Central Administrative Tribunal - Delhi
Baljit Singh Sondhi S/O Balbir Singh ... vs Union Of India Through on 16 March, 2011
CENTRAL ADMINISTRATIVE TRIBUNAL PRINCIPAL BENCH NEW DELHI Original Application No.288 of 2010 This the 16th day of March, 2011 HONBLE SHRI JUSTICE V. K. BALI, CHAIRMAN HONBLE SHRI L. K. JOSHI, VICE-CHAIRMAN (A) Baljit Singh Sondhi S/o Balbir Singh Sondhi, Commissioner of Income Tax (Appeals)-XIII, P-7, Chowrangee Square, Kolkata-700069 (WB), R/o C-47, First Floor, Nizamuddin East, New Delhi-110013. Applicant ( By Shri K. C. Mittal, Advocate ) Versus 1. Union of India through Secretary, Ministry of Finance, Department of Revenue, Government of India, North Block, New Delhi-110001. 2. Central Board of Direct Taxes, Ministry of Finance, Government of India, North Block, New Delhi-110001. Respondents ( By Shri V. P. Uppal, Advocate ) O R D E R Justice V. K. Bali, Chairman:
Baljit Singh Sondhi, Commissioner of Income Tax (Appeals), the applicant herein, has filed this Original Application under Section 19 of the Administrative Tribunals Act, 1985 seeking to quash and set aside memorandum dated 24.8.2009, vide which an enquiry has to be held against him under rule 14 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965. Before we may refer to the memorandum aforesaid and the statement of imputation of misconduct, we may make a mention of the relevant facts emanating from pleadings of the parties.
2. It is the case of the applicant, as set out in the Original Application that during 2004 and 2005 a move was set in motion to harm his career prospects who is very young and also senior in his batch. In that regard it is pleaded that referring to the period when the applicant was posted as Commissioner of Income Tax (Appeals)-I, New Delhi, a show cause notice was issued to him alleging some irregularities in 17 out of 700 odd cases decided by him. The applicant explained that the allegations were quite baseless as it was nothing but the individual perception of the disciplinary authority in respect of the orders passed by the applicant in his quasi judicial capacity. Despite his explanation, a memorandum of charges came to be issued to him on 7.5.2003 in respect of one of the cases included in the show cause notice. Aggrieved, the applicant filed Original Application bearing OA No.989/2003 before the Calcutta Bench of the Tribunal seeking to quash and set aside the said memorandum. The Tribunal vide order dated 9.11.2004 quashed the memorandum dated 7.5.2003. The department accepted the decision of the Tribunal and did not contest the matter any further. Almost on the heels of the decision of the Calcutta Bench of the Tribunal, the applicant was, however, served yet another memorandum of charges dated 16.8.2005 wherein similar allegations as made in the memo dated 7.5.2003 had been made. This time, the respondents picked up nine cases out of the seventeen originally mentioned in the show cause notice dated 15.4.2002. The applicant responded to the show cause notice, but memorandum of charges was issued in one case alone. Constrained, the applicant once again filed OA bearing No.6/2007 before the Calcutta Bench of the Tribunal, which was allowed vide order dated 27.2.2007. The memorandum of charges was quashed. This time, however, the respondents challenged the order of the Tribunal before the High Court, but the writ filed on that behalf was dismissed on 23.2.2009. It is the case of the applicant that the respondents, after having failed in their attempt to succeed in the proceedings initiated against him, issued a memorandum of charges to him on 25.4.2004 alleging that eight years ago (1996) while functioning as Additional Commissioner of Income Tax, Range-10, Kolkata, the applicant had got an enquiry conducted which was sham and hasty with the purpose to benefit an assessee. It is pleaded that the applicant cooperated in the enquiry. The enquiry officer after examining the witnesses and records came to the conclusion that the principal charge was not proved. The respondents, however, informed the applicant that they intended to differ with the findings of the enquiry officer. The applicant pleads that in doing so, the respondents intended to prefer the individual perception of the facts by the disciplinary authority instead of well reasoned out and objective report of the enquiry officer. Once again, the applicant filed an Original Application, but this time before the Principal Bench of the Tribunal bearing OA No.520/2008. Yet another OA No.2092/2007 came to be filed by him seeking directions to the department to open the sealed cover containing the recommendations of the DPC held in September, 2006 for his promotion as Chief Commissioner of Income Tax. Vide a common order dated 12.2.2009, the Tribunal quashed the memorandum dated 25.4.2004 and also directed the respondents to promote the applicant to the post of Chief Commissioner of Income Tax after opening the sealed cover, with all consequential benefits. When the order passed by the Tribunal was not being implemented, the applicant filed a contempt petition on 28.7.2009. It is the case of the applicant that instead of complying with the order of the Tribunal, the respondents in total disregard to the observations made in the order of the Tribunal, issued yet another memorandum of charges dated 24.8.2009 to him, subject matter of which is judicial or quasi judicial orders passed by the applicant under Section 264 of the Income Tax Act.
