No Order Passed On Rectification Application Filed By Assessee For Six Years: Bombay High Court Directs Disciplinary Action Against AO

The Bombay High Court has directed the disciplinary action against AO as no order has been passed on the rectification application filed by the assessee for six years.

The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that the Assistant Commissioner of Income Tax (ACIT) Officer was duty-bound to pass orders on the application, which has been pending for almost 6 years, instead of making baseless statements in the affidavit in reply. Perhaps ACIT thinks that he or she is not accountable to any citizen of this country. A copy of this order shall be placed before the PCCIT to take disciplinary action against ACIT for dereliction of duty.

The petitioner/assessee has approached the High Court alleging that non-disposition of the petitioner's application filed under Section 154 of the Income Tax Act 1961 amounts to an unreasonable and unlawful refusal by the respondent to exercise the statutory powers vested in it and a violation of its statutory duty to decide applications for rectification of mistakes apparent from the record under Section 154. The respondent/AO has failed to pass orders on the application for rectification filed by the petitioner despite numerous reminders being issued by the petitioner.

The department contended that refusal to exercise powers under Section 119by CBDT on a pedantic and narrow interpretation of the expression 'genuine hardship' to mean only a case of 'severe financial crises' is unwarranted. The petitioner, having set up an industrial undertaking in one of the states that is not regarded as a developed state in the country, providing employment to around 100 people and making a huge investment in such a setting up, has a legitimate expectation of a grant of statutory benefits under Section 80-IC. The business decisions, including the pricing of the products manufactured at the said undertaking, are taken keeping in mind the entitlements to such statutory benefits. Therefore, the refusal to exercise its powers under Section 119 of the Act in a manner that would further legislative intention on the grounds that there was no case of severe financial crisis should be rejected by the court.

The court noted that the legislature has conferred power on the respondent department to condone the delay to enable the authorities to do substantive justice to the parties by disposing of the matter on its merits. Routinely passing the order without appreciating the reasons why the provisions for condonation of delay have been provided in the act defeats the cause of justice.

The court directed the ACIT to dispose on or before May 31, 2024, of the pending application under Section 154 of the Act on merits and, before passing any order, shall give a personal hearing to the petitioner, notice of which shall be communicated at least five working days in advance.

Counsel For Petitioner: Rahul Sarda

Counsel For Respondent: Ravi Rattesar

Case Title: Pankaj Kailash Agarwal Versus Assistant Commissioner Of Income Tax

Case No.: Writ Petition (L) No. 7783 Of 2024

Click Here To Read The Order