Allahabad High Court
Dr. Vinod Kumar Rai Son Of Late Sri ... vs The Income Tax Appellate Tribunal, ... on 14 March, 2008
Author: Sudhir Agarwal
Bench: Sushil Harkauli, Sudhir Agarwal
JUDGMENT Sudhir Agarwal, J.
1. Since, both the matters involve similar questions of law and, therefore, have been heard together and are being decided by this common judgment. Heard Sri R.N. Singh. Senior Advocate, assisted by Sri R.K. Rai, and Sri Madhur Prasad. Advocate for the appellants and Sri R.K. Upadhyay for the respondents.
2. I.T.A. No. 14 of 2008 (hereinafter referred to as the 'first case') has been filed under Section 260(A) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') against the order dated 13.11.2007 passed by the Income Tax Appellant Tribunal (hereinafter referred to as the Tribunal') in Income Tax Appeal No. 17 (Alld) of 2007. I.T.A. No. 476 of 2007 (hereinafter referred to as 'second case') is against the order dated 13.4.2007 of the Tribunal passed in several connected appeals of the appellants.
3. The first submission of Sri Singh the learned Counsel for the appellant in the first case is that the appeal filed before Tribunal was barred by time. This objection was raised by him before the Tribunal also but the same has not been adverted to by it. Elaborating his submission, it is contended that the copy of the order dated 3.10.2006 of Commissioner of Income Tax (Appeal) [in short 'CIT(A)] was received by the Assessing Authority before 14.11.2006 inasmuch on 14.11.2006 the Income Tax Officer, pursuant to the order dated 3.10.2006, issued revised demand and. therefore, the appeal filed on 12.1.2007 was barred by limitation as prescribed under Section 253(3) of the Act. However, we do not find any substance in the submission. A perusal of the Section 253(3) shows that the period of limitation Commences from the date the order is communicated to the assessee or the Commissioner as the case may be. Therefore, the period of limitation prescribed under Sub-section 3 of Section 253 of the Act would commence from the date the order is communicated to the Commissioner, Income Tax. In the present case, the respondents have stated that the order was communicated to the Commissioner, Income Tax on 17.11.2006. The same was mentioned not only in the memo of appeal filed before the Tribunal but even in the counter affidavit filed by the respondents before this Court. It is specifically stated in para-6 that the order dated 3.10.2006 was received by C.I.T. on 17.11.2006 and, therefore, the appeal was well within time. This fact has not been disputed by the appellant. The appellant has sought to compute the period of limitation erroneously, i.e., from the date of communication of the order to Assessing Authority, though it would commence from the date of communication to the Commissioner. It, thus, cannot be said that the appeal preferred by the respondents was beyond time.
4. The next submission in the first case is that once the order of CIT (A) was acted upon by the Assessing Authority by issuing a revised demand on 14.11.2006 and was accepted by the assessee, since he deposited the amount of Rs. 19,850/- by Challan dated 23.11.2006, thereafter, it was not open to the respondents to take a different view in the matter and challenge the order of CIT (A) before the Tribunal by filing an appeal under Section 253. This submission also, in our view, is wholly unmerited and misconceived. The right of appeal under Section 253 has been conferred upon the assessee and the Commissioner, Income Tax. Where the Commissioner is aggrieved by the order passed by the CIT (A), he can direct the concerned Assessing Authority to file an appeal and in other matters, it is the assessee, who can file appeal, if he is aggrieved by the order of the CIT (A). It is not the case that the Commissioner took any decision of not filing any appeal against the order dated 3.10.2006 passed by the CIT (A). In fact, till the alleged revised demand was issued by Assessing Officer on 14.11.2006, even the copy of the order dated 3.10.2006 was not communicated to the Commissioner, which in fact was received by him on 17.11.2006. A statutory right of appeal vested in Commissioner cannot be made non est merely on the ground that the order against which the appeal was filed was complied with by the subordinate authority. Even in the judicial orders, when an appeal is filed and no interim order is passed, if the order passed by the Lower Court is executed, it would not make the appeal incompetent or infructuous. The right of appeal is one thing and compliance of the order against which the appeal is filed is another thing. The Commissioner by no principle of law can be restrained or deprived of exercising his right of appeal under Section 253(2) of the Act. The aforesaid contention of the appellant is thus rejected being without any substance.
5. Now comes the last submission that merely because Sri R.K. Jain, the then CIT (A) was transferred, it would not denude him the inherent jurisdiction to decide the pending appeals and, therefore, only on this ground, the order passed by the then CIT (A) could not have been set aside by the Tribunal. It is contended that the doctrine of de facto would apply in such a case and reliance is placed on the Apex Court decision in Gokaraju Rangaraju v. State of A.P. .