3. Memorandum dated 24.8.2009 is accompanied by an article of charge framed against the applicant. We may not make a mention at this stage of the statement of imputation of misconduct in support of the charge framed against applicant, which too is accompanying the memorandum aforesaid, as the allegation subject matter of charge is quite evident from reading of the article of charge itself. The statement of imputation of misconduct is only an elaboration of the single article of charge framed against the applicant. The article of charge reads as follows:
The said Shri B. S. Sondhi, while functioning as Commissioner of Income-Tax-XX, Kolkata, during the Financial Year 2005-06, acted in a grossly negligent & reckless manner with malafide intent, and without exercising due diligence, in passing an order u/s. 264 dated 30.08.2005 in the case of Shri Subhash Singh, Proprietor, M/s Mogra Service Station, A.Y. 2002-03, failing to appreciate the evidence & justification on record relating to acts of concealment of income of Rs.4,37,070/- and by placing blind reliance on assessees submissions, allowing unauthorised relief to the assessee, thereby conferring undue favour to the assessee and causing loss to the revenue.
By the aforesaid acts of omission and commission, Shri B. S. Sondhi failed to maintain absolute integrity, devotion to duty and exhibited conduct unbecoming of a Govt. servant and thereby violated the provisions of Rules 3(1)(i), 3(1)(ii) and 3(1)(iii) of the CCS (Conduct) Rules, 1964.
4. Pursuant to notice issued by this Tribunal, the respondents have entered appearance and filed their counter reply contesting the cause of the applicant. The plea raised by the applicant that the respondents entertained some grudge against him or that the impugned memo is an outcome of mala fides, has been denied. As regards the averments of the applicant of earlier memoranda issued to him, it is pleaded that the department has filed writ petition before the High Court of Delhi on 17.8.2009 against the order of the Tribunal in OA No.2092/2007 relating to memorandum dated 25.2.2004, which is still pending. As regards the decision of the High Court of Calcutta in WP No.11/2008 confirming the order of the Tribunal in OA No.6/2006, it is pleaded that the CBDT has been requested to file SLP against the order of the High Court. While explaining the delay in issuing memorandum dated 24.8.2009, it is pleaded that the charge relates to the order passed by the applicant on 30.8.2005. A complaint was forwarded by CVC against the aforesaid misconduct of the applicant on 16.4.2008 and finally, the applicant was issued memorandum of charge on 24.8.2009 after calling for report from the Director of Income Tax (Vigilance), examining the same, calling for the version of the applicant, and thereafter examining the same as well. It is stated that in the circumstances as mentioned above, there would be no delay.
5. During pendency of the OA, the applicant sought amendment of the same so as to incorporate pleas as not taken in the OA. The application in that regard was allowed and the amended OA has been filed. Inasmuch as, no arguments have been raised on the grounds added and as taken in the amended OA, there would be no need to make a reference to the pleadings made therein. The respondents have filed a reply to the amended OA, but once no reference to the pleadings made in the amended OA is being made, there is obviously no need to make reference to the pleadings made in the counter reply to the amended OA.
6. The applicant has filed a rejoinder, in which it is inter alia pleaded that preceding the impugned memo, a show cause notice was issued to the applicant on 17.11.2008 and the applicant had given a detailed reply to the same on 1.12.2008. It is pleaded that the respondents did not even care to look into the reply submitted by the applicant in this regard, and, therefore, further course of action would be totally in violation of the principles of natural justice, and that the show cause notice was not a mere formality, and further that the purpose of the same was to seek explanation, and when the reply was submitted, before proceeding any further, the reply ought to have been considered, and the respondents having failed to do so, it would be in violation of the principles of natural justice.
