2022 (12) TMI 1095 - HC - Income Tax

High Court reduces costs from Rs.50 lakhs to Rs.5 lakhs based on departmental actions & legal principles

The Allahabad High Court reduced the costs imposed in a previous judgment from Rs.50 lakhs to Rs.5 lakhs after considering the actions taken by the ... Award and quantum of costs - judicial discretion in imposition and reduction of costs - compliance with court directions and departmental remedial action - deposit of costs within stipulated timeAward and quantum of costs - judicial discretion in imposition and reduction of costs - compliance with court directions and departmental remedial action - deposit of costs within stipulated time - Reduction of the previously imposed cost and acceptance of the department's compliance and undertaking regarding improvement of functioning - HELD THAT: - The Court recorded the statement of the Additional Solicitor General that the department is taking steps in compliance with the Court's observations in the earlier judgment and placed on record the CBDT communication calling for explanation from the Jurisdictional Assessing Officer and forwarding the same to DGIT (Vigilance). The petitioner did not oppose reduction of cost and submitted that the petitioner would not dispute the Court's decision on costs. In view of the departmental action taken and the assurance given, and having no reason to doubt the statements made on behalf of the respondent, the Court exercised its discretion to modify the quantum of costs previously awarded. The Court therefore reduced the cost awarded by its order dated 11.08.2022 from the earlier quantum to a lesser quantum and directed payment within a stipulated period to ensure compliance with the judgment. [Paras 2, 5]The cost awarded by the judgment dated 11.08.2022 is modified and reduced to Rs.5 lacs, to be deposited by the respondents within one month; the departmental compliance and remedial action recorded are accepted.Final Conclusion: The Court, on being satisfied with the departmental compliance and the assurances recorded, with the petitioner's consent, reduced the costs awarded earlier to Rs.5 lacs and directed deposit of the reduced cost within one month; all pending applications stand disposed of. Issues:Reduction of cost imposed by the judgment dated 11.08.2022.Analysis:The judgment delivered by the Allahabad High Court involved a discussion on the reduction of costs imposed in a previous judgment. The Additional Solicitor General of India informed the court that the department was taking necessary actions in compliance with the observations made in the previous judgment. An order dated 31.08.2022 was issued by the Central Board of Direct Taxes to the Principal Chief Commissioner of Income Tax-I, Kanpur, directing an explanation to be obtained from the Jurisdictional Assessing Officer regarding the circumstances of reopening the case without proper verification. The ASGI highlighted the department's efforts to improve working conditions and prevent the recurrence of instances leading to legal proceedings against the petitioner. The petitioner's counsel did not oppose the reduction of costs but referred to legal principles regarding the imposition of costs, citing previous judgments such as Salem Advocate Bar Association T.N. v. Union of India (2005) and Ramrameshwari Devi v. Nirmala Devi (2011). The court, considering the department's actions and the counsel's consent, reduced the cost from Rs.50 lakhs to Rs.5 lakhs, modifying the previous judgment solely concerning costs. The respondents were directed to deposit the reduced cost within one month from the date of the judgment, and all pending applications were disposed of.This detailed analysis of the judgment showcases the court's consideration of legal principles, previous judgments, and the actions taken by the department in deciding to reduce the costs imposed in the previous judgment. The court's decision was based on the information provided by the ASGI, the petitioner's counsel's stance, and relevant legal precedents.