6. In order to examine the correctness of the aforesaid submission, it would be appropriate to have a bird eye view of the attending circumstances, in which the order was passed by the then CIT (A), which is subject matter of dispute in this case. It appears that Sri R.K. Jain, who was posted as Commissioner, Income Tax (Appeal), Allahabad was transferred as CIT, I.T.A.T. Allahabad vide the Ministry of Finance, Government of India, Department of Revenue. New Delhi's order dated 31.5.2006. By another order of the same date, i.e., 31.5.2006, one Sri Aseem Kumar was transferred and posted as CIT (A) Allahabad, who was earlier working as CIT (A) Kolkata. Challenging the order of transfer, Sri R.K. Jain filed O.A. No. 642 of 2006 under Section 19 of the Administrative Tribunal Act, 1985 before the Central Administrative Tribunal, Allahabad (hereinafter referred to as the 'CAT') which was disposed of vide order dated 8.6.2006 with the following direction:
6. Accordingly, the O.A. Is disposed of finally at the admission stage itself by giving liberty to the applicant to file afresh representation within a week through proper channel from the date of receipt of a copy of this order, along with, copy of the previous representation dated 2.5.2005, addressed to the Chairman, C.B.D.T., New Delhi and also along with a copy of the Original Application before the Competent authority and the Competent Authority will consider and decide the same by a reasoned and speaking order as expeditiously as possible.
7. In the interest of justice, it is further provided that ill the disposal of the representation the effect and operation of the impugned transfer order dated 31.5.2006 in respect of the applicant shall not be given effect to, in case he has not already been relieved.
Sri R.K. Jain, pursuant to CAT's order dated 8.6.2006 preferred a representation before Central Board of Direct Tax, which was rejected vide order dated 22.9.2006. The operative part of the order is as under:
5. In view of the above, the Competent Authority had decided to reject the representation of Shri R.K. Jain against the posting of CIT, I.T.A.T., Allahabad, the representation of Shri Jain is therefore, rejected. He is also directed to hand over the charge of CIT(A), Allahabad to his successor and join new place of posting immediately in compliance of order No. 68/06 dated 31.5.2006.
6. This is issued in compliance of the order of the Hon'ble C.A.T. Allahabad Bench in O.Ac. No. 624/A/2006.
7. It is said that the order dated 22.9.2006 was served upon Sri R.K. Jain on 25.9.2006 through a letter dated 25.9.2006 of Chief Commissioner of Income Tax, Allahabad. On the same date, it is said that Sri Aseem Kumar also assumed charge as CIT (A), Allahabad. Sri Jain filed a contempt petition No. 154 of 2006 stating that the Department has disobeyed the order of Tribunal whereupon on 27.9.2006 order of "status quo as on date" was passed by the CAT. The said contempt petition was disposed of by the CAT vide judgment dated 20.11.2006 wherein it recorded a clear finding that Sri R.K. Jain was aware of disposal of his representation by order dated 22.9.2006 and that the charge was taken by Sri Aseem Kumar on 25.9.2006, the order of status quo passed on 27.9.2006 was not in favour of Sri R.K. Jain but the respondents. It also recorded a finding of fact that Sri R.K. Jain was already relieved on 25.9.2006.
8. However, in the meantime, taking advantage of the status quo order dated 26.9.2006, it appears that Sri R.K. Jain, the then CIT (A) sought to discharge his duties as CIT (A), Allahabad and decided the appeal on 3.10.2006 though on the said date. Sri Aseem Kumar, in fact, was holding the office of CIT (A), Allahabad.