7. The respondents have filed a counter to the rejoinder filed by the applicant, styling the same as supplementary submissions on behalf of the respondents to the rejoinder filed by the applicant, wherein as regards the plea raised by the applicant that the reply to the show cause notice was not even considered, it has been inter alia contended that It is further vehemently denied that the respondent had failed to consider the reply filed by the applicant in response to show cause notice. In fact, full facts were put up to the Honble F.M. along with the relevant records as is apparent from the note sheet pages 16/N & 17/N referred to above. Thus, the contents of this para are misleading & incorrect. Pages 16/N and 17/N of notesheets have been annexed with the counter reply to the amended OA. The same are reproduced in entirety and verbatim, thus:
Sub.: Complaint against Shri B.S. Sondhi, CIT, Kolkata Under consideration us the allegations made in the complaint dated 21.03.2006 (page 1-2/c) by Shri Sandipan Khan, the then ITO against Shri B. S. Sondhi, CIT. the complainant has alleged that Shri b. S. Sondhi, CIT in the case of an assessee, Shri Subhash Singh, A.Y. 2002-03 appreciated the assessment work and subsequently deleted the additions made by him in a proceedings u/s 264 and also changed the comments in his review report which was earlier rated as excellent.
2. The allegations were investigated by DIT(Vig.) East Zone and version of the officer was obtained on the points of irregularities. The DIT (Vig.) has submitted a Self Contained Report dated 21.08.2008 (pages 4-15/c) in the matter. The report was analysed and following irregularities have been noted to have been committed by Shri B. S. Sondhi.
i) In the case of Shri Subhash Singh (A.Y. 2002-03), the assessing officer during the course of assessment proceedings noted the difference of Rs.4,37,070/- in the purchase price of diesel as shown in the ledger account and in the P&L account filed along with the return of income. The assessee was asked to explain the discrepancy which could not be explained satisfactorily. Therefore, the discrepancy of Rs.4,37,070/- was added in the assessment order.
ii) An order dated 30.08.2005 u/s 264 was passed by Shri B. S. Sondhi, CIT. The report was obtained from assessing officer who has given an adverse report. This report of the assessing officer was ignored and without making any verification on the submission of the assessee, a blind reliance upon the submission of the assessee was placed and relief was given in undue haste without verifying/investigating the facts properly while deciding the petition u/s 264 thereby causing an irrecoverable loss of tax revenue on Rs.4,37,070/-.
3. From the report of the DIT (Vig.) East Zone and comments of the analyzing authorities, it is clear that the officer had acted in a negligent manner, passed order in undue haste causing undue benefit to the extent of tax on Rs.4,37,070/- by acting detrimental to the interest of revenue. Initiation of RDA for major penalty has been recommended against Shri B. S. Sondhi. DIT (Vig.) has also forwarded a draft charge sheet for major penalty in the matter.
4. Accordingly, the matter was referred to the CVC vide U.O. Note dated 23.02.2009 for its first stage advice with the recommendations that major penalty proceedings may be initiated against the officer. CVC vide its O.M. No.008/ITX/021-35867 dated 03.03.2009 (pages 50/c, F/X) has concurred with the Departments recommendations of initiation of major penalty proceedings against Shri B. S. Sondhi.
5. Shri B. S. Sondhi, has committed grave misconduct by acting arbitrarily and in a negligent manner causing irrecoverable loss to revenue. He has thus failed to maintain absolute integrity and devotion to duty and have exhibited conduct unbecoming of a Govt. Servant, thereby contravening the provisions of Rules 3(1)(i), 3(1)(ii) and 3(1)(iii) of the CCS (Conduct) Rules, 1964. Therefore, RDA for major penalty is to be initiated against the officer. Accordingly, draft Memorandum under Rule 14 of the CCS (CCA) Rules, 1965 for initiation of major penalty proceedings against Shri B. S. Sondhi has been prepared and is placed below for kind perusal and approval by the F.M.
6. In view of the above facts, approval of the Finance Minister is solicited for initiation of major penalty proceedings against Shri B. S. Sondhi, presently posted as Commissioner of Income Tax, Kolkata for contravening the provisions of Rules 3(1)(i), 3(1)(ii) and 3(1)(iii) of the CCS (Conduct) Rules, 196. Sanction may also be accorded for appointment of an Inquiry Officer and Presenting Officer in case inquiry is found necessary in the matter.
