2014 (8) TMI 1243 - HC - Income Tax

Charge memo issued to CIT(A) - disciplinary actions on allegations of mala fide against an officer exercising quasi-judicial powers - as alleged CIT (Appeals), had allowed certain appeals without properly appreciating the facts or going through the records - Secret Note was forwarded for examination to Director of Income Tax (Vigilance), who in the reports stated that out of nineteen appellate orders passed by the CIT(Appeals/respondent and inspected by him, irregularities were noticed in six appellate orders - Whether Tribunal had erred in holding that the Articles of Charge were not sustainable since they were based on quasi-judicial orders passed by the respondent in his capacity as CIT (Appeals)? HELD THAT - In the present case, a plain reading of the Articles of Charge as well as the statement of imputations clearly indicate that the sole basis for making the charges is the correctness of the decisions rendered by the respondent while he was acting as CIT (Appeals) HELD THAT - The gravamen of the charges levelled against the respondent are not based on his conduct. Although it has been alleged that certain decisions rendered indicate a lack of devotion to duty, but a bare perusal of the statement of imputation and the Articles of Charge indicate that the gravamen of the charges is only that the respondent had rendered decisions which, according to the Revenue, were erroneous. This is certainly not the basis on which the proceedings for misconduct can be commenced against a officer who is charged with a quasi-judicial function. As decided in KK. DHAWAN 1993 (1) TMI 255 - SUPREME COURT there was a specific allegation that the Officer had completed the assessment apparently with a view to confer to undue favour upon the assessee s concern . The test laid down by the Supreme Court in that case must be read in the context of the facts placed before the Court. Although, the Court had held that where an officer had acted in a manner which would reflect upon his reputation for integrity or good faith or devotion to duty, a disciplinary action could be initiated. However, an act of an Officer which would reflect on his devotion to duty must be read in the context of his conduct and not the correctness of the decisions rendered by him in a multi-tiered appellate structure. The conduct of an officer must be alleged to be one, which reflects recklessness or complete disregard for the function that he is performing. Mere erroneous decisions on account of a mistake of law or facts, cannot be the basis of commencing proceedings for misconduct. The decision in the case of K.K. Dhawan (supra) cannot be read to mean that misconduct proceedings can be commenced, alleging lack of devotion of duty, in cases where the decisions rendered by quasi-judicial authority are alleged to be erroneous. There has to be something more than mere allegation of erroneous decisions to charge an employee for misconduct; the conduct of an employee must be alleged to be reckless or for motives. In absence of such imputations, a charge made solely on the basis of a decision rendered by a quasi-judicial authority would not be sustainable. The petitioner s contention that the tribunal erred in relying on the statement of law in Nagarkar (supra) as the law stated by the Supreme Court in that case is no longer good law, also cannot be accepted. It is also necessary to bear in mind that a CIT (Appeals), essentially has to decide the cases based on the contentions canvassed before him. Proceedings before a CIT (Appeals) are adversarial proceedings and are bound to be decided in favour of one or the other party. It is necessary to ensure that a CIT (Appeals) or any other quasi-judicial authority is not put under any pressure in discharging his functions. The idea that the Government could commence disciplinary proceedings if, the decisions were rendered against the department, would be pernicious to the effectiveness of the role that is required to be performed by the CIT (Appeals). We concur with the reasoning of the Tribunal that a quasi-judicial authority is to act without fear and levelling charges which are based solely on the decisions rendered by the quasi-judicial authority would certainly instill fear in the minds of the officers and, thus, cannot be permitted. No reason to interfere with the decision of the Tribunal

Issues Involved:
1. Legality of Charge Memo against a quasi-judicial authority.
2. Procedural infirmities in issuing the Charge Memo.
3. Justification of delay in issuing the Charge Memo.

Issue-wise Detailed Analysis:

1. Legality of Charge Memo against a quasi-judicial authority:
The Tribunal examined whether the respondent, a Commissioner of Income Tax (Appeals), could be charged for decisions made in his quasi-judicial capacity. The Tribunal held that imputations of errors of law or mistakes could not be treated as misconduct in the absence of malafide intention or allegations of dishonest action. It referenced the Supreme Court decision in *Zunjarrao Bhikaji Nargarkar v. Union of India and Others* (1999) 7 SCC 409, which emphasized that quasi-judicial authorities must function independently without fear of disciplinary action for decisions against the Government. The Tribunal concluded that the respondent's decisions, being quasi-judicial, could not form the basis for alleging misconduct and initiating disciplinary proceedings.

2. Procedural infirmities in issuing the Charge Memo:
The Tribunal identified procedural infirmities in the issuance of the Charge Memo, noting that the initiation of disciplinary proceedings and the issuance of the charge memo were done simultaneously, contrary to prescribed procedures. The disciplinary authority should first decide on the necessity of disciplinary action and consult an independent agency like the CVC before framing charges. The Tribunal also noted that the Charge Memo originated from a secret note without proper inquiry or opportunity for the respondent to defend himself, violating procedural requirements.

3. Justification of delay in issuing the Charge Memo:
The Tribunal found no delay in the initiation of proceedings, stating that the authorities acted promptly once the secret note was forwarded.

High Court's Analysis:
The High Court reviewed the Tribunal's decision and upheld its findings. The Court noted that the Articles of Charge against the respondent were based solely on the correctness of his quasi-judicial decisions, with no allegations of malafide actions, extraneous considerations, or recklessness. The Court referenced the Supreme Court decision in *Union of India & Ors. vs. K.K. Dhawan* (1993) 2 SCC 56, which allows disciplinary action against quasi-judicial authorities only if there is prima facie material indicating misconduct, recklessness, or corrupt motives. The Court found that the charges against the respondent did not meet these criteria and were based merely on alleged errors in his decisions.

The Court emphasized that quasi-judicial authorities must be able to act without fear of disciplinary action for decisions that might be erroneous but are made in good faith. It referenced the Supreme Court decision in *Ramesh Chander Singh v. High Court of Allahabad & Anr.* (2007) 4 SCC 247, which reiterated that disciplinary proceedings should only be initiated against judicial officers if there are strong grounds to suspect malafides, bias, or illegality.

Conclusion:
The High Court concurred with the Tribunal's reasoning that charges based solely on the decisions rendered by a quasi-judicial authority cannot be sustained. It dismissed the petition and application, affirming that the respondent's decisions, being quasi-judicial, could not form the basis for alleging misconduct without evidence of malafide actions or extraneous considerations. The Court underscored the importance of judicial independence and the need to protect quasi-judicial authorities from undue pressure and fear of disciplinary action.

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