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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 14178 OF 2023
M/s. OM Siddhakala Associates through its
Partner Mr. Mayur D. Walhekar …Petitioner
Versus
Deputy Commissioner of Income Tax, CPC
through Jurisdictional Assessing Officer
(Respondent No. 2) & Ors. …Respondents
Mr. Sanket Bora a/w Ms. Vidhi Punmiya i/b SPCM Legal for
Petitioner.
Mr. Suresh Kumar for Respondents-Revenue.
CORAM: K. R. SHRIRAM &
DR. NEELA GOKHALE, JJ.
DATED: 28th March 2024
PC:-
1. Petitioner is impugning an order dated 28th March 2023 passed
by Respondent No. 3 rejecting Petitioner’s application filed under
Section 264 of the Income Tax Act, 1961 (“the Act”).
2. The reason, Respondent No. 3 has rejected the application on
merit, can be found in paragraph no. 6.2 of the impugned order and
it reads as under :
“6.2 Regarding the merits of the assessee’s contentions.
Firstly, the assessee has himself accepted that the
tolerance limit of 5% between the declared sales
consideration and the stamp duty valuation was inserted
by the Finance Act, 2018 with effect from 01.04.2019.
This was subsequently enhanced to 10% by the Finance
Act, 2020 with effect from 01.04.2021. When the act
itself lays down that these amendments would come into
effect prospectively from 01.04.2019/01.04.2021, there
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is no question of holding that these amendments were
retrospective in nature. The assessee has not produced
any judgements of the High Court/Supreme Court
holding that these amendments were to be applied
retrospectively. The Hon’ble ITAT judgements relied
upon by the assessee have not been accepted by the
Department and are therefore of no help to the
assessee.”
3. The Apex Court in Union of India and Others v. Kamlakshi
Finance Corporation Ltd.,1 has held that in disposing the quasi-
judicial issues before them, the Revenue Officers are bound by the
decisions of Appellate Authorities. The order of Appellate Collector is
binding on the Assistant Collectors working within his jurisdiction
etc. The Apex Court in paragraph no. 6 has criticized the conduct of
Revenue Authorities. Paragraph no. 6 reads as under :
“6. Sri Reddy is perhaps right in saying that the
officers were not actuated by any mala fides in passing
the impugned orders. They perhaps genuinely felt that
the claim of the assessee was not tenable and that, if it
was accepted, the Revenue would suffer. But what Sri
Reddy overlooks is that we are not concerned here with
the correctness or otherwise of their conclusion or of any
factual mala fides but with the fact that the officers, in
reaching their conclusion, by-passed two appellate
orders in regard to the same issue which were placed
before them, one of the Collector (Appeals) and the
other of the Tribunal. The High Court has, in our view,
rightly criticised this conduct of the Assistant Collectors
and the harassment to the assessee caused by the failure
of these officers to give effect to the orders of authorities
higher to them in the appellate hierarchy. It cannot be
too vehemently emphasised that it is of utmost
importance that, in disposing of the quasi-judicial issues
before them, revenue officers are bound by the decisions
of the appellate authorities. The order of the Appellate
Collector is binding on the Assistant Collectors working
within his jurisdiction and the order of the Tribunal is
1. 1992 Supp(1) Supreme Court Cases 443.
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binding upon the Assistant Collectors and the Appellate
Collectors who function under the jurisdiction of the
Tribunal. The principles of judicial discipline require
that the orders of the higher appellate authorities should
be followed unreservedly by the subordinate authorities.
The mere fact that the order of the appellate authority is
not “acceptable” to the department – in itself an
objectionable phrase – and is the subject matter of an
appeal can furnish no ground for not following it unless
its operation has been suspended by a competent court.
If this healthy rule is not followed, the result will only be
undue harassment to assessees and chaos in
administration of tax laws.”
4. Therefore, Respondent No. 3 should have realized that the
order of Income Tax Appellate Tribunal (“ITAT”), Pune was binding
upon him and the principles of judicial discipline required that orders
of the highest Appellate Authorities should be followed unreservedly
by the subordinate Authorities. The mere fact that the order is not
acceptable to the department, in itself an objectionable phrase, can
furnish no ground for not following it, unless its operation has been
suspended by the Competent Court. If this healthy rule is not
followed, the result would only be undue harassment to Assessees
and chaos in administration of tax laws.
5. In the circumstances, we hereby quash and set aside the order
dated 28th March 2023 impugned in the petition and remand the
matter to Respondent No. 3 for de-novo consideration. Respondent
No. 3 shall follow the law as laid down by the ITAT. Before passing
an order, Respondent No. 3 shall give a personal hearing to Petitioner,
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notice whereof shall be communicated atleast five working days in
advance. After the personal hearing, if Assessee wishes to file written
submissions, Assessee may do so within three working days of the
personal hearing. The order to be passed shall be a reasoned order
dealing with all submissions of Petitioner. The order shall be passed
on or before 30th June 2024.
6. Petition disposed. No order as to costs.
(DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)
GITALAXMI
KRISHNA
KOTAWADEKAR
Digitally signed by
GITALAXMI KRISHNA
KOTAWADEKAR
Date: 2024.04.01
18:51:30 +0545
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