8. The plea as regards non-consideration of the representation of the applicant that he made when the show cause notice was issued to him, as mentioned above, has been taken for the first time in the rejoinder. Although in the main reply filed on behalf of the respondents, there is a vague reference as regards consideration of the representation made by the applicant while explaining the delay in issuing the charge memo to the applicant dated 24.8.2009, but to the specific plea made by the applicant as regards non-consideration of his representation, no specific reply is forthcoming from the reply to the rejoinder, relevant part whereof has been reproduced above. Pages 16/N and 17/N as reproduced above, is a note prepared by the Director General of Income Tax (Vigilance) and CVO, CBDT, which was put up before the concerned authorities up to the Finance Minister for charge sheeting the applicant. There is not a word mentioned as regards issuance of the show cause notice and the reply filed by the applicant, least, consideration of the same. From the documentary evidence relied upon by the respondents, themselves, it is thus proved that before issuing the charge memo to the applicant, concerned authorities would not even consider the reply filed by the applicant to the show cause notice. We may, at this stage, make a mention of the reply to the show cause notice given by the applicant. As regards the allegation against the applicant that he had blindly accepted the submission of the assessee and decided the matter without proper verification in undue haste, the applicant stated on the basis of records that the petition under Section 264 of the Income Tax Act was disposed of with due care. He stated that the petition was filed by the assessee on 15.5.2005 and finally disposed of on 30.8.2005, and that there was no haste as had been remarked. On merits of the controversy, the applicant gave his explanation, which reads as follows:
The petition was filed by the assessee on 13.05.05 and finally disposed of on 30.8.05. There is no haste as has been remarked.
The assessee in his petition protested against the addition of Rs.437070 on account of alleged inflation of purchases. The plea of the assessee was that it was running a petrol pump and while the stock was delivered by the Oil companies free of charge, the assessee had to incur expenditure by way of payments to the drivers and khalasis for food etc for the same of ensuring proper quantity and quality of the goods that this was debited under the head Trip expenses. Though a separate account was maintained in the books of accounts in respect of this expenditure, during the year under consideration these expenses were merged with the figure of purchase of High Speed Diesel. The matter was reconciled before the ITO but may have escaped his attention as the assessment was completed at the fag end of the year. In his report dated 27.05.05 (refer Annexure-4) with regard to this petition the ITO stated his reasons for making the addition to income as stated above. The bare facts brought on record by the ITO are that the assessee had shown the purchase of diesel at Rs.6,12,52,775 in the profit & loss account, in the ledger account the figure of purchase was shown at Rs.6,08,15,705. The difference between the two figures was Rs.437070. This was treated as inflation of purchases by the ITO. In his report the ITO has stated that the plea taken in the petition under section 264 of the Act that the position was reconciled before the ITO was new and not taken before him at the assessment stage. But strangely enough his discussion on the matter clearly shows that he was fully conversant with the issue and the point of view expressed by the assessee.
On 07.06.05 a letter was addressed to the ITO vide letter No.CIT-XX/Kol/264/05-06/1020 once again (Annexure-9). In this letter all the points raised by the ITO were highlighted. But it was pointed out that the ITO had on 01.03.05 made a query about the difference of Rs.437070 and called for reconciliation. Thereafter he took two more hearings on 09.03.05 and 21.03.05. The record is silent about any examination of the issue made by the ITO. On 24.03.05 he finalized the assessment. It was mentioned in this letter addressed to the ITO that on account of this it could not be determined if he had examined this issue before passing his order even though he had made a specific query in this regard. Hence he was directed to examine the Trip expenses account and if this tallied with the difference of Rs.437070 as stated above then possibly no adverse presumption would be possible. Without such an exercise the addition was premature. The report of the ITO was called for.
The reply of the ITO was received vide letter No.wd-1(4)/Hg/revision petition/05-06/338 dated 23.08.05 (Annexure-10). The ITO clearly made no worthwhile enquiry as directed but has commented that such Trip expenses were not seen in the accounts of the year 2001-02. The specific plea of the assessee was not addressed by the ITO as was required. He has made certain other irrelevant observations having no bearing on the limited enquiry entrusted to him. He has also acknowledged that the appeal filed in this case stood withdrawn by the assessee.
Hence, the record clearly shows that the ITO was entrusted with the enquiry, verification and reconciliation with regards the Trip expenses of Rs.437070. Despite the lapse of two and a half months his report finally submitted on 23.08.05 does not cast any light on the issue or supports his contentions made in his letter dated 27.05.05. The order passed by me is very elaborate and it is clearly brought out as to why the order of the AO does not bring on record evidence sufficient to merit the addition made by the AO. Hence the report of the AO was not ignored but taken due cognizance of. Despite the fact that the AO on 01.03.05 had made a specific requirement for reconciliation of the difference of Rs.437070 and has also taken two hearing on 01.03.05 & 21.03.05 after he was given the benefit of doubt and was asked vide letter dated 07.06.05 to examine the plea taken in the petition under section 264 of the Act in this regard. His verification did not yield anything to support his conclusion in the assessment order. As the verification was entrusted to the AO there was no requirement of any enquiry by me. Hence, in conclusion it is stated that there was no haste in passing the order under section 264 of the Act and further the report of the AO was not ignored and no blind reliance was placed on the submission of the assessee, as the AO was required to verify the same before they were accepted. Lastly, the order passed by the Commissioner under section 264 of the Act must satisfy the well settled test of judicial act (Dwarka Nath v ITO [1965] 57 ITR 349 SC).
