There is a couplet of an Urdu poem of a renowned Indian poet "ghar ko aag lag gayee ghar ke chirag se" (The house is caught fire by its own lamp). Metaphorically meaning thereby that "loss is caused to a person by his own trusted people." These three appeals by the different assessees but partners in a firm called as M/s Bharat Hardware & Iron Stores, Nagpur, fit completely into the aforesaid Urdu couplet. There is a substantial loss of revenue to the government in the ministry of finance to the tune of nearly Rs. 5 lakhs in these three cases on account of which I would say, culpable misconduct by one of its own revenue assessing and collecting officer of the rank of Deputy Commissioner, Special Range, Nagpur, and that too in "Raid" (search and seizure) cases under the Income Tax Act, 1961.
The interesting facts revealing loss of substantial revenue to the Government of India by one of its own top ranking officer in these appeals require narration as under : The Assistant Director of Investigation (ADI), Hyderabad, upon warrant of authorisation from the competent authority under section 132 of the Income Tax Act, 1961, on 30-5-1990, searched at Hyderabad Airport one Shri Bharat Kumar B. Doshi, one of the appellant herein and a partner in the firm of M/s Bharat Hardware & Iron Stores, Nagpur. The raid at Hyderabad Airport resulted in recovery of a sum of Rs. 11.50 lakhs, certain bank cheques and demand drafts and other incriminating material in the custody and possession of Shri Bharatkumar B. Doshi. The said Shri Bharatkurnar B. Doshi in his statement on 31-5-1990, under section 132(4) of the Act to the ADI., Hyderabad, confessed that the recovered amount of Rs. 11.50 lakhs represented collection of sale proceeds from Hyderabad parties of unrecorded sales of the partnership firm of M/s Bharat Hardware & Iron Stores, Nagpur, in which he was a partner. He further confessed that the said cash was the income of the said partnership firm and that the same will be offered for taxation in the firm's assessment for the assessment year 1991-92. The recovered amount was seized by the ADI, Hyderabad, and proceedings under section 132(5) of the Income Tax Act read with rule 112A of the Income Tax Rules were commenced by the assessing officer at Nagpur, who passed an order on 21-9-1990, in the said proceedings under section 132(5) of the Act holding that there will be substantial liability towards income-tax, interest, penalty, etc., on the partnership firm and, therefore, declined to release the seized sum of Rs. 11.50 lakhs. But as per the provisions of section 132(4A), the proceedings under section 132(5) should have been taken and order passed in the case of Shri Bharatkumar B. Doshi and not in the case of partnership firm. Anyhow, this is not the issue to be decided, in these appeals. This fact is being recorded to demonstrate that initiation of illegal proceedings against the partnership firm under section 132(5) has also caused loss of revenue to the Government of India.
A letter dated 12-3-1991, was written by the firm to the Deputy Commissioner, Special Range, Nagpur, requesting him to adjust the advance tax instalments of the firm from the seized cash of Rs. 11.50 lakhs and the remaining unappropriated balance from the seized cash be adjusted towards advance tax instalments due by the three partners of the said firm, who are appellants in these appeals.
The firm and the partners submitted the returns of income which were processed in terms of section 143(1)(a) of the Act and orders were passed on 29-1-1992, accepting returned income in the case of the firm as well as in the cases of the three partners, the appellants herein, I am not concerned in these appeals with the order passed under section 143(1)(a) in the case of the firm but I am only concerned with the orders passed in the cases of the three appellants herein being the partners of the firm of M/s Bharat Hardware & Iron Stores. The Deputy Commissioner, Special Range, Nagpur (assessing officer), who passed orders on 29-1-1992, in the cases of the above-mentioned three appellants, while accepting the returned income, determined the total liability falling upon each one of the appellants herein charging interests under the provisions of sections 234A, 234B and 234C of the Act. The details of interests charged in the case of (a) Shri Prafulchandra Doshi (appellant of ITA No. 686/Nag/98) was to the tune of Rs. 61,847, (b) in the case of Shri Bhogilal R. Doshi (appellant of ITA No. 687/Nag/98) was Rs. 60,273 and (c) in the case of Shri Bharatkumar B. Doshi (appellant of ITA No. 188/Nag/99) was Rs. 59,960.
Thus, the total liability of the above named appellants under the provisions of sections 234A, 234B and 234C aggregated to Rs. 1,82,080.
These amounts were added to the tax liability and demand inclusive of interests was raised in terms of section 156 of the Act after adjusting the prepaid taxes.
