TaxTMI 
TaxTMI 
2026 (6) TMI 302
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....Exports for assessment year 2007-08, granting exemption under Section 10B of the Income Tax Act, 1961 (hereinafter referred as 'IT Act'). The disciplinary proceedings culminated into the penalty order dated 10.12.2010, imposing minor penalty of reduction of one stage in the time scale of pay for a period of three years w.e.f. 01.01.2011. Aggrieved by the said penalty order dated 10.12.2010, the respondent no.1 approached the learned Central Administrative Tribunal, Jodhpur (hereinafter referred as 'Tribunal') by way of filing OA No. 556/2011. FACTUAL MATRIX 3. Brief facts of the case are that the respondent no.1 was Income Tax Officer in the Office of Income Tax-I, Paota C-Road, Jodhpur and he being the Assessing Officer made assessment of assessee (M/s Kwal Pro Exports) under Section 143(3) of IT Act and has allowed the claim under Section 10B of the IT Act for the assessment year 2007-08. The assesse was a firm and claimed itself to be manufacturer and exporter of the handicraft items. On earlier occasion, the firm's claim for deduction under Section 10B of IT Act was rejected for the AY 2001-02. Later/ the CIT-1 reopened the said assessment for 2001-02 under section 263 of....
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....terial and the reply filed by the respondent no.1, the petitioner no.2 passed an order dated 10.12.2010, whereby a penalty of reduction in pay scale by one stage from Rs. 17,470/- to Rs. 16,820/- for a period of three years w.e.f 01.01.2011 was imposed against the respondent no.1 with further direction that the respondent no.1 will not earn increment of pay during the period of reduction. 3.6 Respondent no.1 challenged the chargesheet and the penalty order dated 10.12.2010 before the learned Tribunal on the ground that the penalty was wrongly imposed upon him and it is a major penalty, whereas no misconduct was committed by him. The petitioners replied that the disciplinary proceedings have been initiated by the department as the delinquent had committed misconduct by granting exemption to the assessee under Section 10B of the IT Act, therefore, the penalty order was rightly passed against him and the penalty imposed a minor penalty. 3.7 The learned Tribunal vide its order dated 19.09.2013 quashed the order dated 10.12.2010 observing that the penalty imposed upon respondent no.1 is major penalty in view of Rule 11(v) of the CCS (CCA) Rules, 1965, and cannot be enforced withou....
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....e. Respondent no.1's actions jeopardized the consistent stand of the department in pending appeals. Learned counsel for the petitioners stated that the department has also pointed out in the chargesheet that there were discrepancies in the order sheets at page no. 3 and 4 of the assessment order. 7. Learned counsel for the petitioners submitted that the learned Tribunal has ignored the facts that the respondent no.1 has caused loss to the revenue by giving exemption under Section 10B of the IT Act to assessee. The respondent no.1 has given undue advantage to the assessee. The respondent no.1 was fully aware of the approach of the department towards assessee's previous assessment in denying his claims and pending appeals against the order of learned ITAT. The learned Tribunal has also ignored the fact that the respondent no.1 has deviated from his own decisions of previous assessments of the same assessee. 8. Learned counsel for the petitioners argued that assessment order was passed without considering vital aspects of the assessee's business as well as applicability of Section 10B of the IT Act. Department had taken consistent stand that the business activities of the assess....
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....ITAT vide order dated 27.08.2012 while holding that the said order was passed after considering the relevant factors and applicable provision, respondent no.1 has applied his mind to the facts and circumstances and passed a well reasoned order. Analysis 15. Heard both the learned counsel for the parties and perused the material available on record. 16. The issue that arises for consideration in the present case is as to whether the act of respondent no.1 can be termed as 'misconduct' whereby he allowed the assessee's claim of granting exemption under Section 10B of the IT Act. 17. As far as misconduct is concerned, the same has not been defined under the CCS (Conduct) Rules, 1965. 18. The Hon'ble Supreme Court in The State of Punjab v. Ex Constable Ram Singh, reported in (1992) 4 SCC 54 dealt with the definition of misconduct and has observed as under:- "5. Misconduct has been defined in Black's Law Dictionary, Sixth Edition at page 999 thus: "A transgression of some established and definite rule of action, a forbidden act, a dereliction from duty, unlawful behaviour, wilful in character, improper or wrong behaviour, its synonyms are misdemeanou....