9. From the pleadings and the accompanying documents, what clearly emerges is that the allegations subject matter of charge against the applicant emanate from the judicial or quasi judicial orders passed by him. It is also crystal clear that the complaint against the applicant came to be made by Sandipan Khan, the ITO. It is against the orders of Sandipan Khan as ITO that the applicant had heard the revision. It is also clear from the note at pages 16/N and 17/N as reproduced hereinabove that the applicant was his reviewing authority and had downgraded his report, which was earlier excellent. The allegations subject matter of charge against the applicant were as regards the orders passed by him as Commissioner of Income Tax (Appeals) in revision of the orders passed by his subordinate Sandipan Khan, ITO. The allegation was thus as regards the orders passed by the applicant in his judicial or quasi judicial capacity, and his reply that he had not decided the matter in hurry and his explanation in the matter, as reproduced above, in our view, required to be looked into. We are quite conscious that disciplinary action against an employee as regards actions taken by him or purported to be done in the course of judicial or quasi judicial proceedings can be taken, but such action has to be only after great caution and a close scrutiny of his actions, and only if the circumstances so warrant. The Honble Supreme Court in Union of India & others v A. N. Saxena [JT 1992(2) SC 532] observed as follows:
In our view, an argument that no disciplinary action can be taken in regard to actions taken or purported to be done in the course of judicial or quasi-judicial proceedings is not correct. It is true that when an officer is performing judicial or quasi-judicial functions disciplinary proceedings regarding any of his actions in the course of such proceeding should be taken only after great caution and a close scrutiny of his actions and only if the circumstances so warrant The Initiation of such proceedings. It is true, is likely to shake the confidence of the public in the officer concerned and also if lightly taken likely to undermine his independence. Hence the need for extreme care and caution before initiation of disciplinary proceedings against an officer performing judicial or quasi-judicial functions in respect of his actions in the discharge or purported to discharge his functions. But it Is not as if such action cannot be taken at all. Where the actions of such an officer indicate culpability, namely a desire to oblige himself or unduly favour one of the parties or an improper motive there is no reason why disciplinary action should not be taken. The Supreme Court has taken similar view in Union of India & others v K. K. Dhawan [AIR 1993 SC 1478].
10. The charge memo had to precede a serious consideration of the explanation furnished by the applicant. Non-consideration of the same would run counter to the dictum of the Honble Supreme Court in A. N. Saxena and K. K. Dhawan (supra). It would also be against the principles of natural justice. Once, a show cause notice was given to the applicant and his reply was solicited, the principles of natural justice required the respondents to consider the same. A charge memo without such consideration would be illegal and thus cannot sustain. We are conscious that at the preliminary stage, while considering the representation made by an employee against a show cause notice, detailed and speaking order may not be passed as that would surely seal the fate of the employee concerned without trial, but there has to be consideration of the explanation furnished by the employee.
11. Before we may part with this order, we may mention that during the course of arguments, we sought information from the learned counsel representing the parties as to whether the order passed by the applicant in revision, from which alone the charge memo may emanate, has been challenged in any judicial forum, we were informed that the department has taken no recourse to challenge the said order. Shri Uppal, learned counsel representing the respondents, would, however, contend that no further revision against the order passed by the applicant would be permissible, even though it is not denied that such an order could definitely be challenged by way of a writ petition under Article 226 of the Constitution before the High Court.
12. The impugned charge memo dated 24.8.2009 being against the principles of natural justice, is thus quashed and set aside with liberty to the respondents to examine the explanation furnished by the applicant carefully as per the decision of the Supreme Court in A. N. Saxena and K. K. Dhawan (supra), and also to take into consideration the fact that the complaint was filed by Sandipan Khan against whose order only the applicant was hearing the revision, and the fact that the applicant being his reviewing authority had downgraded his reports, as also that the allegations subject matter of charge emanated from an order passed by the applicant in his judicial or quasi judicial capacity, and that the charge memo was issued to the applicant in 2009 pertaining to the events of the year 2005. The respondents will also consider the factum of the order passed by the applicant having attained finality, as mentioned above, having not been challenged in any judicial forum, as prima facie it appears to us that if the order passed by the applicant is said to be tainted with mala fides with a view to help the assessee, as is the case of the respondents, normally such order should have been challenged.
13. Present Original Application is allowed to the extent as fully indicated above. There shall, however, be no order as to costs.
( L. K. Joshi ) ( V. K. Bali ) Vice-Chairman (A) Chairman /as/