9. From the aforesaid facts, we have no manner of doubt that Sri R.K. Jain, was not holding the office of CIT (A) legally or otherwise not having been posted by the competent authority on the said post on the said date. That being so, there was no question of applying "doctrine of de facto". When the office of CIT(A) was occupied by Sri Aseem Kumar since 25.9.2006 pursuant to his posting order dated 3 1.5.2006, there was no occasion for Sri R.K. Jain to hear the appeals as CIT (A), Allahabad and decide on 3.10.2006. The order passed by the then CIT (A) was patently without jurisdiction. In fact it amounts to usurpation of a Public Office without any authority and is a blatant disregard of discipline and decorum which is expected from the officers of such status and rank. The Apex Court's decision in Gokaraju (supra) has no application in the case in hand. Let us examine as to how and when the doctrine of de facto was applied and in what circumstances. It had borne out of. necessity particularly when it was found that the appointment of a judge was not valid. The Court held:
A judge, de facto is one who is not a mere intruder or usurper but one who holds office, under colour of lawful authority, though his appointment is defective and may later be found to be defective. Whatever be the defect of his title to the office, judgments pronounced by him and acts done by him when he was clothed with powers and functions of the office, albeit unlawfully, have the same efficacy as judgments pronounced and acts done by a judge de jure. Such is the de facto doctrine, borne of necessity and public policy to prevent needless confusion and endless mischief The de facto doctrine saves such acts. There is yet another rule also based on public policy. The defective appointment of a de facto judge may be questioned directly in a proceeding to which he be a party hut it cannot be permitted to be questioned in a litigation between two private litigants, a litigation which is of no concern or consequence to the judge except as a judge. Two litigants litigating their private titles cannot be permitted to bring in issue and litigate upon the title of a judge to his office. Otherwise so soon as a judge pronounces a judgment a litigation may be commenced for a declaration that the judgment is void because the judge is no judge. A judge's title to his office cannot be brought into jeopardy in that fashion. Hence the rule against collateral attack on validity of judicial appointments. To question a judge's appointment in an appeal against, his judgment is, of course, such a collateral attack.
10. Earlier too, the de facto doctrine was applied by the Constitutional Body vide 22nd Amendment of the Constitution to protect the judgments and orders etc. passed by certain District Judges appointed before 1966 otherwise than in accordance with the provisions of Article 233 and 235. The said amendment was made pursuant to the Apex Court's decision in Chandra Mohan v. State of U.P. .
11. Again it was applied in State of U.P. v. Rafiquddin by the Apex Court when it found the appointment of certain judges to be illegal by observing that "A person who is ineligible to judgeship, but who has nevertheless been duly appointed and who exercises the powers and duties of the office is a de facto Judge, he acts validly until he is properly removed. Judgment and orders of a de facto Judge cannot be challenged on the ground of his ineligibility for appointment."
12. While reiterating the said doctrine in Union of India v. Charanjit S. Gill , the Apex Court observed that where the proceedings are pending challenging legality of appointment, in those cases the doctrine of de facto would not apply. In the present case, it was not a case of illegality in the appointment of Sri R.K. Jain. On the contrary his very holding of office under lawful authority was wanting. He could have an authority as GT (A) under an order of posting as such passed by competent authority. On 3.10.2006 when he passed the order in the appeal of the appellant, admittedly, he was already transferred by order dated 31.5.2006 which was passed by the competent authority. The CAT in its judgment dated 8.6.2006 did not quash the order of transfer but only deferred the said transfer order till his representation is decided by the competent authority. Admittedly, the said representation was decided on 22.9.2006 and the said order of C.B.D.T. was served on him on 26.9.2006. On the same date, a successor in office, namely, Sri Aseem Kumar assumed charge. This leads to the inference that the order of transfer dated 31.5.2006 became operative after rejection of the representation of the then CIT (A), i.e. on and after 22.9.2006, or at least when the said order was communicated, i.e., 25.9.2006, and since then he had no authority or jurisdiction to function as CIT (A), Allahabad. Instead he was obliged to assume his duty as CIT, I.T.A.T. Allahabad where he was transferred. This leads to the situation that on 3.10.2006. Sri R.K. Jain had no jurisdiction whatsoever to function as CIT (A). Allahabad. In these circumstances we fail to understands as to how the doctrine of de facto would have any application whatsoever in his case. The submission of the learned Counsel for the appellants lack substance. It is rejected accordingly.
13. No other argument has been advanced. However, before parting, this Court find it appropriate to record its displeasure to the manner in which such senior authorities of the Department have functioned despite the orders of transfer creating an atmosphere of doubt in the mind of the assessee and public at large that the bondfide is lacking in the entire transactions. The conduct of the authorities cannot be appreciated at all. The situation has arisen on account of the litigation caused due to the challenge to transfer order before the Central Administrative Tribunal. Since, right to challenge an order of transfer cannot be doubted, in our view, time has come when the Finance Department of the Government must look into such kind of cases and frame a general policy that if an order of transfer is passed and made subject of litigation, such authorities who are under transfer may not discharge quasi judicial function or may not take important decision till the matter is cleared or till a clarificatory order is issued by the Department notifying as to which authority should discharge such functions. The CBDT must also look into this matter and take a policy decision so as to avoid recurrence of such a situation in future.
14. A copy of this order shall be communicated to the Secretary, Ministry of Finance, Government of India and Central Board of Direct Taxes, New Delhi, for information and necessary actions as directed above.
In the result, we do not find any merit in these appeals and the same are, accordingly, dismissed. There shall be no order as to costs.