Bombay High Court Directs Disciplinary Action Against AO For Not Passing Order On Assessee's Rectification Application For Six Years
Bombay High Court Directs Disciplinary Action Against AO For Not Passing Order On Assessee's Rectification Application For Six Years
The Bombay High Court has instructed disciplinary action against the Assessing Officer (AO) due to the absence of any order passed on the rectification application submitted by the assessee for a period of six years.
Justice K. R. Shriram and Justice Neela Gokhale noted that the Assistant Commissioner of Income Tax (ACIT) Officer had a responsibility to issue orders on the pending application, which had remained unresolved for nearly 6 years, rather than making unfounded statements in the affidavit in response. It appears that the ACIT believes they are not answerable to any citizen of the country. A copy of this directive will be submitted to the Principal Chief Commissioner of Income Tax (PCCIT) for initiating disciplinary measures against the ACIT for neglecting their duties.
The petitioner/assessee has petitioned the High Court, asserting that the respondent's failure to address the petitioner's application under Section 154 of the Income Tax Act, 1961, constitutes an unjustifiable and illegal reluctance to exercise the statutory authority vested in them. It is also deemed a breach of their statutory obligation to adjudicate on rectification applications for evident mistakes in the record under Section 154. Despite repeated reminders from the petitioner, the respondent/AO has neglected to issue rulings on the rectification application filed by the petitioner.
The department argued that construing the term genuine hardship in Section 119 of the Income Tax Act, 1961, narrowly as pertaining only to cases of severe financial crises is unjustified. The petitioner, having established an industrial venture in one of the states not classified as developed, has created employment for approximately 100 individuals and has made significant investments in this endeavor. Consequently, the petitioner has a reasonable expectation of receiving statutory benefits under Section 80-IC. Business decisions, including pricing strategies for products manufactured at the mentioned venture, are made with consideration of eligibility for such statutory benefits. Hence, the court should dismiss the notion of refusing to exercise powers under Section 119 in a manner that aligns with legislative intent, solely on the basis of the absence of severe financial crises.
The court observed that the legislature has empowered the respondent department to condone delays, allowing authorities to deliver substantive justice by adjudicating matters on their merits. Simply issuing orders without understanding the rationale behind the provisions for condonation of delay in the act undermines the pursuit of justice.
The court instructed the ACIT to resolve the pending application under Section 154 of the Act on its merits by May 31, 2024. Before making any decision, the ACIT must provide the petitioner with a personal hearing, with notice given at least five working days in advance.
