The Hon'ble Allahabad High Court in Prashant Chandra v. DHarish Gidwani Deputy Commissioner Of Income-tax Range 2, Contempt Application (Civil) No. 562 dated August 9, 2024 held that where the Deputy Commissioner deliberately and intentionally kept the outstanding notice of assessment year 2011-12 operational on the web portal for seven years and seven months, which ruined the reputation of the assessee, this act was in deliberate and willful disobedience of the judgment and order passed by the High Court. Consequently, the retired Deputy Commissioner was awarded a fine of Rs. 25,000 along with simple imprisonment for a period of one week.
Facts of the Case:
The applicant, Prashant Chandra, changed his business from Lucknow to New Delhi due to alleged harassment by Income Tax Authorities in Lucknow. He filed a writ petition (No. 9525 (MB) of 2013) which was allowed by the High Court on March 31, 2015. The Court held that after the change of business location, Income Tax Authorities in Lucknow did not have jurisdiction to assess the applicant in Lucknow. The Court ordered the opposite party to delete all outstanding amounts from the web portal showing dues to be paid.
The Court's order on March 31, 2015, specifically quashed a notice dated September 11, 2013, issued for the assessment year 2012-13, on grounds of jurisdictional error. The Court also directed that any consequential orders based on this notice should be quashed.
Despite this order, the Deputy Commissioner of Income Tax, Mr. Harish Gidwani (the opposite party), deliberately and intentionally kept the outstanding notice of assessment year 2011-12 operational on the web portal for seven years and seven months. This action ruined the reputation of the applicant, affecting his creditworthiness and causing various difficulties.
Prior to the Court's judgment, on September 20, 2014, and October 15, 2014, the opposite party had issued notices for the assessment year 2013-14. The applicant did not challenge these notices or raise any grievance against them before the Court within the statutory period of 30 days as required under Section 124(3) of the Income Tax Act.
After the Court's judgment, on June 24, 2015, the opposite party issued another notice for the assessment year 2013-14, recording the applicant's PAN number and Delhi address. The applicant responded on July 5, 2015, citing the Court's judgment and arguing that the opposite party lacked jurisdiction.
On March 15, 2016, the opposite party issued another manually prepared notice, referencing the June 24, 2015 notice but altering the applicant's address from Delhi to Lucknow. This notice gave the applicant seven days to respond.
The applicant filed a contempt application against Mr. Gidwani. The Court issued a show cause notice on September 28, 2022, asking why he should not be tried and punished under Section 12 of the Contempt of Courts Act, 1971. After considering the conduct of the opposite party, the Court framed three charges against him on November 1, 2023.
The contempt application was initially disposed of on December 16, 2022, but was later recalled on January 17, 2023, following a review application. A special appeal against this recall order was dismissed by a Division Bench on April 24, 2023.
The opposite party claimed that he had referred the applicant's representation to the Commissioner of Income Tax (CIT) in January 2016, but no evidence was provided to support this claim. He also argued that he was transferred from his post in June 2016 and was no longer responsible for the applicant's case after that date.
Issue:
Whether the Deputy Commissioner of Income Tax committed contempt of court by willfully disobeying the High Court's order regarding jurisdiction and outstanding tax demands?
Held:
The Hon'ble Allahabad High Court in Contempt Application (Civil) No. 562 of 2016 held that:
The Court observed that its judgment and order dated March 31, 2015, was not confined to any particular assessment year. It had generally recorded that the Income Tax Authority at Lucknow did not have jurisdiction over the applicant who was assessed in Delhi. The Court viewed that the opposite party did not have the authority to interpret the Court's order by adding words not contained in the original judgment.
The Court emphasized that the judgment and order passed by it has primacy. It rejected the plea raised at a late stage that the applicant's representation had been referred to the CIT in January 2016, as no document was produced to show any efforts or regard towards the Court's order. The Court noted that after referring the representation, the opposite party neither sent any reminder nor took any steps to obtain a decision from the CIT.
