2024 (11) TMI 325 - HC - Income Tax

Central Administrative Tribunal's (CAT) decision to set aside the charge-sheet against the Commissioner of Income Tax (Appeal) Kolkata/respondent - Charge against the respondent is to the effect that he has deleted an addition of while deciding an appeal in the hasty manner - order passed by the respondent in the appeal filed by the assessee, though once reversed by the ITAT but later on, pursuant to the direction given by the High Court at Calcutta, the ITAT has decided the issue regarding disallowance of sales commission and purchase commission to the assessee afresh and has remanded the matter to the Assessing Officer for deciding the issue afresh. HELD THAT - Though the petitioners has submitted that the said deletion was ultimately reversed by the ITAT in the appeal filed by the Revenue in the year 2011, however, it is to be noticed that the said order of the ITAT was interfered by the High Court at Calcutta and the matter was again remanded to the ITAT for deciding afresh the appeal filed by the Revenue after providing opportunity of hearing to the assessee and the ITAT has remanded the matter to the Assessing Officer to decide the issue afresh. In such circumstances, the whole premise of issuance of charge-sheet against the respondent has vanished. Though the Department was aware about the alleged negligent act of the respondent since the beginning but has not taken any action against the respondent till passing of a fresh order by the ITAT, pursuant to the direction issued by the High Court at Calcutta. It is not the case of the petitioners that the Department was not aware about the said negligent act of the respondent, if any, and came to know about it only in the year 2017 when the memorandum of charges were issued against the respondent. As observed earlier, the gravity of charge against the respondent has been diluted when the ITAT has remanded the matter to the AO for deciding the issue afresh and in such circumstances, the delay in initiation of the disciplinary proceedings against the respondent, in the present case, is fatal and on this ground alone, the memorandum of charges issued against the respondent is liable to be interfered with. The Hon ble Supreme Court in State of Madhya Pradesh Vs. Bani Singh Anr., 1990 (4) TMI 286 - SUPREME COURT in somewhat similar circumstance, has dismissed the challenge made by the State. No merit in this writ petition and the same is, therefore, dismissed.

Issues Involved:
1. Validity of the Central Administrative Tribunal's (CAT) decision to set aside the charge-sheet against the respondent.
2. Legality of initiating disciplinary proceedings against an officer for actions taken in a quasi-judicial capacity.
3. Impact of delay and laches on the initiation of disciplinary proceedings.
4. Assessment of the alleged misconduct in the context of judicial review.

Issue-wise Detailed Analysis:

1. Validity of the CAT's Decision:
The petitioners challenged the CAT's order dated 22.05.2020, which set aside the charge-sheet issued against the respondent. The CAT relied on a precedent set by its Principal Bench in a similar case (Anuradha Mookerjee Vs. Union of India & Ors.), where it was determined that disciplinary proceedings based on assumptions and without objective evidence were not permissible. The CAT observed that the charge against the respondent was primarily based on suspicion without any concrete evidence of misconduct. The CAT concluded that the initiation of disciplinary proceedings on the basis of the respondent's decision being overturned by a higher authority was not a valid ground, as it would undermine the quasi-judicial system.

2. Legality of Disciplinary Proceedings for Quasi-Judicial Actions:
The judgment acknowledges that disciplinary proceedings can be initiated against officers for their actions in a judicial or quasi-judicial capacity if they act negligently or recklessly. However, the CAT emphasized that such proceedings must be based on objective and verifiable material, not on presumptions or imaginations. The CAT found that the charge-sheet against the respondent lacked such material, as it was premised on the assumption that the respondent acted with ulterior motives without any supporting evidence.

3. Impact of Delay and Laches:
The respondent argued that the disciplinary proceedings were initiated with undue delay, as the charge-sheet was issued nearly nine years after the alleged misconduct and just six months before his retirement. The CAT, and subsequently the High Court, found that the delay was prejudicial to the respondent, particularly since the department was aware of the alleged misconduct much earlier. The High Court cited the Supreme Court's decision in State of Madhya Pradesh Vs. Bani Singh & Anr., which held that unexplained delays in initiating disciplinary proceedings could render them unfair and subject to dismissal.

4. Assessment of Alleged Misconduct:
The charge against the respondent involved the deletion of an addition of Rs. 120.55 crore in a tax appeal, which was later reversed by the ITAT. However, the High Court at Calcutta intervened, leading to a remand for fresh consideration, which diluted the basis for the charge. The High Court noted that the department's failure to act promptly despite being aware of the respondent's decision undermined the credibility of the charges. The court concluded that the gravity of the charge was diminished by the subsequent legal developments, and the delay in proceedings was unjustifiable.

In conclusion, the High Court dismissed the writ petition, upholding the CAT's decision to set aside the charge-sheet against the respondent. The court emphasized the need for disciplinary actions to be based on solid evidence and conducted without undue delay, especially in cases involving quasi-judicial functions.

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