2022 (2) TMI 345 - HC - Income Tax

High Court Quashes Tax Notices, Upholds ITAT Decision

The High Court quashed the impugned notices and proceedings under Section 201 for the assessment year 2014-15, noting that the ITAT's decision ruled the ... Validity of order u/s 201 - order against the GIA US company of the Assessing Officer has been reversed by ITAT which has held that amount paid to GIA US was not taxable - HELD THAT:- The Apex Court in Union of India Vs. Kamlakshi Finance Corporation Ltd. [1991 (9) TMI 72 - SUPREME COURT] has held that quasi-judicial authorities like revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities and the mere fact that the order of the appellate authority is not 'acceptable' to the department and is the subject matter of an appeal can be no ground for not following it unless its operation has been suspended by a competent court - As in Kamlakshi Finance [1991 (9) TMI 72 - SUPREME COURT] High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws - No hesitation to allow the petition in terms of prayer clause (a) as quoted above. Issues:1. Challenge to impugned notices and proceedings under Section 201 for the assessment year 2014-15.2. Binding nature of ITAT's orders on revenue officers.3. Department's appeal against ITAT's order for A.Y.-2010-2011.4. Recovery of amount or penalty by the department if successful in appeal.5. Disposal of Writ Petition No.1153 of 2021.6. Disposal of Writ Petition No.1430 of 2021.7. Adjournment of Writ Petition (L) No.10778 of 2021.Analysis:1. The petitioner sought to quash the impugned notices and proceedings under Section 201 for the assessment year 2014-15. The High Court noted that the ITAT had set aside the order against the GIA US company, ruling that the amount paid was not taxable. The department had not accepted the decision of the ITAT for A.Y.-2010-2011, appealing to the High Court. The Court emphasized the binding nature of ITAT's orders on revenue officers, citing the principle that higher appellate authorities' decisions should be followed unless suspended by a competent court.2. The Court highlighted the importance of judicial discipline, stressing that subordinate authorities must adhere to orders of higher appellate authorities to avoid undue harassment to assessees and chaos in tax law administration. The Court noted that the department's appeal against the ITAT's order for A.Y.-2010-2011 had not been stayed or suspended by a competent court.3. The respondent suggested that if the department succeeded in its appeal against the ITAT's order, it should be allowed to recover the amount or penalty from the concerned assessee. The Court refrained from expressing an opinion on this matter, stating that the department could take appropriate steps in accordance with the law.4. Consequently, the Court allowed the petition in terms of the prayer clause (a) presented by the petitioner, leading to the disposal of Writ Petition No.1153 of 2021. Subsequently, Writ Petition No.1430 of 2021 was also disposed of in light of the order passed in Writ Petition No.1153 of 2021.5. Writ Petition (L) No.10778 of 2021 was adjourned to 21st March 2022, with any interim relief continuing until the next date. The Court did not provide further details on this petition, indicating a pending status for future proceedings.