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TMI Blog2025 (4) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... to put in context the controversy involved herein:- 3.1 The Petitioner filed its return of income for the Assessment Year 2018-19 on 30.03.2019, declaring Nil income, while claiming exemption under Sections 11 and 12 of the Income Tax Act, 1961 ("the Act"). 3.2 It is the case of the Petitioner that, since the Petitioner's gross total income exceeded the maximum amount not chargeable to tax, the Petitioner audited its books of accounts in accordance with Section 12A (b) of the Act. The audit report in Form No.10B, as prescribed under Rule 17B of the Income Tax Rules, 1962, (the Rules) was duly uploaded on the Income Tax Portal on 30.03.2019. 3.3 Subsequently, it was noticed that due to an inadvertent error on the part of the Chartered Accountant who prepared the audit report in Form No.10B, incorrect figures were entered in certain fields. Specifically, at Row No. 1, the amount of income applied during the year was erroneously stated as Rs. 1,93,61,840/- instead of the correct figure Rs. 4,51,06,113/-, and at Row No. 3, the amount set apart for application was stated to be Rs. 71,36,765/- instead of Rs. 24,72,325/-. Upon discovery of this error, a revised audit report in Form No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss a fresh assessment order u/s. 143 (3) after providing opportunity of furnishing submissions against the draft assessment order at Annexure-H. B) Pending the hearing and final disposal of this application. this Hon'ble Court be pleased to stay operation and implementation of assessment order passed u/s. 143 (3) dated 04.03.2021 at Annexure-J and demand notice issued u/s 156 at Annexure-K-coll and further stay the recovery of demand in pursuance of notice issued u/s. 156 at Annexure-K-coll. C) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice, and D) This Hon'ble Court be pleased to allow this application with costs against the respondent." 5. This Court by Order dated 06.04.2021 had issued notice in Special Civil Application No. 6003 of 2021 and had stayed further proceedings. It appears that in spite of the same, the respondent No. 2 had passed a penalty order dated 21.12.2021 in utter disregard of the stay order of this Court dated 06.04.2021. The aforesaid action on the part of the Department compelled the petitioner to file a further petition being Special Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or even the orders passed by this Court and does whatever it pleases, based upon the ipse dixit of the random officer who has the occasion to deal with the Assessee's case. 8. On the other-hand, Ms. Maithili Mehta, learned Senior Standing Counsel for the Department submitted that during the course of hearing of the present petition, initially referred to and relied upon the affidavit-in-reply dated 10.02.2025 filed by Ashish Kumar Gupta serving as Income Tax Officer(Exemption) Ward-II, Ahmedabad but, had subsequently relied upon the affidavit dated 28.02.2025 filed by the same officer, wherein, an unconditional apology was tendered for filing the previous affidavit dated 10.02.2025. 9. DISCUSSION & FINDINGS :- 9.1 After hearing the learned Counsel on both sides and in view of the myriad cases that we have had the occasion to deal with in the last six months or so, in the present Roster, more than the redressal of an individual/isolated wrong, we deemed it our bounden duty to address what we perceived to be a systemic failing of the Income Tax Department. 9.2 The record shows that on 11.02.2025, this Court after a detailed hearing on the merits of the matter had passed the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjournment was sought upto 11.03.2021. In the affidavit dated 10.02.2025 which has been placed on record, the deponent - Shri Ashish Kumar Gupta serving as Income Tax Officer (Exemption) Ward-2, Ahmedabad has at paragraph no.6 submitted as under : "With respect to submission made in petition in para 3(i), I say and submit that, As per records, the assessee was afforded several opportunities to present his case and submit his response during the course of assessment proceeding u/s 143 (3) of the Act by issuing various notices as listed here under: Sr. No. Date Notice and remarks 1 22.09.2021 Notice u/s 143 (2) issued. 2 15.10.2020 Notice issued. 3 01.12.2020 Notice u/s 142 (1) issued and fixing hearing on 16.12.2020 4 04.01.2020 Notice issued - adjournment sought 5 14.01.2021 Notice issued-No response 6 27.01.2021 Notice u/s 142 (1) issued and fixing hearing on 03.02.2021- adjournment sought. 7 13.02.2021 Notice u/s 142 (1) issued fixing hearing on 17.02.2021-Response on 15.02.2021 8 27.02.2021 Show cause notice issued fixed hearing on 03.03.2021- No response As can be seen from the above records and order sheet, no adjournment has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that in spite of the detailed order of this Court dated 06.04.2021 framing the issue and refraining the department from proceeding further, not only has the said direction been completely ignored and the respondents have proceeded to flout the same with impunity and levied a penalty on the petitioners by ignoring the stay granted at para 6 thereof, but before this Court, in the proceedings which are now been heard for the purpose of adjudicating the issues framed on 06.04.2021, a false affidavit has been filed with the knowledge that it is false, with the intention that the petition may be dismissed by this Court taking reliance upon the false facts pleaded by the respondent. Despite the best efforts of learned Senior Standing Counsel Ms. Mehta appearing on behalf of the respondent and her repeated pleas that one more opportunity may be granted to the respondents, we are of the firm opinion that the brazen action of contempt and perjury on the part of the department must not go unpunished because the credibility of the orders of this Court is at stake and we are of the opinion that until and unless suitable action is taken in respect of all concerned, the very purpose for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty order has been withdrawn. 5. I humbly say and submit that explanations of Mr. Ashish Kumar Gupta, ITO (Exemption), Ward-1, Ahmedabad as well as Mr. R. S. Saju, ITO (Exemption), Ward-2, Ahmedabad, who are primarily responsible for filing the Affidavits dated 10.02.2025 and 28.02.2025 have been called for. I humbly say and submit that explanation has also been called for from Faceless Assessing Officer Mr. Lokesh C. Meena, ITO, presently posted at Ward-4(1), Jaipur, who has been unmasked to inquire into fact how penalty order dated 21.12.2021 under section 270A of the. Income Tax Act, 1961 ('the Act' for short) was passed, despite the stay granted by this Hon'ble Court vide order dated 06.04.2021. 