/143(3) DATED 28.03.2014. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ORDER U/S 263 OF IT ACT, 1961 DATED 28.03.2016 PASSED BY PRINCIPAL C OMMISSIONER OF INCOME TAX, CENTRAL, KOLKATA-2 DIRECTING THE AO TO PASS AS SESSMENT ORDER AFRESH MAKES NO MEANINGFUL SINCE IN THE ABSENT OF ANY ERRO R CONCERNING COMPUTATION OF TOTAL INCOME. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ACTION OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL, KOLK TA-2, TO PASS ORDER U/S. 263 DATED 28.03.2016 WITH THE SOLE OBJECT OF INITIA TION OF PENALTY PROCEEDINGS U/S. 271AAA OF IT ACT, 1961 IS NOT SUSTAINABLE IN L AW IN VIEW OF PROVISIONS OF SECTION 273B OF IT ACT, 1961 WHICH SUGGEST THAT LEV Y OF PENALTY IS OPTIMAL. 5. BEFORE US LD. AR SUBMITTED THAT THE PENALTY PROC EEDINGS WERE DROPPED BY ASSESSING OFFICER AFTER HAVING CONSIDERED THE SUBMI SSION MADE BY ASSESSEE. THEREFORE, AO HAS NOT INITIATED PENALTY PROCEEDINGS U/S. 271AAA AS IMMUNITY WAS AVAILABLE TO THE ASSESSEE FROM THE PENALTY SUBJECT TO THE CONDITIONS OF SEC. 271AAA OF THE ACT. THE AO HAS TAKEN ONE OF THE POSSIBLE VIEW, THEREFORE, THE ORDER OF AO CANNOT BE HELD ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE. HE, THEREFORE, REQUESTED THE BENCH TO QUASH THE ORDER PASSED BY LD. CIT. ON THE OTHER HAND, LD. DR SUBMITTED THAT PENALTY HA S NOT BEEN INITIATED U/S. 271AAA OF THE ACT WHICH IS MANDATORILY REQUIREMENT. THEREF ORE, THE ORDER PASSED BY AO U/S 153A/143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE. HE VEHEMENTLY RELIED ON THE ORDER OF LD. CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT THE ASSESSMENT IN THE INSTANT CASE WAS FRAMED U/S. 153A/143(3) OF THE ACT AT THE RETUR NED INCOME OF ASSESSEE. IN THE ASSESSMENT PROCEEDINGS, PENALTY PROCEEDINGS WAS INI TIATED U/S. 271(1)(C) BUT SUBSEQUENTLY ON A LATER DATED WERE DROPPED BY AO O N THE GROUND THAT INSTANT CASE IS COVERED UNDER THE PROVISION OF SEC. 271AAA OF THE ACT AND NOT UNDER THE PROVISION OF SEC. 271(1)(C) OF THE ACT. HOWEVER, AO DROPPED T HE PROVISION OF SEC. 271(1)(C) IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 4 BUT HAS NOT INITIATED PENALTY PROCEEDINGS U/S. 271A AA. ACCORDINGLY, LD. CIT IN HIS IMPUGNED ORDER U/S. 263 OF THE ACT HELD THAT NON IN ITIATION OF PENALTY PROCEEDINGS RENDER THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE AND REQUIRES TO BE SET ASIDE. HOWEVER, WE FIND THAT IM MUNITY IS PROVIDED FOR THE PENALTY PROCEEDING U/S. 271AAA OF THE ACT SUBJECT TO FULFIL LMENT OF CERTAIN CONDITIONS. FROM THE FACTS WE FIND THAT ADMITTEDLY THE PENALTY PROCE EDINGS WAS INITIATED UNDER THE WRONG SECTION AND THEREFORE THE SAME WAS DROPPED BU T THE AO HAS NOT RESORTED TO PROCEED FOR THE PENALTY PROCEEDINGS UNDER THE PROVI SION OF SEC. 271AAA OF THE ACT. FROM THE FACTS, IT IS INFERRED THAT THERE IS POSSIB ILITY OF NOT INVOKING THE PROVISION OF SEC. 271AAA OF THE ACT AS THE ASSESSEE HAS FULFILLE D ALL THE CONDITIONS AS PROVIDED IN SEC. 271AAA FOR GETTING THE IMMUNITY FROM THE PENAL TY. AT THIS JUNCTURE, WE FIND IMPORTANT TO REPRODUCE THE PROVISION OF SEC. 271AAA , WHICH READS AS UNDER:- [PENALTY WHERE SEARCH HAS BEEN INITIATED. 