Harassment of the assessee is not permitted under the Statute, should have been avoided at all cost – says Tribunal.

[C.A. DEV KUMAR KOTHARI]

ITO vs. Audyogik Tantra Shikshan (ITAT Pune)   

Illegal additions and disallowances:

The people conversant with tax administration are well aware that in case of scrutiny assessment large additions and disallowances are made by the Assessing Authorities knowingly that they are wrong and will get deleted in first appeal itself. However, after raising such demands pressure for recovery is also made and many times penalty is also levied even during pendency of first appeal. Raising huge demands, passing serious but wrong statements to disallow expenses or to add to income are common practices adopted by AO’s.  Cases have come to notice where AO issue attachment orders or certificates for recovery of disputed dues through Tax Recovery officers even when first appeal is pending, stay petition is pending before CIT. Unfortunately senior authorities also do not mind on such wrong practices if the AO is able to make collection. Therefore, such practices are being used as tools in hands of many officers who harass tax payers.

Appellate authorities – just delete such additions:

Generally appellate authorities just delete such wrong, unreasonable additions and disallowances without making any adverse remarks on various wrong statements made by the AO for disallowing claims or making additions.  We find rare cases in which appellate authorities ask explanations from the AO to justify his actions. We also find rarely that appellate authorities, Tribunal and courts pass remarks against the erring authority. Many times it is quite evident that the actions of AO were designed to harass the tax payer, still there is no action taken against erring officers. This is one of the major reasonof harassment, power to harass and as a result existence of corruption.

 Criticism from senior and appellate authorities is desired:

Criticism from senior and appellate authorities is required in such circumstances. And if they do so, perhaps it will go a long way to reduce harassment of tax payers and corruption- due to power to harass. However, we rarely find such criticism or reprimand to AO to avoid harassment.

Recent ruling of ITAT- harassment of assessee is not permissible:

In a recent ruling the ITAT, Pune Bench in case of ITO vs. Audyogik Tantra Shikshan came heavily on the harassment caused by the AO to assessee. The Tribunal held that “the A.O should have confined himself in making just and proper assessment only, as per the provisions of the law and harassment of the assessee which is not permitted under the Statute should have been avoided at all cost.”

In this case assessee has also taken a ground for awarding of cost of appeal. However, during hearing, on behalf of assessee it was contended that they are not much interested in cos, the purpose of the ground to claim costs was to bring it to the notice of the Tribunal about the highhandedness with which the AO has acted. Therefore, the Tribunal refrained from awarding costs although it was considered a fit case for awarding costs.

Generally tax payer keep mum against harassment to avoid further harassment:

Many times tax payers find that they have been harassed, but they avoid saying this openly because they are afraid of further harassment by tax authorities. The harassment can be in relation to the same year or in some other year. The harassment can be in the case of same assessee or his associates. Tax Consultants also refrain from openly raising voice against such harassment because they deal with many other cases and are afraid of harassment of their clients. Cases of harassment are evident when we find that about 90% of additional demands raised in assessments are deleted in the appeals. For smaller demands tax payer avoid tofight out due to time consuming and high cost of litigation. In fact author has experienced that in many cases ultimately assessed income is lower than even income as per return because many additional claims made by assessee are allowed in course of appeal.