Civil contempt through wilful disregard of a stay order, with knowledge proved by surrounding circumstances and conduct.

Civil contempt may arise where an income-tax authority, with proved knowledge of a stay order, proceeds to pass or approve a time-bound order in disregard of that restraint. Formal service is not indispensable if notice is otherwise established by oral intimation, surrounding circumstances, or conduct showing awareness of the order. Altered records, hurried approval, or other steps suggesting deliberate non-compliance may support an inference of wilful disobedience. An apology will not purge contempt unless it is sincere and timely; a belated or qualified apology does not excuse conduct that reflects persistence in disregard of the court's order or use of a subterfuge to defeat compliance.

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Issues: (i) Whether the Income-tax Officer and the Commissioner committed civil contempt by passing and approving an order under section 132(5) after knowledge of the High Court's stay order; (ii) Whether the apology tendered by them should excuse or mitigate punishment, and what relief or punishment should follow.

Issue (i): Whether the Income-tax Officer and the Commissioner committed civil contempt by passing and approving an order under section 132(5) after knowledge of the High Court's stay order

Analysis: The decisive question was whether the respondents had notice of the stay order and nevertheless proceeded with the time-bound order under section 132(5). The Court found that oral communication by counsel was accepted by the Income-tax Officer, that the surrounding circumstances showed her satisfaction about the authenticity of the stay, and that the Commissioner also had knowledge when he approved the order. The altered and incomplete order-sheet entries, the endorsement on the duplicate notice, and the hurried approval at Patiala supported the inference of deliberate disregard rather than mere uncertainty. One respondent who only advised the officer to seek guidance was not shown to have himself disobeyed the order.

Conclusion: The Income-tax Officer and the Commissioner were held guilty of civil contempt, while the Inspecting Assistant Commissioner was discharged.

Issue (ii): Whether the apology tendered by them should excuse or mitigate punishment, and what relief or punishment should follow

Analysis: The Court held that an apology must be sincere and offered at the earliest opportunity. A qualified or belated apology would not suffice where the contemner had already persisted in the misconduct and had resorted to a subterfuge to evade compliance with the stay order. The conduct of the Commissioner was treated as serious because he encouraged disregard of the stay and approved the impugned order. The Income-tax Officer, though found guilty, was treated more leniently because the Court accepted that she was acting under pressure from a superior officer and would otherwise have obeyed the Court's order.

Conclusion: The Commissioner's apology was ignored and he was sentenced to imprisonment and fine, while the Income-tax Officer was warned; the apology did not wipe out the contempt.

Final Conclusion: The proceedings ended with a finding of civil contempt against two departmental officers for wilful disobedience of the stay order, discharge of the third officer, and imposition of punishment only on the Commissioner.

Ratio Decidendi: A court order need not be formally served if knowledge is otherwise proved, and a belated or insincere apology will not purge civil contempt where the contemner knowingly disregards the order or uses a subterfuge to defeat compliance.

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