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTH ING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHER E SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY OF PENAL TY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN P ER CENT. OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES TH E MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION . FROM A PLAIN READING OF THE SAID SEC. WE FIND THAT IMMUNITY IS AVAILABLE TO THE ASSESSEE SUBJECT TO FULFILLMENT OF CONDITION. IN CA SE THE ASSESSEE FULFILLS THE REQUIRED IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 5 CONDITIONS THEN AO MAY NOT INVOKE THE PROVISION OF SEC. 271AAA OF THE ACT. IT IS WELL SETTLED LAW THAT WHERE THE TWO VIEWS ARE POSSI BLE ON ANY ISSUE THEN THE ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS CONNECTION, WE RELY IN THE CASE OF CIT VS. GREEN WORLD CORPORATION 314 ITR 81 (SC) WHERE THE HON'BLE SUPREME COURT HAS HELD AS UN DER:- SEC. 263 PROVIDES FOR A REVISIONAL POWER. IT HAS I TS OWN LIMITATIONS. AN ORDER CAN BE INTERFERED SUO MOTU BY THE SAID AUTHORITY NO T ONLY WHEN AN ORDER PASSED BY THE AO IS ERRONEOUS BUT ALSO WHEN IT IS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. BOTH THE CONDITIONS PRECEDENT FOR EXERCISI NG THE JURISDICTION UNDER S. 263 ARE CONJUNCTIVE AND NOT DISJUNCTIVE. AN ORDER O F ASSESSMENT PASSED BY AN ITO, THEREFORE, SHOULD NOT BE INTERFERED WITH ONLY BECAUSE ANOTHER VIEW IS POSSIBLE. THE CIT, HOWEVER, HAS SPECIFIED A NUMBER OF REASONS IN SUPPORT OF ITS ORDER. 7. WE ALSO RELY ON THE ORDER OF ITAT CHANDIGAR BENC H IN THE CASE OF SUBASH KUMAR JAIN VS. ACIT 88 ITD 272 (CHD) WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- REVISIONJURISDICTION OF CITDIRECTION TO AO TO IN ITIATE PENALTY PROCEEDINGSEVEN IF, WHILE EXAMINING THE RECORDS OF AN ASSESSMENT ORDER IN EXERCISE OF HIS POWERS OF REVISION UNDER S. 263, TH E CIT FINDS THAT THE AO HAS NOT INITIATED PENALTY PROCEEDINGS, HE CANNOT DIRECT THE AO TO INITIATE THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE UNDER S. 2 71(1)(C)PENALTY PROCEEDINGS ARE NOT A PART OF THE ASSESSMENT PROCEE DINGS AND THE NON- INITIATION OF PENALTY PROCEEDINGS BY THE AO UNDER S . 271(1)(C) DURING THE COURSE OF ASSESSMENT PROCEEDINGS NEITHER MAKES THE ORDER OF THE AO ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUEADD L. CIT VS. ACHAL KUMAR JAIN (1982) 30 CTR (DEL) 146 : (1983) 142 ITR 606 (DEL), SURENDERA PARSHAD SINGH & ORS. VS. CIT (1988) 71 CTR (GAU) 125 : (1988) 173 ITR 510 (GAU), CIT (WT) VS. A.N. SARVARIA (1986) 52 CTR (DEL) 296 : (1986) 161 ITR 694 (DEL), P.C. PURI VS. CIT (1985) 151 ITR 584 (DEL), ADDL. CIT VS. J.K. DCOST A (1981) 25 CTR (DEL) 224 : (1982) 133 ITR 7 (DEL), A DDL. CIT VS. SUDERSHAN TALKIES (1993) 111 CTR (DEL) 368 : (1993) 200 ITR 153 (DEL) , ADDL. CIT VS. PRECISION WORKS & ORS. (1984) 43 CTR (DEL) 341 : (1985) 156 ITR 693 (DEL), CIT VS. KESHRIMAL PARASMAL (1985) 48 CTR (RAJ) 61 : (1986) 157 ITR 484 (RAJ), CIT VS. LINOTYPE AND MACHINERY LTD. (1991) 192 ITR 337 (CAL), CIT VS. SUDERSHAN TALKIES (1993) 112 CTR (DEL) 165 : (1993) 201 ITR 289 (DEL) AND CIT VS. NIHAL CHAND REKYAN (1999) 156 CTR (DEL) 59 : (2000) 242 ITR 45 (DEL) FOLLOWED; ADDL. CIT VS. INDIAN PHARMACEUTICAL S (1980) 123 ITR 874 (MP), ADDL. CWT VS. NATHOOLAL BALARAM (1980) 125 ITR 596 (MP), ADDL. CIT VS. KANTILAL JAIN (1980) 125 ITR 373 (MP) AND CIT VS. NARPAT SINGH MA LKHAN SINGH (1980) 19 CTR (MP) 302 : (1981) 128 ITR 