Curiously, after a lapse of nearly 28 months from the date of passing of the orders under section 143(1)(a), the Deputy Commissioner, Special Range, Nagpur (assessing officer), suo motu without any move, application or promoting from any of the above-mentioned appellants passed on 26-5-1994, three separate orders under section 154(1)(b) of the Act in the case of each of the above-mentioned appellant- assessees stating therein that there was a mistake in the orders passed on 29-1-1992, under section 143(1)(a) of the Act in charging interests under sections 234A, 234B and 234C in the cases of above-mentioned three assessees (appellants herein) because of adjustment of excess seized cash from the firm's assessment to the individual assessments of the assessees (appellants herein). The Deputy Commissioner, Special Range, Nagpur, considered charging of interests under sections 234A, 234B and 234C in these three cases as mistakes apparent on record and, therefore, under section 154(1)(b) of the Act, rectified the three orders passed on 29-1-1992, thereby reducing the determined liability of each of the three appellants herein aggregating to Rs. 1,82,080 as has been recorded by me above. Naturally, the appellants herein were happy in reduction of their determined liability due to the deletion of the interests aggregating to Rs. 1,82,080 which were charged originally on 29-1-1992, in terms of the provisions of sections 234A, 234B and 234C of the Act in the orders passed separately by the Deputy Commissioner under the provisions of section 143(1)(a) of the Act.
The appeal records reveal that there was audit objection regarding the loss of government revenue by deletion of interests in these three cases by the Deputy Commissioner, Special Range, Nagpur, pursuant to the orders passed by him on 26-5-1994, under section 154(1)(b) of the Act. The audit party opined that interests in all the three cases of the present appellants were correctly levied and charged under the provisions of sections 234A, 234B and 234C of the Act in the original orders passed on 29-1-1992, and that the Deputy Commissioner, Special Range, Nagpur, committed serious mistake and error in deleting the interests in all the three cases by suo motu invoking his powers under section 154(1)(b) of the Act and passing orders on 26-5-1994. The audit party was unhappy with the loss of revenue to the government on account of illegal and erroneous orders passed on 25-5-1994, by the Deputy Commissioner, Special Range, Nagpur, suo motu without any application, whisper or word from all or any of the three appellants herein.
It is pertinent to record that similar action was taken by the Assistant Commissioner in the case of the firm also and interests under sections 234A, 234B and 234C charged originally in order passed on 29-1-1992, were not charged in assessment order passed on 25-3-1994, under section 143(3) of the Act with a note appended to the said order.
On the basis of the audit objection, the Assistant Commissioner, Circle 1(2), Nagpur, issued notices under section 154 of the Act to the firm and also to the three appellants herein proposing to amend and rectify the three orders passed on 26-5-1994 by his superior officer, namely, the Deputy Commissioner which caused loss of revenue by deleting of the interests originally charged on 29-1-1992, in the orders passed under section 143(1)(a) of the Act. According to the Assistant Commissioner, Circle 1(2), Nagpur, the deletion of interests by the Deputy Commissioner in the orders dated 26-5-1994, passed under section 154(1)(b) of the Act was a clear and patent mistake of law apparent on record requiring rectification and amendment. The appellants, due to short time given, submitted no reply whatsoever to the proposed amendment. The Assistant Commissioner also issued notice under section 154 of the Act to the firm proposing to rectify the order, dated 25-3-1994, passed under section 143(3) wherein interests under sections 234A, 234B and 234C were not charged, though charged in the order, dated 29-1-1992, passed under section 143(1)(a) of the Act. In the firm's case also, an order under section 154 was passed on 17-3-1998, charging interests under sections 234A, 234B and 234C of the Act which was challenged by the firm before the Commissioner (Appeals), Nagpur.
Since the appellants did not furnish replies to the show-cause notices issued for rectification of the orders passed by the then Deputy Commissioner, Special Range, Nagpur, on 26-5-1994, under section 154(1)(b) of the Act deleting the interests levied in the cases of above-mentioned two appeals under sections 234A, 234B and 234C, the Assistant Commissioner, Circle 1(2), Nagpur, passed orders on 17-3-1998, and 25-3-1998, in these cases amending the orders passed on 26-5-1994, under section 154(1)(b) by the then Deputy Commissioner, Special Range, Nagpur, deleting the interest levied in the case of this appellant under sections 234A, 234B and 234C. The Assistant Commissioner also on 17-3-1998, passed an order under section 154 of the Act amending the assessment order passed on 25-3-1994, under section 143(3) of the Act in the firm's case wherein interests under sections 234A, 234B and 234C were not charged. By this order passed on 25-3-1998, under section 154 in the firm's case, the Assistant Commissioner, Circle 1(2), Nagpur, amended the order, dated 25-3-1994, directing his subordinates to charge interests under sections 234A, 234B and 234C and send a revised demand.