The Court considered the argument that each assessment year is independent and that the March 31, 2015 order might not apply to other years. However, it found that the order was not confined to a specific year and generally addressed the jurisdiction issue. The Court rejected the opposite party's argument that the notices for 2013-14 were issued before the Court's judgment, stating that the opposite party should have respected the Court's order once it was passed.
The Court noted that the notice issued to the applicant for the assessment year 2012-13 was quashed on jurisdictional grounds, and consequential orders were also directed to be set aside. This meant that the Assessing Officer had to ensure that the entry on the web portal was deleted immediately after the March 31, 2015 judgment. However, the outstanding notice remained on the portal for seven years and seven months, which the Court found to be a deliberate and willful disobedience of its order.
The Court referenced several Supreme Court and High Court judgments emphasizing the importance of punishing willful and deliberate contempt to uphold the dignity and majesty of the court. It cited cases such as T.N. Godavarman Thirumulpad, Patel Rajnikant Dhulalbai, and Balwantbhai Somabhai Bhandari, which stressed that apologies should not be accepted as a matter of course, especially if the conduct has caused serious damage to the dignity of the institution.
Considering the totality of facts and circumstances, as well as the cited legal precedents, the Court found the charges framed on November 1, 2023, to be proved against the opposite party. It deemed the action of Mr. Gidwani not only contemptuous but also malicious, finding that he had purposefully acted to harass the applicant despite the Court's order.
The Court concluded that a fine alone would not meet the ends of justice, given that Mr. Gidwani was a senior officer and custodian of the applicant's assessment. It held that not punishing such conduct would send the wrong signal to other Income Tax Department officials.
Consequently, the Court found Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow (now retired) guilty under Section 12 of the Contempt of Courts Act, 1971. It awarded him a fine of Rs. 25,000 along with simple imprisonment for a period of one week, with an additional day of imprisonment in case of default on the fine.
The Court rejected a request by the opposite party's counsel for a 10-day extension to the enforcement of the judgment, citing the long-pending nature of the matter. It ordered Mr. Gidwani to surrender before the Senior Registrar of the Court at 3:30 PM on August 9, 2024, to serve out his sentence.
The Court directed the Senior Registrar to submit a report by August 12, 2024, regarding compliance with the order.
Relevant Sections:
Section 124 of the Income-tax Act, 1961: "Jurisdiction of Assessing Officers"
Section 12 of the Contempt of Courts Act, 1971: "Punishment for contempt of court"
Pari Materia:
1. T.N. Godavarman Thirumulpad (102) through the Amicus Curiae v. Ashok Khot and another; (2006) 5 SCC 1
2. Patel Rajnikant Dhulalbai and another v. Patel Chandrkant Dhulabhai and others; (2008) 14 SCC 561
3. Principal Commissioner of Income Tax v. M/S I-Ven Interactive Ltd., Mumbai [Civil Appeal No. 8132 of 2019]
4. P.C. Sen v. Unknown, AIR 1970 SC 1821
5. Raza Textiles Ltd. v. CIT [1987] 34 Taxman 130/[1989] 178 ITR 496 (Allahabad)
Arguments by Lawyers:
Applicant's Counsel:
- Argued that the writ Court's judgment dated March 31, 2015, decided the question of jurisdiction and was not confined to any particular assessment year.
- Submitted that the opposite party deliberately kept the outstanding amount on the web portal for seven years and seven months, ruining the applicant's reputation.
- Emphasized that the opposite party's actions were willful and deliberate, showing contempt for the Court's order.
Opposite Party's Counsel:
- Denied the charges and reiterated submissions made at the time of charge framing.
- Argued that the March 31, 2015 order was specific to the assessment year 2012-13 and did not apply to other years.
- Claimed that the opposite party had referred the applicant's representation to the CIT in January 2016, showing regard for the Court's order.
- Submitted that the opposite party had the highest regard for the Court's dignity and majesty and had not willfully disobeyed the order.
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