Mr. R v. N.j. Jamadar, Jj

Digitallysigned byGAURIGAURI AMITGAEKWADAMITDate:GAEKWAD2022.02.0211:01:05+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.224 OF 2021 Karanja Terminal & Logistic Pvt. Ltd. ….Petitioner V/s.Principal Commissioner of Income Tax & Ors. ….Respondents ---- Mr. R. V. Easwar, Senior Advocate a/w. Mr. Mihir Naniwadekar andMs. Rubal Maini i/b. Mr. Ruturaj H. Gurjar for petitioner.Mr. Suresh Kumar for respondents. ---- CORAM : K.R. SHRIRAM &N.J. JAMADAR, JJ. DATED : 31[st] JANUARY 2022 N.J. JAMADAR, JJ. P.C. : 1Petitioner is impugning an order dated 16[th] January 2020 passed by respondent no.1 under Section 264 read with Section 260 of the Income Tax Act, 1961 (the said Act). Paragraph 11 of the impugned order reads as under :- 11. In the present case, the appellant had itself shown theinterest earned on fixed deposits as revenue receipt in theROI filed by it for A.Y. 2011-12 as well as 2012-13. Insubsequent assessment years, the assessee has changed itsstand and has claimed the interest income as capital receiptwhich was not accepted by the AO and addition to theincome was made treating the same as revenue receipt. Thisaddition has been confirmed by the CIT (A) for the relevantA. Yrs. Even though the ITAT has deleted the addition madeby AO for A.Y. 2012-13 to 2015-16 the Department has notaccepted the decision of ITAT and has preferred appealbefore Hon’ble High Court. Various Courts have held thatinterest earned on the circumstances similar to the facts andcircumstances of the cased of present assessee, as discussedabove, to be revenue in nature chargeable to tax. In view ofthese facts, I am of the considered opinion that the assesseedoes not have a case u/s. 264 of I.T. Act and accordingly, onmerits, the petition of assessee cannot be entertained and thesame is rejected. 2The principles of judicial discipline require that the orders ofthe higher appellate authorities should be followed unreservedly by thesubordinate authorities. The mere fact that the order of the appellateauthority is not acceptable to the department and is the subject matter of anappeal cannot be a ground for not following it unless its operation has beensuspended by a competent Court. Paragraph 6 of the judgment of the ApexCourt in Union of India and Ors. V/s. Kamlakshi Finance CorporationLimited 1 reads as under : 2The principles of judicial discipline require that the orders ofthe higher appellate authorities should be followed unreservedly by thesubordinate authorities. The mere fact that the order of the appellateauthority is not acceptable to the department and is the subject matter of anappeal cannot be a ground for not following it unless its operation has beensuspended by a competent Court. Paragraph 6 of the judgment of the ApexCourt in Union of India and Ors. V/s. Kamlakshi Finance CorporationLimited 1 reads as under : 6. Sri Reddy is perhaps right in saying that the officers werenot actuated by any mala fides in passing the impugnedorders. They perhaps genuinely felt that the claim of theassessee was not tenable and that, if it was accepted, theRevenue would suffer. But what Sri Reddy overlooks is thatwe are not concerned here with the correctness or otherwiseof their conclusion or of any factual malafides but with thefact that the officers, in reaching in their conclusion,by-passed two appellate orders in regard to the same issuewhich were placed before them,one of the Collector(Appeals) and the other of the Tribunal. The High Court has,in our view,rightly criticised this conduct of the AssistantCollectors and the harassment to the assessee caused by thefailure of these officers to give effect to the orders ofauthorities higher to them in the appellate heirarchy. Itcannot be too vehemently emphasised that it is of utmostimportance that, in disposing of the quasi-judicial issuesbefore them, revenue officers are bound by the decisions ofthe appellate authorities; The order of the AppellateCollector is binding on the Assistant Collectors workingwithin his jurisdiction and the order of the Tribunal isbinding upon the Assistant Collectors and the AppellateCollectors who function under the jurisdiction of theTribunal. The principles of judicial discipline require that theorders of the higher appellate authorities should be followedunreservedly by the subordinate authorities. The mere factthat the order of the appellate authority is not "acceptable" tothe department - in itself an objectionable phrase - and is thesubject matter of an appeal can furnish no ground for notfollowing it unless its operation has been suspended by acompetent court. If this healthy rule is not followed, theresult will only be undue harassment to assessees and chaosin administration of tax laws. 3It is not respondents’ case that the order of ITAT or theoperation of the said order has been suspended by any Court. In thecircumstances, we set aside the order dated 16[th] January 2020 impugned inthe petition and remand the matter for denovo consideration. 4Unless there is a stay by a competent Court of the operation ofthe order of ITAT, respondent no.1 shall give effect to the same and pass anorder in accordance with law. 5Respondent shall grant personal hearing to petitioner andcommunicate the date of personal hearing atleast one week in advance. Ifrespondent wishes to rely on any judgments or order passed by any Court orTribunal, he shall provide a copy thereof to petitioner and give them anopportunity to deal with those judgments or distinguish those judgmentsand those submissions of petitioner shall also be dealt with in theassessment order. 6Petition disposed accordingly. (N.J. JAMADAR, J.) (K.R. SHRIRAM, J.)