The partnership firm, namely, M/s Bharat Hardware & Iron Stores, Nagpur, and the present appellants preferred appeals before the Commissioner (Appeals), Nagpur, challenging the separate orders passed by the Assistant Commissioner, Circle 1(2), Nagpur, under section 154 of the Act amending the earlier orders passed by the Deputy Commissioner, Special Range, Nagpur, under section 154(1)(b) and under section 143(3) in the case of the firm, M/s Bharat Hardware & Iron Stores, Nagpur. The appeal of the firm M/s Bharat Hardware & Iron Stores) was dismissed by the Commissioner (Appeals) through order, dated 8-10-1998, dismissing the appeal for the following reasons given in para 7.2 of the order dated 8-10-1998, which I extract below : "I have considered the submissions. The assessing officer might have interpreted the relevant provision in his own manner but in view of what has been held above in appeal No. 62/98-99 in the case of the firm M/s Bharat Hardware & Iron Stores, it is clear that charging of interest under sections 234A, 234B and 234C is mandatory and the reduction/waiver is possible only at the level of Chief Commissioner/Commissioner. If an authority acts without jurisdiction, the order passed by such authority would be illegal and void ab initio.
This precisely is the position with regard to the orders passed whereby interest under sections 234A, 234B and 234C were waived by passing an order under section 154. Obviously such order under section 154 was without authority and, therefore, was void ab initio. The impugned orders have only declared that the earlier orders under section 154 were without authority and were illegal and void in which view of the matter and facts of the case, the impugned orders cannot be said to be illegal or without jurisdiction. The same are sustainable in law and it is ordered accordingly." The firm preferred an appeal against the said order of the Commissioner (Appeals) and the same is pending before the Nagpur Division Bench of this Tribunal which is not functioning since 4-6-2000, as no Accountant Member has been posted by the President of this Tribunal. The Commissioner (Appeals) also dismissed the appeals filed by the abovementioned three appellants herein not giving separate reasons but adopting the reasons given by him in para 7.2 of the order dated 8-10-1998, in the case of the firm of M/s Bharat Hardware & Iron Stores, Nagpur. It is for these reasons that the present appeals came to be filed before this Tribunal by the assessees mentioned above.
Shri S.R. Chhallani, chartered accountant, appeared for the three appellants mentioned above and Shri N.P. Sinha, senior authorised representative of the income-tax department, appeared for the assessing officer. Shri S.R. Chhallani made two-pronged attack of the orders passed by the Commissioner (Appeals) in the cases of three appellants and took me to the reasons given in the appeal order dated 8-10-1998, in the case of the firm which have been adopted as his reasons for dismissing the appeals filed by the present appellants before him. The first attack of Mr. Chhallani has been that the Commissioner (Appeals) ought to have quashed the orders passed by the Assistant Commissioner, Nagpur, under section 154 of the Act in all the three cases because adequate and reasonable opportunity of hearing before passing the orders under section 154 was not afforded by the assessing officer though the law provides that reasonable opportunity of being heard should be given to any assessee before passing an order under section 154 of the Act which results in an enhancement of liability or reduction of the refund. According to Mr. Chhallani, the orders passed by the Assistant Commissioner under section 154 of the Act on 17-3-1998, in the case of two appellants (Shri Prafullachand and Shri Bhogilal) and on 25-3-1998, in the case of one appellant (Shri Bharat Kumar Doshi) have increased the interest liability of the appellants because a direction has been given for charging of interest under sections 234A, 234B and 234C and which interests were suo motu deleted by his own superior officer, namely, the Deputy Commissioner, Special Range, Nagpur. In support of this argument, he relied on the order passed on 11-10- 2000, of Nagpur Division Bench of this Tribunal (to which I am a party) in the batch of appeals being in the case of M/s Mehta Steel Industries & Ten Ors. v. Addl. CIT ITA Nos. 545/Nag/98 to 555/Nag/98. My attention was drawn to the facts of that case and the reasons given in that order for taking a view that if reasonable opportunity of being heard is not given, then the order passed by the revenue authority is illegal and not sustainable in law. On the strength of the afore-stated order dated 11-10-2000, of this Tribunal, Mr. Chhallani argued that since the Commissioner (Appeals) failed to quash the orders passed under section 154 by the Assistant Commissioner enhancing the interest liability of the present appellants, this Tribunal should quash the orders passed on 17-3-1998, in two cases and on 25-3-1998, in the case of Shri Bharatkurnar B. Doshi.
