No. 26503 of 2008andM.P. No. 1 of 20081. The Union of India v. The Central Administrative Tribunal

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 18-12-2008CORAM :THE HONOURABLE MR.JUSTICE P.K. MISRAandTHE HONOURABLE MR.JUSTICE A. KULASEKARANW.P. No. 26503 of 2008andM.P. No. 1 of 20081. The Union of India rep. By the Under Secretary to Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (Ministry of Finance) North Block, New Delhi – 110 0012. The Chairman Central Board of Direct Taxes New Delhi – 110 0013. The Director Central Vigilance Commission Government of India Satarkta Bhavan, GOP Complex INA New Delhi4. The Deputy Director of Income Tax (Vig) O/o. The Director of Income Tax (Vig) South No.121, Mahatma Gandhi Road Chennai.. Petitioners Versus1. The Central Administrative Tribunal rep. By its Registrar City Civil Court Buildings High Court Campus, Chennai2. A.C. Joseph Dy. Commissioner of Income Tax Circle-III Trichy, Tamil Nadu.. Respondents Prayer: Petition filed under Article 226 of The Constitutionof India praying for a Writ of Certiorari to calling for therecords of proceedings of the first respondent Tribunal in O.A. No.890 of 2006 dated 01.04.2008 and to quash the same. https://hcservices.ecourts.gov.in/hcservices/ For Petitioners :Mr. M. VelusamiSr. Central Govt. Standing CounselFor Respondents :Mr. S. Sridharan for R2ORDER(Order of the Court was made by P.K. MISRA, J)Heard the counsel appearing for the parties.2.The present writ petition has been filed by the Union ofIndia challenging the Order passed by the Central AdministrativeTribunal in O.A. No. 890 of 2006 dated 01.04.2008. Such Originalapplication has been filed by the present second respondentchallenging the order of punishment of stoppage of incrementwithout cumulative effect for a period of three years. Such orderof punishment was imposed by following the procedures contemplatedunder Rule 15 of CCS (CCA) Rules 1965. 3.The allegation against the second respondent was that hedid not follow the guidelines laid down in the appraisal report.The substance of the imputation, which ultimately resulted inpunishment is found at Page No.2 of the typed set of papers, whichis to the following effect:-“1.1.In this case, during the courseof search on 8.3.96, a kacha balance sheet wasfound at the business premises of theassessee, depicting the true state of affairsof the firm as on 31.3.95. The balance sheetshowed the total capital balance in theaccounts of the partners at Rs.1,26,51,810/-as on 31.3.95. The assessee had filed thereturn for the asst.year 1995-96 before thesearch and the balance sheet filed with thereturn showed the balance in the capitalaccount at Rs.14,62,633/-. It was thus clearthat in the return filed the capital balancein the accounts of the partners had beensuppressed to the tune of Rs.112 lakhs. Onconsideration of this and the credit balancein the accounts of agriculturists, SriSathyanarayana Rathi, husband of the partnerSmt. Srirangabai and brother of partner Sri OmPrakash Rathi, admitted that under creditors,the balance outstanding as on 31.3.95 had beeninflated to the extent of Rs.117 lakhs. Hemade a disclosure of this amount u/s.132(4).He also made disclosure of Rs.12.80 lakhstowards unexplained cash and Rs.5 lakhstowards jewellery. A total disclosure of https://hcservices.ecourts.gov.in/hcservices/ Rs.134.80 lakhs was thus made. In theappraisal report the modus operandi of theassessee in generating the unaccounted incomewas discussed in detail. The appraisal reportalso pointed out that the Assessing Officershould enquire into the genuineness of thebalance shown under other agriculturalcreditors as on 8.3.96 to the extent ofRs.6,78,99,042/-. This was based on the listof creditors prepared by the assessee on thedate of search. Subsequent to the declaration,the assessee made an adhoc payment of Rs.25lakhs towards tax liability. The assessee hasalso filed an affidavit, duly notarized,confirming the disclosure made by Sri Rathi on19.4.96.”4.The second respondent has replied to the charges on23.06.2003. The disciplinary authority, after going through theimputation and reply has considered the case as follows:-“DA's views:-The CO's reply on allegation (i) abovecannot be accepted. He accepted the versionof the assessee ignoring the fact that asurrender was made in the statement recordedu/s.132 (4) and that the assessee had alsofiled an affidavit in this regard. He did notdischarge his duties with the seriousnesswhich is called for in completing the search &seizure cases and accepted the fabricatorystory of the assessee. He did not apply therates as were applicable in the blockassessment cases. As regards the informationgiven to the CIT at the time of seeking hisapproval, this does not absolve the CO of hisguilt.On the allegation at (ii) above, the CO,in spite of his such a long experience inservice, failed to understand that in the caseof creditors, the onus lies on the assessee toprove the identity, genuineness andcreditworthiness of the creditors. Therefore,his brushing aside the Inspector's report andgetting satisfied merely with the currentbooks of accounts, clearly speaks of a lapseon his part.The charge on both the above counts hasbeen viewed as 'proved' at this stage.” https://hcservices.ecourts.gov.in/hcservices/