77 (MP) NOT FOLLOWED IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 6 FURTHER, WE FIND THE JUDGMENT AS RELIED BY THE LD. CIT IN HIS ORDER OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF ASSOCIATE CONTRACTORS CORPORATION (SUPRA) WHERE IT WAS HELD AS UNDER:- THAT NON-INITIATION OF PENALTY PROCEEDING BY THE A SSESSING AUTHORITY IN THE COURSE OF ASSESSMENT PROCEEDINGS WOULD RENDER THE O RDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HOWEVER, THE JURISDICTIONAL HONBLE HIGH COURT OF C ALCUTTA HAS DECIDED THE SIMILAR PENALTY ISSUE IN FAVOUR OF ASSESSEE IN THE CASE OF CIT VS. LINOTYPE AND MACHINERY LTD. 192 ITR 337 (CAL). THE RELEVANT EXTRACT OF THE ORDE R IS REPRODUCED BELOW : PENALTY PROCEEDINGS DO NOT FORM PART OF ASSESSMENT PROCEEDINGS. RECORDING BY THE ITO OF SATISFACTION OR DIRECTION TO ISSUE A NOTICE UNDER S. 273 FOR DEFAULT COMMITTED UNDER S. 273(A) FOR FAILURE TO FILE AN ES TIMATE OF ADVANCE TAX AND PAY THE TAX IS NOT AN INTEGRAL PART OF THE ASSESSMENT O RDER SO THAT FAILURE TO DO SO WOULD RENDER IT IPSO FACTO ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE CONTEXT OF S. 263, THE EXPRESSION ' ASSESSMENT' REFERS TO THE PARTICULAR 'PROCEEDING' WHICH IS TO BE CONSIDERED. THE COMMISSIONER, IN DEALING WITH ASSESSMENT PROCEEDINGS AND THE ASSESSM ENT ORDER, CANNOT EXPAND HIS POWERS TO DEAL WITH PENALTY PROCEEDINGS WHEN TH EY ARE NOT BEFORE HIM. IN THE ASSESSMENT ORDER, THE ITO DID NOT RECORD THAT T HE PENALTY PROCEEDINGS HAD BEEN INITIATED. HE MAY INITIATE PATENTLY PROCEEDING S BY RECORDING A DIRECTION TO THAT EFFECT IN THE ORDER SHEET, BUT NO PENALTY CAN BE IMPOSED AS A MATTER OF COURSE. THE ITO MUST BE SATISFIED AS TO WHETHER THE FACTS WARRANT INITIATION OF PENALTY PROCEEDINGS AND, IF SO, WHETHER ANY PENALTY SHOULD BE IMPOSED. HE HAS A DISCRETION AS TO WHETHER PENALTY SHOULD BE IMPOSE D OR NOT. HE MAY LEVY PENALTY AFTER BEING SATISFIED THAT THE CASE ATTRACT S THE PROVISIONS FOR PENALTY. FOR FAILURE OF THE ITO TO RECORD IN THE ASSESSMENT ORDER HIS SATISFACTION OR THE LACK OF IT, THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ITO MUST RECORD H IS OPINION ABOUT THE LEVIABILITY OF THE PENALTY ON THE FACTS OF THE CASE . THE ITO HAS TO BE SATISFIED THAT THE ASSESSEE HAD FURNISHED A STATEMENT OF ADVA NCE TAX PAYABLE BY HIM WHICH HE KNEW OR HAD REASON TO BELIEVE TO BE UNTRUE . IT WAS FOR THE ITO TO FIND OUT WHETHER THERE WAS ANY REASONABLE CAUSE PREVENTI NG THE ASSESSEE FROM FILING THE REVISED ESTIMATE UNDER S. 212(2). IT CANNOT BE PRESUMED IN THE ABSENCE OF ANY RECORDING BY THE ITO THAT THE ASSESSEE DID NOT FURNISH ANY EXPLANATION TO THE SATISFACTION OF THE ITO. THEREFORE ON THE FACTS OF THIS CASE, IT MUST BE HELD THAT THE CIT CANNOT INVOKE HIS POWER UNDER S. 263 O N THE GROUND THAT THE ORDER PASSED BY THE ITO IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. PENALTYREVISION BY CITASSESSMENT PROCEEDINGS ARE NOT PART OF PENALTY PROCEEDINGSREVISION OF PENALTY PROCEEDINGS CANNOT BE DONE BY CIT IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 7 IN OUR CONSIDERED VIEW THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING BEING JURISDICTIONAL COURTS. THE HON'BLE SU PREME COURT IN EAST INDIA COMMERCIAL CO. LTD. V. COLLECTOR OF CUSTOMS AIR 196 2 SC 1893 OBSERVES THAT THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE IS B INDING ON AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE AND THEY CANNOT IGNORE IT . THE APEX COURT REITERATED THE AFORESAID POSITION ONCE AGAIN IN BARADAKANTA MISHRA V. BHIMSEN DIXIT AIR 1972 SC 2466 WHERE IT STATED THAT IT WOULD BE ANOMALOUS TO SUGGEST THAT A TRIBUNAL OVER WHICH A HIGH COURT HAS SUPERINTENDENCE CAN IGNORE THE LAW DECLARED BY IT AND IF A TRIBUNAL CAN DO SO, ALL THE SUBORDINATE COURTS CAN EQUALLY D O SO, FOR THERE IS NO SPECIFIC PROVISION AS IN RESPECT OF HON'BLE SUPREME COURT, M AKING THE LAW DECLARED BY THE HIGH COURT BINDING ON SUBORDINATE COURTS. THE COURT FURTHER OBSERVED THAT IT IS IMPLICIT IN THE POWER OF SUPERVISION CONFERRED ON A SUPERIOR TRIBUNAL THAT ALL THE TRIBUNALS SUBJECT TO ITS SUPERVISION SHOULD CONFIRM TO THE LAW LAID DOWN BY IT. IF THE TRIBUNALS DEFY THEIR JURISDICTIONAL HIGH COURT, THE RE WOULD BE CONFUSION IN THE ADMINISTRATION OF LAW AND RESPECT FOR LAW WOULD IRR ETRIEVABLY SUFFER. EMPHASIZING THE NEED OF FOLLOWING THE JUDGMENTS OF THE HON'BLE HIGH COURTS BY THE ASSESSING OFFICERS, THE ALLAHABAD HIGH COURT IN K. N. AGARWAL V. CIT [1991] 189 ITR 769 OBSERVES THAT INDEED, THE ORDERS OF THE TRIBUNAL AN D THE HIGH COURT ARE BINDING UPON THE ASSESSING OFFICER AND SINCE HE ACTS IN A QUASI JUDICIAL CAPACITY, THE DISCIPLINE OF SUCH FUNCTIONING DEMANDS THAT HE SHOULD FOLLOW THE DECISION OF THE TRIBUNAL OR THE HIGH COURT, AS THE CASE MAY BE. HE CANNOT IGNORE ME RELY ON THE GROUND THAT THE TRIBUNAL'S ORDER IS THE SUBJECT MATTER OF REVISION IN THE HIGH COURT OR THE HIGH COURT'S DECISION IS UNDER APPEAL BEFORE THE SUPREME COURT. PERMITTING HIM TO TAKE SUCH A VIEW WOULD INTRODUCE JUDICIAL INDISCIPLINE, WHICH IS NOT CALLED FOR EVEN IN SUCH CASES. IT WOULD LEAD TO A CHAOTIC SITUATION. THE HON'BLE A.P. HIGH COURT WENT A STEP FURTHER IN STATE OF A.P. V. CTO (1988) 169 ITR 564, WHERE IT PRONOUNCED THAT IT IS NOT PERMISSIBLE FOR THE AUTHORITIES AND THE TRIBUNALS T O IGNORE THE DECISIONS OF THE HIGH COURT OR TO REFUSE TO FOLLOW THE DECISIONS OF THE H IGH COURT ON THE PRETEXT THAT AN APPEAL IS PENDING IN THE HON'BLE SUPREME COURT OR T HAT STEPS ARE BEING TAKEN TO FILE AN APPEAL. THE COURT THEN MADE THE FOLLOWING IMPORTANT AND BOLD OBSERVATIONS THAT IF ANY AUTHORITY OR THE TRIBUNAL REFUSES TO FOLLOW ANY DEC ISION OF THE HON'BLE HIGH COURT ON IT(SS)A NO.23/KOL/2016 A .Y.2011-12 RAKESH KR DHANIWAL VS. PCIT, C. KOL-2 PAGE 8 THE ABOVE GROUNDS, IT WOULD BE CLEARLY GUILTY OF CO MMITTING CONTEMPT OF THE HON'BLE HIGH COURT AND IS LIABLE TO BE PROCEEDED AGAINST. IN VIEW OF ABOVE, WE HOLD THAT THE IMPUGNED ORDER O F THE LD. CIT PASSED U/S 263 OF THE ACT IS UNSUSTAINABLE IN THE EYES OF LAW AND LIABLE TO BE QUASHED. ACCORDINGLY WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT AND ALLOW T HE APPEAL FILED BY THE ASSESSEE. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26/10/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ! - 26/10/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-RAKESH KR. DHANIWAL, FLAT NO. 2D, BLOCK NO.GB-2, GANGES GARD EN, 106, K.C. SISNGHA RD, SHIBPUR, HOWRAH-102 2. /RESPONDENT-PRINCIPAL CIT,CENTRAL KOLKATA-2, AAYKAR BHAWAN, POORVA 110, SHANTIPAL LY, KOLKT-107 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ , /TRUE COPY/ / '#,