The second attack of Mr. Chhallani has been that the interests under section 234A, 234B and 234C of the Act were charged on 29-1-1992, in orders passed under section 143(1)(a) by the then Deputy Commissioner, Special Range, Nagpur, and the assessee did not feel aggrieved and agitate the levy and charging of interests under those three provisions in the said order, dated 29-1-1992. The Deputy Commissioner, Special Range, Nagpur, suo motu, on his own without any petition, application, move or approach by any of the appellants herein, deleted the interests under the provisions of sections 234A, 234B and 234C which were charged in orders, dated 29-1-1992, passed under section 143(1)(a) in all the three cases. The interest liability under those three provisions was, therefore, reduced because the then Deputy Commissioner Special Range, Nagpur, was of the opinion that the interests under those three provisions were not lawfully chargeable because of the adjustment of the balance seized cash after adjustment of the demand in the case of the firm of M/s Bharat Hardware & Iron Stores. Subsequently, the Assistant Commissioner being prompted by the audit party's direction, acted to amend under section 154 of the Act the orders passed on 26-5-1994, by the Deputy Commissioner, Special Range, Nagpur, under section 154(1)(b) of the Act, suo motu deleting the interests originally charged on 29-1-1992, under the afore-stated three provisions of the Act. Arguing in support of the appeals, Mr. Chhallani submitted that charging of interest, first on 29-1-1992, in orders under section 143(1)(a), then subsequently deleting those interests suo motu by the Deputy Commissioner, Special Range, Nagpur, under section 154(1)(b) through orders, dated 26-5-1994, again recharging interests under the aforesaid three provisions, clearly establishes that the issue regarding levy and chargeability of interests under the provisions of sections 234A, 234B and 234C was a highly debatable issue and none of the high ranking officers were sure whether interests under the aforesaid three provisions were chargeable or not. The first officer on 29-1-1992, was of the opinion that it was chargeable and he, therefore, charged interests in the orders passed by him under sections 143(1)(a) on that date. The subsequent incumbent officer was of the opinion that the interests were not chargeable and he, therefore, suo motu, without any move, application or petition from any of the appellants passed orders on 26-5-1994, deleting the interests charged under the aforestated three provisions. There was no action from any officer from 27-5-1994 to 27-3-1998 (or till 25-3-1998), to form an opinion whether the interests were rightly or wrongly charged on 29-1-1992, or whether interests were erroneously deleted through orders dated 26-5-1994, under section 154(1)(b) of the Act by the Deputy Commissioner, Special Range, Nagpur. It is the audit party who formed an opinion that the interests under sections 234A, 234B and 234C were chargeable on the present appellants and that they were correctly charged by then Deputy Commissioner in the orders passed on 29-1-1992, under section 143(1)(a) of the Act, and that the orders passed on 26-5-1994, by the new incumbent Deputy Commissioner, Special Range, Nagpur, under section 154(1)(b) were wholly illegal and erroneous in law. What Mr. Chhallani intended to bring out is that charging of interest under the provisions of sections 234A, 234B and 234C in the present set of facts and circumstances of the case is highly debatable issue on which there are three opinion., firstly that of the Deputy Commissioner on 29-1-1992, that the interests are chargeable, secondly, then again on 26-5-1994, by the new incumbent Deputy Commissioner, Special Range, Nagpur, that they were not chargeable; thirdly, again by the audit party that they were chargeable and fourthly, by the Assistant Commissioner agreeing with the opinion of the audit party charging the interests invoking the provisions of section 154 of the Act. Mr. Chhallani submitted that this is highly debatable issue and the Honble Supreme Court and various High Courts have clearly held in numerous cases that mistake apparent on recorded under the rectificatory provisions of the Income Tax Act can only be resorted to, to amend or rectify only patent, obvious and clear mistakes of law and facts, and not those mistakes, either of facts or law, on which there is a debate or argument or on which there are conceivably two opinions.
Mr. Chhallani relied on the decision of the Apex Court in the case of T.S. Balaram, Income Tax Officer v. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC) and that of the jurisdictional Bombay High Court in the case of CIT v. Ramesh Electric & Tradmg Co. (1993) 203 ITR 497 (Bom).
