Bombay High Court asks DCIT to pay Cost of Rs. 1.5 Lakhs for Illegal Denial of Refund [Read Judgment]

The Bombay High Court has recently imposed a fine of 1.50 lakhs on the Deputy Commissioner of Income Tax to pay a cost of Rs. 1.5 Lakhs for not granting refund by raising a wrong demand.

The Officer had denied the refund of tax to the petitioner on the ground that demand of Rs 62,00,000/- and Rs.90,92,528/- is pending against them.

The petitioner approached the High Court by stating that they consistently and continuously demanded the documents or the records of the office. It was submitted that they have not received the order raising the demands for the above Assessment Years.

Allowing the petition, Justice Collabawalla and Justice S C Dharmadhikari directed the department to grant the refund determined for the Assessment Years 1993-1994 and 1995- 1996 together with applicable interest within three months from the date of communication of our order.

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“We have not been shown anything in the law which disables the Petitioner from claiming such refund. If that amount is yet not released but is sought to be adjusted against demands which are also not taken to their logical conclusion, then, the Revenue must suffer the consequences in law. It cannot then say that the Petitioner was not prompt or vigilant in obtaining the refund or the benefits due to it in accordance with law.”

Before concluding, the division bench also pointed out

Adding that disposing of the petition without visiting the concerned officials with any consequences would send a wrong message, the division bench imposed a fine of Rs. 1.50 lakhs on the official.

“We must as a part of our duty send strong signal and message that we do not tolerate any inefficiency and lapse in the working and functioning of this Department. Hence, while we allow the Writ Petition, we impose costs on the Respondents which are quantified in the sum of Rs.1.5 Lakhs. The costs to be paid to the Petitioner within a period of four weeks from today. The costs are apportioned between the officer who is present in Court and the officer who was his predecessor. The amounts shall be in the first instance paid by the Respondents and thereafter they shall be recovered from the salaries of these two officers. Equally, the lapses and errors on their part are noted by taking due cognizance of this order. The superiors should enter in their Annual Confidential Reports these lapses and errors on account of which the Respondents faced this embarrassment in the Court. Once the Respondents could not justify their acts and solely because of the inefficiency of these officials, then, the superiors must initiate the requisite steps and if they include denial of any promotional or monetary benefits to such officials, then, even then such steps and measures be initiated in accordance with law. That is the minimal expectation of this Court.”

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While concluding, the bench also noted that the official as also the official who is present in Court has tried to overreach the authority and powers of this Court by not allowing Mr. Suresh Kumar to argue the case but frequently interrupting him.

“In the view of this officer, Mr. Suresh Kumar has not performed his duty by inviting the attention of this Court to the relevant documents in the file or in his custody. The official’s version is “I have to presume that once the demand is raised it must have been duly served or steps in relation thereto are taken by other officials in the Department.” He could not have then questioned their acts and placed as he is in a position of the Deputy Commissioner. We do not think that such conduct on the part of the officer enhances the image and reputation of the Respondents. We think that he is compounding his lapses and errors by such conduct and behavior in the Court. All the more, therefore, he should be visited with the above consequences,” the bench said.