6, I humbly say and submit that explanation has also been called for from Mr. Harish Shah, Assessing Officer, ITO, Exemption, Ward-2, presently posted at Verification Unit- 1 (2) (4), Palanpur, who was Respondent no. 2 in the present petitions under consideration, for explaining circumstances why the order dated 06.04.2021 passed by this Hon'ble Court was not communicated to National e-Assessment Centre (NeAC for short, presently known as National Faceless Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the said adjournment request made by the petitioner did not reflect in the Case History Noting / order sheet. I humbly say and submit that such shortcoming in software came to be noticed subsequently and accordingly in the year 2023, the software was updated so that adjournment entries in the hearing module get synchronized in Case History Noting /order sheet module. 11. I humbly state that the Department has not only taken several steps to remedy the situation as stated above in Para 10 to deal with situations similar to those arising after the order dated 04.03.2021, but it is also committed to take all further remedial steps to prevent denial of, as in this case, opportunity to the taxpayer to defend its case. 12. I humbly say and submit that the Department highly respects and bows to the judicial discipline to maintain judicial decorum and would never permit any action of its officers to undermine or disrespect the Hon'ble Court's orders. For handling writ petitions where assessment is made under Faceless Assessment Scheme, NaFAC has issued Standard Operating Procedure (SOP) Vide F.No. CIT(NaFAC)-1/58/2021-22/333 dated 26.07.2021 with the prior approval of CB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, contained questionnaires to the concerned officers and their written responses to their respective Superiors. 14. From the same, it is apparent that the failure of the administration rested on the twin factors: issues with the portal and human error. 15. This Court deems it appropriate not to venture in the area of errors and the degrees of negligence in the performance of duties by the concerned officers. It is up to the Department to deal with the same on the administrative side. 16. As far as issues with the portal are concerned, we find that these portals have become silent stakeholders in the Justice Delivery System. On the last hearing, we were pleased to note that there is an acknowledgment on behalf of the Department, coupled with a sincere effort to rectify the issues. 17. Given such a situation, the Department, whose avowed objective being to participate in the economic growth of the country through the Tax collection system as mandated and circumscribed by Parliament in Article 265 of the Constitution of India, has to ensure that at all times, every wing of the Department including the "portal" is attuned and fine tuned to the imminent needs of the functioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the office of PCCIT, and also is the first recipient of the Court orders. Further, CIT (Judicial) is already coordinating and collaborating with multiple stakeholders like Standing Counsels & Jurisdictional hierarchy. Also, as per the CBDT instruction no 1 of 2024 dated 09.02.2024, in all the judicial matters, CIT (Judicial) is the coordinating body. The proposed changed is depicted graphically as below:- Current receipt and communication of court orders Proposed receipt and communication of court orders Court Court CIT (Judicial) CIT (Judicial) ITBA through CIT (J) All users in Jurisdictional and Faceless Hierarchy Jurisdictional Hierarchy (including PCIT, JCIT, DCIT) ITO/AC/DC in JAO through ITBA Faceless Hierarchy (ITO/AC/DC) 1.1. The proposed change will have multiple benefits: (a) The Court order will be immediately uploaded on the ITBA for all users. There will be more prompt communication of such orders for FAOs who are operating on very thin timelines at the end of time limitation dates. (b) The orders will be populated on ITBA for all users- both Jurisdictional and Faceless hierarchy. This will lead to early digitiza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jurisdictional and AU hierarchy (referred to as communication utility in the SOP of NaFAC). The ITBA team has not confirmed the technical feasibility of the proposal. Details will be presented in subsequent report. 5. Introduction of MIS report for AU hierarchy. MIS for PCIT (AU), Range Head (AU) and FAO (AU) detailing the PAN AY and designation of the ITBA user uploading the document and the date of uploading of documents under the "Court order & related" category. 6. Transfer out of cases from Faceless Assessments For the cases where writ petitions have been filed and the issues involved are complex, require submissions of large volume of documents, protracted litigation and continuous interaction with Standing Counsel is anticipated the same may be transferred from JAO to FAO for uniform stand, regular communication and compliance. The same may be done on case-to-case basis with the approval of PCIT (AU) after examining necessary parameters that will be built into ITBA and approved by NaFAC. 20. Ms. Mehta, learned Senior Standing Counsel has further drawn the attention of this Court to Board Instruction No. 1 of 2024 dated 09.02.2024 regarding the functions of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of law.With the aforesaid steps taken by the Department in consultation with the Chairman, CBDT and the directions passed by us in the foregoing paragraphs, we are buoyant and optimistic that the deficiencies recorded in the Orders of this Court, of which the Department is now alive to and both pro-active and re-active, the administration of the provisions of the Income Tax Act will be optimized to ensure that a powerful engine of our economy can maximize its potential and at the same time remain just and humane to the Assessee. It is the need of the hour. 22. Lastly, it brings us to the individual case of the "little man" who had knocked the doors of this Court for his own statutory and Constitutional rights. Special Civil Application No. 3060 of 2022:- 1. The Department has filed affidavit dated 10.02.2025 wherein, it has been stated as under:- "8. Further, the audit reports in Form 10B (original as well as the revised) are shown to be obtained on 30.03.2018 which is actually before the close of the relevant Financial Year. Further, it is also be noted that while both the audit reports are claimed to be obtained on 30.03.2018 there is a large gap in filing of the same on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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