Reliance was also placed by Shri Chhallani on the order dated 31-3-2000, of Nagpur Division Bench of this Tribunal (to which I am a party) in the batch of appeal being 7A Nos. 93, 94, 97 and 170/Nag/97 in the case of Shri Milind D. Mahalan, Nagpur & three Ors. a copy of which has been filed by the Senior Departmental Representative Shri N.P. Sinha in the paper book filed on 27-11-2000, and placed from pp 18 to 20. Concluding the arguments, Mr. Chhallani humbly prayed for quashing of the orders passed under section 154 of the Act by the Assistant Commissioner on 17-3-1998, in the case of two appellants, namely, Shri Prafullachand B. Doshi and Shri Bhogilal Doshi and on 25-3-1998, in the case of Shri Bharat Kumar B. Doshi and allowing the three appeals.
Shri N.P. Sinha, Senior Departmental Representative, on the other hand, submitted that the reasons given by the Commissioner (Appeals) in para 7.2 of his order in the case of the firm, namely, M/s Bharat Hardware & Iron Stores, Nagpur, and by the Commissioner (Appeals) in the impugned order are perfectly valid in law and no inteference is justified by this Tribunal. According to Mr. Sinha, the power to reduce, waive or delete interest imposed under sections 234A, 234B and 234C only vests with the Chief Commissioner and the Deputy Commissioner, Special Range, Nagpur, in law, has no powers to reduce, waive or delete interests charged under the aforestated three provisions which according to him were rightly charged in the order passed on 29-1-1992, in all the three cases. He repelled the arguments of the assessee's counsel Shri Challani that charging of interest under the aforesaid three provisions was an arguable or debatable issue or point on which there are conceivably two opinions. He distinguished the decisions relied upon by the assessee's authorised representative Shri Chhallani and also the order dated 31-3-2000, passed by the Nagpur Division Bench of this Tribunal in the batch of appeals, a copy of which has been filed by him and placed from pp. 18 to 20 in the departmental paper book. According to Mr. Sinha, the Commissioner (Appeals) has rightly understood the facts of the case and the decision given by him does not suffer from any infirmity or flaw and, therefore, the case made out by the assessee's authorised representative was wholly without any basis or foundation and, therefore, all the three appeals require to be dismissed. Regarding reasonable opportunity plea advanced by Mr.
Chhallani, it was submitted by Mr. Sinha that such a plea was not raised in first appeal and, therefore, there is no finding by the first appellant authority in the impugned orders. This Tribunal, according to Mr. Sinha, should not admit such new ground and adjudicate and render any decision.
In my considered view, the law is loaded in favour of the appellants entitling them to succeed in these appeals. I find substantial force in the arguments advanced by the assessee's counsel Shri Chhallani that the orders passed by the assessing officer under section 154 were required to be quashed because no reasonable opportunity of being heard was afforded to the appellants before passing orders and further those orders were not required to be sustained as there is a strong debate and argument on the issue whether or not, interests under sections 234A, 234B and 234C which were deleted by orders dated 26-5-1994, and again be reimposed invoking the provisions of section 154 of the Act.
On the ground of reasonable opportunity, I do not wish to labour much in view of the elaborate reasons given by this Tribunal in order dated 11-10-2000, in batch of appeals of M/s Mehta Steel Industries & 10 Ors v. Additional CIT Range-2, Nagpur, being ITA Nos. 545 to 555/Nag of 1998, wherein it has been held by me that if no reasonable opportunity is given to any assessee, then the orders passed by the authorities functioning under the Income Tax Act are illegal, null and void requiring to be quashed. In taking such a view, support has been taken by this Tribunal from the below given decisions of the Apex Court :State of Mysore v. Abdul Razack Sahib AIR In view of the elaborate reasons given in the aforestated order, dated 11-10-2000, in the case of M/s Mehta Steel Industries, Nagpur & Ors.
