Allahabad High Court Holds Deputy Commissioner Of Income Tax Guilty Of Contempt

While directing one-week simple imprisonment along with file of Rs. 25,000/- against the opposite party, Justice Irshad Ali held that

“Disobedience of this Court's order strikes at the very root of the rule of law on which the judicial system rests. The rule of law is the foundation of a democratic society. Judiciary is the guardian of the rule of law. Hence, it is not only the third pillar but also the central pillar of the democratic State.”

The Court further held that

“If the judiciary is to perform its duties and functions effectively and remain true to the spirit with which they are sacredly entrusted to it, the dignity and authority of the Courts have to be respected and protect at all costs. Otherwise, the very corner stone of our constitutional scheme will give way and with it will disappear the rule of law and the civilized life in the society. That is why it is imperative and invariable that Court's orders are to be followed and complied with.”

Case Background

In the writ petition filed under Article 226 of the Constitution of India, the Court had held that the Assessing Authority had exceeded its jurisdiction by proceeding in the case when the assesee had refused to submit to its jurisdiction. It was noted that the officer, therein, had deliberately crossed the Delhi address of the assesee and written the local address so as to make the assesee amenable to his jurisdiction. Accordingly, the entire proceedings were quashed.

Due to alleged willful disobedience of the Assessing Authority at Lucknow, petitioner/ assesee/ applicant filed a contempt application. Counsel for the applicant argued that initial place of business of the assesee was in Lucknow, however, due to harassment by the Income Tax Authorities at Lucknow, he was forced to change the place of business to Delhi. It was stated that the change was intimated to the authorities, and subsequently in all automatically generated notices, the address of the assesee was reflected as New Delhi.

It was submitted that despite Court orders that the authority had Lucknow had no jurisdiction to initiate proceedings under the Income Tax Act against the petitioner, the contemnor proceeded to issue notices and manually changed the address of the assesee on such notices from Delhi to Allahabad.

Counsel for the contemnor pleaded that there was no violation of the Court order on his part. It was pleaded that he was posted as Deputy Commissioner of Income Tax, Lucknow from 9.10.2014 to 09.06.2016 and thereafter was transferred and had nothing to do with the functioning of that post. It was argued that the judgment of the High Court pertained to the assessment year 2012-13, whereas contempt has been filed for exercise of jurisdiction for A.Y. 2013-14.

It was further pleaded that despite giving an opportunity to the assesee to file an application for transfer of jurisdiction, no such application was filed. It was stated that the assesee never raised the issue of jurisdiction before the Assessing Authority. It was stated that the mere change in address in ITR or PAN does not take away the jurisdiction of the competent authority, especially if no order transferring such jurisdiction has been issued by a competent court or the higher Authorities.

High Court Verdict

Since Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow was prima facie guilty of contempt of court, the Court framed three charges against him: first, despite Court order, why did he proceed with assessment for year 2013-14 when he had no jurisdiction to conduct such proceedings at Lucknow; second, why was local address of the assesee deliberately included so as to vest jurisdiction at Lucknow; and, third, why was the outstanding amount not deleted from the web portal despite specific directions by the Court.

The Court observed that the judgment of the Writ Court was not confined to A.Y. 2012-13, which was under challenge before the Court. It was held that the judgment extended to the general exercise of jurisdiction by the Assessing Authority in respect of any assessment year for the assesee.

Holding the Opposite Party guilty of contempt, the Court held that “the opposite party does not have the jurisdiction or authority to interpret the order passed by the Court by putting words which are not contained in the judgment and order dated 31.03.2015 appears to be willful and deliberate.”

The Court held that once the notices for A.Y. 2012-13 under the Income Tax Act were quashed for lack of jurisdiction, the Assessing Authority ought to have deleted the entry from the web portal of the assesee. It was held that the outstanding notices for A.Y. 2011-12 were still showing on the portal of the assesee which ruined his reputation.

The Court held that though the opposite party stated that the outstanding amount was deleted after 7 months, it was actually deleted after 7 years and 7 months which shows willful disobedience on part of the opposite party.

It was observed that the opposite party took to steps to obtain approval from Commissioner of Income Tax regarding exercise of jurisdiction over the assesee.

The Court relied on Balwantbhai Somabhai Bhandari v. Hiralal Somabhai Contractor (Deceased) Rep. By LRS. and others, where the Supreme Court held that apology tendered by the contemnor must not be accepted as a matter of course as the Court is not bound to accept such apology. It was held that if the conduct is damaging to the institution, unconditional, unqualified and bonafide apology can also be rejected by the Court.

“There ought not to be a tendency by courts, to show compassion when disobedience of an undertaking or an order is with impunity and with total consciousness,” held the Apex Court.

The Court held that the opposite party had purposely harassed the assesee and willfully disobeyed the order of the Court. Accordingly, opposite party was held guilty under Section 12 of the Contempt of Courts Act, 1971. Fine of Rs. 25,000 along with a week of simple imprisonment was imposed on the contemnor from 9^th August, 2024 which is the date of the delivery of judgment in the contempt petition.

Case Title: Prashant Chandra v. Harish Gidwani Deputy Commissioner Of Income Tax Range 2 2024 LiveLaw (AB) 507 [CONTEMPT APPLICATION (CIVIL) No. - 562 of 2016]

Case citation: 2024 LiveLaw (AB) 507

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