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....ccurs, regard being had to the scope of the statute and the public purpose it seeks to serve. The police service is a disciplined service and it requires to maintain strict discipline. Laxity in this behalf erodes discipline in the service causing serious effect in the maintenance of law and order." 19. The Hon'ble Supreme Court in Union of India and Ors. vs J Ahmed, reported in (1979) 2 SCC 286 has held that the mere error of judgment or negligence does not constitute misconduct unless it is such a degree as to reflect lack of integrity or devotion to duty. Thus, there must be mala fide intent or recklessness or moral turpitude. The relevant portion of the said judgment is as follows: "10. It would be appropriate at this stage to ascertain what generally constitutes misconduct, especially in the context of disciplinary proceedings entailing penalty. 11. Code of conduct as set out in the Conduct Rules clearly indicates the conduct expected of a member of the service. It would follow that conduct which is blameworthy for the government servant in the context of Conduct Rules would be misconduct. If a servant conducts himself in a way inconsistent with due and fa....
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....y be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence. Leaving aside the classic example of the sentry who sleeps at his post and allows the enemy to slip through, there are other more familiar instances of which a railway cabin-man signals in a train on the same track where there is a stationery train causing head-on collision; a nurse giving intravenous injection which ought to be given intramuscular causing instantaneous death; a pilot overlooking an instrument showing snag in engine and the aircraft crashes causing heavy loss of life. Misplaced sympathy can be a great evil (see Navinchandra Shakerchand Shah v. Manager, Ahmedabad Coop. Department Stores Ltd. [(1978) 19 Guj LR 108, 120] ) But in any case, failure to attain the highest standard of efficiency in performance....
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.... held that it may be a case of negligence, but not misconduct, more so when the bail order was not challenged by the prosecution or any other party. The penalty of discharge was set aside with 50% backwages. 20. In K.C. Rajwani v. State of M.P., 2022 SCC OnLine MP 1550this court dealt with the case of judicial officer wherein the allegation against the judicial officer were passing erroneous orders who otherwise had a unblemished career and there were no complaints as regard his integrity in performance of duties and he enjoyed very good reputation. There was no doubt in the integrity of the said judicial officer. On these grounds the major penalty granted to the judicial officer concerned was set-aside. 21. In the present case though it is a case of error of judgment and erroneous order passed by the trial judge, but it is also a case very thinly crossing the line of judicial indiscipline which appears to be under a mistaken belief/impression, as noted by us above. Even no extraneous or ulterior motive was proved in the enquiry." 21. The same aspect has been recently dealt with by the Hon'ble Apex Court, in the case of "Nirbhay Singh Suliya v. State of Madhya ....
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....atutory powers; (v) if he had acted in order to unduly favour a party; (vi) if he had been actuated by corrupt motive, however small the bribe may be because Lord Coke said long ago "though the bribe may be small, yet the fault is great". 29. The instances above catalogued are not exhaustive. However, we may add that for a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted. Here, we may utter a word of caution. Each case will depend upon the facts and no absolute rule can be postulated." 34. This Court held that merely because the order is wrong, disciplinary action is not warranted and that each case will depend upon the facts and no absolute rule can be postulated. What is significant to notice is that even though in the illustrated case [para 28 (iv)] K.K. Dhawan (supra), cases of omission of prescribed conditions which are essential for the exercise of statutory powers may in a given case furnish a ground for disciplinary enquiry, it is not an absolute rule and each case will depend upon the facts. As observed in R.R. Parekh (supra....
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.... justified the distinction between the previous assessment years and the assessment year in question in his reply and had further emphasized that, in view of the orders passed by the learned Tribunal as well as the Hon'ble Apex Court, the respondent no.1 was bound to follow the same, failing which he would have exposed himself to contempt proceedings. 22.3 This Court would not like to embark upon the issue as to whether the process undertaken by the assessee amounted to a manufacturing process or whether the delinquent was justified in concluding that the assessee, having invested in plant and machinery, was undertaking manufacturing activity. However, it is evident that the view taken by the respondent no.1 was a plausible view and cannot be said to be a view taken in abstract without any supporting material. Thus, merely because another view was possible, the same would not amount to misconduct. More so, the assessment order reflected bona fide application of mind supported by cogent reasons and, therefore, none of the ingredients pertaining to lack of integrity or lack of devotion towards duty are made out in the facts of the present case. 23. It is admitted position that ....