similar view in the instant cases is also taken that the appellants were not given reasonable opportunity of being heard by the Assistant Commissioner, Nagpur, before passing orders in their respective cases under section 154 of the Act charging interests under sections 234A, 234B an 234C of the Act as also interest under section 220(2) of the Act. The Commissioner (Appeals), in my view, therefore, failed to take into consideration all these very vital aspects of the case. He, therefore, ought to have annulled the orders passed under section 154 of the Act by the assessing officer in all these cases which were impugned before him. Since he has failed to do so, I have no other option except to hold that the orders passed on 17-3-1998 and 25-3-1998, in these cases as discussed by me elsewhere above in this order are wholly illegaland, therefore, declared null and void and quashed, In addition to the above reasons, the orders passed by the assessing officer in all these cases under section 154 are further not sustainable in law because as rightly contended by Shri Chhallani, there is a great debate and argument whether or not interests under sections 234A, 234B and 234C are chargeable pursuant to the orders passed under section 154 of the Act in March, 1998, by the Assistant Commissioner when the Deputy Commissioner, Special Range, Nagpur, suo motu deleted the interests by invoking his powers under section 154(1)(b) of the Act which interests were originally charged by his predecessor Deputy Commissioner in the orders passed on 29-1-1992, in all these cases in terms of section 143(1)(a) of the Act. The debate and argument about charging of interest in these cases under section 234A, 234B and 234C is very patent and obvious which compel me to quash those orders passed in March, 1998, by the Assistant Commissioner under section 154 of the Act which were impugned by the appellants before the Commissioner (Appeals) under section 246 of the Act.
The Deputy Commissioner, Special Range, Nagpur, while passing the orders under section 143(1)(a) on 29-1-1992, in all these cases charged interests under the afore-stated three provisions of the Income Tax Act. And surprisingly, after a lapse of nearly 27 months, the successor Deputy Commissioner suo motu without any application, petition, move or approach by any of the appellants (assessees) deleted the interest under the afore-stated three provisions which were originally charged in the main orders, dated 29-1-1992, passed in all these cases. After considerable lapse of time, the government audit party intervened and opined that the interest under the afore-stated three provisions was rightly charged in the orders passed on 29-1-1992, under section 143(1)(a) and that the successor Deputy Commissioner, Special Range, Nagpur, committed an illegality in suo motu invoking his powers under section 154(1)(b) and deleting those interests which were originally charged in the orders passed on 29-1-1992, in all these cases. It is on the basis of the issue raised by the audit party that the new Deputy Commissioner woke up from his slumber and passed orders in March,1998, in all these cases invoking again the provisions of section 154 of the Act and amending thereby the earlier suo motu orders passed on 26-5-1994, by his superior officer and directing his office to once again charge interest under the provisions of sections 234A, 234B and 234C and send revised demand. All these cumulative acts commending from 29-1-1992, and culminating on 25-3-1998, clearly lead to one and only one conclusion that none of the high and top-ranking officers of the income-tax department were sure or clear about charging of interest on these appellants in terms of sections 234A, 234B and 234C of the Act.
When the matter went to the Commissioner (Appeals) by way of challenge under section 246 of the Act by the firm and by these appellants, the Commissioner (Appeals) instead of giving positive finding about invoking of the powers under section 154 of the Act only found fault with the former Deputy Commissioner who passed suo motu orders on 26-5-1994, that he had no powers under section 154 to waive the interests which were originally charged in the orders passed on 29-1-1992, under the provisions of section 143(1)(a) of the Act. There is thus a great and lengthy debts on the chargeability or otherwise of the interest on these appellants under the provisions of sections 234A, 234B and 234C of the Act.
The law, as is know to all, is practically well settled by now through catena of decisions of the Apex Court as well as of the various High Courts that mistake apparent on record, under section 154 of the Act can only be rectified if there is patent, obvious and clear mistake of facts and law apparent on record and that mistake of fact and law apparent on record cannot be rectified if there is a debate or argument or if there are conceivably two opinions on the issue. If any authority is required, the same is found in the decision of the Apex Court in the landmark case of Volkart Brothers (supra). Another decision on this aspect is rendered by the Hon'ble Bombay High Court in the case of CIT v. Ramesh Electric & Trading Co. (supra). There are very many decisions on this aspect but I do not deem it fit and proper to refer to all those decisions and discuss it in support of my view. The decision of the Apex Court in the case of Volkart Brothers (supra) and the decision of the jurisdictional Bombay High Court in the case of Ramesh Electrical & Trading Co. (supra) are sufficient to support my view. I am firmly of the opinion that there is a clear debate and argument on the chargeability of interest under the provisions of sections 234A, 234B and 234C in these cases from the facts which I have recorded elsewhere above in the order and, therefore, in view of the numerous decisions of the Superior Courts, the Assistant Commissioner who passed the orders under section 154 of the Act on 17th and 25-3-1998, in these cases ought to have refrained from passing any such order, as has been done by him, which gave rise to first appeals before the Commissioner (Appeals) and later on second appeals before this Tribunal. The Commissioner (Appeals), Nagpur, ought to have allowed the appeals by quashing those orders which were impugned before him in first appeal instead of dismissing it. In my considered opinion, the orders passed by the Assistant Commissioner under section 154 in these three cases are, therefore, patently illegal and void being outside the scope and purview of the provisions of section 154 and were not required to be passed. Since the Commissioner (Appeals) failed to quash the same, I hereby quash the same for these reasons also.
I do not agree with the Commissioner (Appeals) that the Deputy Commissioner through orders passed on 26-5-1994, under section 154(1)(b) waived the interests which were originally charged in the orders dated 29-1-1992. The interests were deleted by the Deputy Commissioner but not waived. I agree with the Commissioner (Appeals) that the powers of waiver only vest with the Chief Commissioner and not with any other income-tax authorities below him.
Before closing this case, I deem it my legal duty as a Judicial Officer of an important revenue Appellate Tribunal to say something about the illegality and reckless and negligent act and serious misconduct committed by the then Deputy Commissioner, Special Range, Nagpur, in suo motu on 26-5-1994, invoking his powers under section 154 of the Act and in deleting the interest in all these three cases which were very rightly levied and charged under the provisions of sections 234A, 234B and 234C of the Act in the parent orders passed on 29-1-1992, under section 143(1)(a) of the Act. The appellants are indeed fortunate that the decision of this Tribunal is in their favour, not because their appeals are meritorious, but because of the illegal act committed by the then Deputy Commissioner, Special Range, Nagpur, by suo motu passing illegal orders on 26-5-1994, under section 154(1)(b) of the Act deleting the interest charged under sections 234A, 234B and 234C of the Act which were very correctly levied and charged in the original orders, dated 29-1-1992, passed under section 143(1)(a) of the Act.
I am not very sure or certain whether the illegal act by the then Deputy Commissioner, Special Range, Nagpur, in passing suo motu orders on 26-5-1994, invoking his powers under section 154 and in deleting the interests was deliberate or inadvertent. But one thing appears to be sure and certain that the act of the then Deputy Commissioner, Special Range, Nagpur, in suo motu passing orders in all these three cases in terms of section 154(1)(b) after lapse of two years and three months of the passing of the original orders under section 143(1)(a) points a needle of suspicion about his culpability in causing a wrongful pecuniary loss of revenue to the Central Government to the tune of nearly five lakhs in these cases apart from equal amount of loss (or perhaps more than that) in the case of the firm M/s Bharat Hardware & Iron Stores, Nagpur. In my considered opinion, this illegal act of then Deputy Commissioner, Special Range, Nagpur, is also grave misconduct in discharge of quasi-judicial functions entrusted to him under the provisions of section 154 of the Act. Such illegal acts of the then Deputy Commissioner, Special Range, Nagpur require a thorough and an indepth inquiry and investigation particularly by the police authorities to unravell whether such an act on the part of the former Deputy Commissioner, Special Range, Nagpur was a bona fide act or it was undue favour to these appellants tainted with oblique motives, intentions and considerations or whether it was for some other hidden consideration. It is only the inquiry and investigation by the police authorities which can reveal and unfold the mysterious illegal act of the then Deputy Commissioner, Special Range, Nagpur.Union of India & Ors. v. K.K. Dhawan AIR 1993 SC 1478 at p. 1484 in para 28 have laid down tests for initiation of disciplinary action against an authority for misconduct in discharge of judicial or quasi-judicial functions. I extract below the relevant paragraph : "28. Certainly, therefore, the officer who exercise judicial or quasi-judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a Judge. Accordingly, the contention of the respondent has to be rejected. It is important to bear in mind that in the present case, we are not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer. The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act. But we have no doubt in our mind that the government is not precluded from taking the disciplinary action for violation of the Conduct Rules. Thus, we conclude that the disciplinary action can be taken in the following cases : (i) Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty: (ii) if there is prima facie material to show recklessness or misconduct in the discharge of his duty: (iii) if he has acted in a manner which is unbecoming of a government servant., (iv) if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory owners; (vi) if he had been actuated by corrupt motive, however, small the bribe may be because Lord Coke said long ago though the bribe may be small, yet the fault is great." If those tests are applied to the illegal act and the misconduct on the part of the former Deputy Commissioner, Special Range, Nagpur, then in my considered opinion, disciplinary action is required to be taken by the appointing authority in accordance with the provisions of the Service Rules as applicable to the Deputy Commissioner.
I have brought to surface the illegality and misconduct on the part of the former Deputy Commissioner, Special Range, Nagpur, because the Honble Madras High Court has laid down in the case of CIT v. Rayala Corporation (P) Ltd. (1995) 215 ITR 883 (Mad) that it is not only the duty of this Tribunal to protect the interests of the assessees but it is equally the duty of this Tribunal to even protect and safeguard the interests of the revenue and ensure that no person should cause any wrongful pecuniary loss to the government revenues. Keeping these legal principles in mind, I have brought to light the illegal act and misconduct for appropriate disciplinary proceedings as per Service Rules as well as penal action under the provisions of IPC against the Deputy Commissioner, Special Range, Nagpur, who suo motu passed the orders on 26-5-1994, under section 154(1)(b) of the Act deleting the interests which were rightly and lawfully charged, imposed and levied upon these appellants as provided under sections 234A, 234B and 234C of the Act in the parent orders passed on 29-1-1992, under section 143(1)(a) of the Act and thereby causing monetary loss of government revenue aggregating to several lakhs of rupees.
(i) The orders passed by the Commissioner (Appeals), Nagpur, impugned by the appellants herein are hereby vacated and cancelled.
Consequently, the orders passed under section 154 by the Assistant Commissioner, Nagpur, in all the three cases are hereby quashed; (ii) The amounts of interest under sections 234A, 234B and 234C and interest under section 220(2) of the Income Tax Act, 1961, if any paid by the appellants or collected by the assessing officer during the pendency of appeals, shall be refunded to the appellants herein not later than 28th day of February, 2001; (iii) The Commissioner, Vidarbha Region, Nagpur, shall pay to each of the appellants herein a sum of Rs. 7,500 (rupees seven thousand-five hundred) (total Rs. 22,500) not later than 28th day of February, 2001, towards the costs as provided in section 254(2B) of the Income Tax Act, 1961; (iv) In the event of failure to pay to the appellants the amount as specified in (ii) and (iii) above, the appellants shall be entitled to receive interest at the rate of 18 per cent per annum from 1st day of March, 2001, till the date of payment; (v) The amounts payable to the appellants herein as ordered in (ii) and (iii) above shall be recovered by the Disbursing Officer of the Central Government from the salary and other emoluments and allowance payable to the then Deputy Commissioner, Special Range, Nagpur, who passed the orders under section 154(1)(b) on 26th May, 1994, deleting the interests and causing a pecuniary loss to the Central Government revenues as discussed and held elsewhere above in this order; (vi) If the delinquent officer, namely, the Deputy Commissioner, Special Range, Nagpur, has demitted his office upon attaining the age of superannuation, then in such an event, the Commissioner, Vidarbha Region, Nagpur shall recommend to the appropriate authority in the Central Government for deduction and recovery of the amounts specified in (ii) and (iii) above from the pension payable to the said officer in accordance with the provisions of rule 9 of the Central Civil Services (Pension) Rules, 1972; (vii) As held and laid down by The Hon'ble Supreme Court in the case of Union of India v. K.K. Dhawan (supra), the Commissioner, Vidarbha Region, Nagpur, shall recommend to the appropriate authority, through proper channel, for initiation of disciplinary proceedings against the Deputy Commissioner, Special Range, Nagpur (who passed the orders under section 154(1)(b) on 26th May, 1994) in accordance with the relevant provisions of the Central Civil Services (Conduct) Rules for committing grave and serious misconduct and illegality in discharge of quasi-judicial duties, particularly abusing and misusing the powers vested in him under the provisions of section 154 of the Income Tax Act, 1961, by bestowing undue monetary favours to the appellants herein thereby causing huge pecuniary wrongful loss to the Central Government revenues running into several lakhs of rupees as discussed elsewhere in this order; (viii) The Assistant Registrar of Nagpur Bench of this Tribunal is directed to forward forthwith by registered post acknowledgment due copies of this order to the below mentioned authorities for their information and knowledge and for initiation of appropriate actions as deemed fit by them in accordance with law against the Deputy Commissioner, Special Range, Nagpur, who passed the orders on 26th May, 1994, under section 154(1)(b). deleting the interests charged under seciton 234A, 234B and 234C of the Income Tax Act, 1961 : (a) The Central Vigilance Commissioner, Satarkata Bhavan, I.N.A.Building, New Delhi.
(b) The revenue Secretary, Ministry of Finance, Government of India, North Block, New Delhi.
(e) The Deputy Commissioner, Vigilance Cell of Income Tax Department, in the region and office of the Commissioner, Vidarbha, Nagpur.
(ix) The Assistant Registrar of Nagpur Bench of this Tribunal is further ordered and directed to report compliance of the directions given above with relevant proof of despatch of the copies of this order.
All the three appeals are allowed with the directions contained herein above.