5.On the aforesaid basis, the punishment of stoppage ofincrement for a period of three years, without cumulative effect,was imposed on the second respondent as per the Order dated16.10.2006, after obtaining the opinion of the UPSC. Challengingsuch order of punishment, the second respondent has approached theTribunal.6.The Tribunal, under the impugned judgment, has set asidethe order of punishment imposed on the second respondent. TheTribunal was of the view that the allegations related to the year1997, the departmental proceedings were initiated only in the year2003 and even though the reply to the charge memo was sent by thesecond respondent in the month of June 2003, the order ofpunishment was passed only on 16.10.2006 and therefore, there was adelay, which was not properly explained by the Department.7.It is no doubt true that the allegations against thesecond respondent related to the year 1997, but in normal course,obviously, it would consume time for the department to look intothe matter and to initiate proceedings against the delinquent.Therefore, initiation of proceedings in the year 2003 cannot besaid to have delayed inordinately. Moreover, at that stage, thesecond respondent had not raised any objection regarding the delayin initiating departmental proceedings. After initiatingdepartmental proceedings in the year 2003, the order, imposingpunishment, was issued in the year 2006. Obviously, in themeantime, the opinion of UPSC had to be obtained as required underLaw. Under such circumstance, we are unable to accept theconclusion arrived at by the Tribunal with regard to delay inimposing the punishment.8.The other conclusion of the Tribunal is to the effectthat the second respondent was discharging a quasi judicialfunction like making the assessment and therefore, no disciplinaryproceedings could have been initiated against him. For theaforesaid purpose, the Tribunal relied on the decision of theSupreme Court reported in (Zunjarrao Bhikaji Nagarkar vs. Union ofIndia and others) 1999 7 SCC 409.9.The learned counsel appearing for the petitionerscontended that the law laid down in Nagarkar's case relied on bythe Tribunal was subsequently clarified in several decisions of theSupreme Court including one reported in (Union of India and othersvs. Duli Chand) (2006) 5 SCC 680. As a matter of fact, in theaforesaid decision, the Supreme Court had gone to the extent ofholding that the opinion rendered in Nagarkar's case is contrary tothe decision of a larger bench of the Supreme Court reported in(Union of India vs. K.K. Dhawan) (1993) 2 SCC 56. It is also heldthat mere exercise of quasi judicial powers by itself does notafford immunity to an authority. In (Union of India vs. K.K.Dhawan) (1993) 2 SCC 56, in para No.28, it was observed by theSupreme Court as follows:- https://hcservices.ecourts.gov.in/hcservices/ “28. Certainly, therefore, the officerwho exercises judicial or quasi-judicialpowers acts negligently or recklessly or inorder to confer undue favour on a person isnot acting as a Judge. Accordingly, thecontention of the respondent has to berejected. It is important to bear in mind thatin the present case, we are not concerned withthe correctness or legality of the decision ofthe respondent but the conduct of therespondent in discharge of his duties as anofficer. The legality of the orders withreference to the nine assessments may bequestioned in appeal or revision under theAct. But we have no doubt in our mind that theGovernment is not precluded from taking thedisciplinary action for violation of theConduct Rules. Thus, we conclude that thedisciplinary action can be taken in thefollowing cases:(i)Where the officer had acted in amanner as would reflect on his reputation forintegrity or good faith or devotion to duty;(ii)if there is prima facie material toshow recklessness or misconduct in thedischarge of his duty;(iii)if he has acted in a mannerwhich is unbecoming of a Government servant;(iv)if he had acted negligently or thathe omitted the prescribed conditions which areessential for the exercise of the statutorypowers;(v)if he had acted in order to undulyfavour a party;(vi)if he had been actuated by corruptmotive, however small the bribe may be becauseLord Coke said long ago “though the bribe maybe small, yet the fault is great”.10.In a recent decision of the Division bench of this Courtreported in (T.K.K. Tharmar vs. Registrar, Central AdministrativeTribunal, Chennai Bench, Chennai – 600 104 and others) 2008 3 MLJ877, a Division Bench of this Court, in which, one of us was a https://hcservices.ecourts.gov.in/hcservices/ party (P.K. Misra, J) held that the disciplinary proceedings can beinitiated if there is negligence even while discharging judicial orquasi judicial function.11.On the aforesaid contention, the learned counsel for thesecond respondent submitted that there is no conclusion arrived itin the order of the disciplinary authority that there has been anynegligence in the discharge of duty by the second respondent andtherefore the order passed by the Tribunal is sustainable.12.In our opinion, a bare reading of the order passed by thedisciplinary authority clearly points to the negligence of thesecond respondent while discharging his duties. In such view ofthe matter, the ratio laid down in (Union of India vs. K.K. Dhawan)(1993) 2 SCC 56 will be applicable.13.Once it is held that the departmental proceedings couldhave been initiated, the Tribunal or the High Court is not expectedto interfere with such conclusion arrived at by the disciplinaryauthority. In the present case, the disciplinary authority hasconsidered the imputation and explanation and has come to aparticular conclusion, which cannot be characterised as arbitrary.In such view of the matter, the order passed by the Tribunal cannotbe sustained.14.The learned counsel for the second respondent submittedthat on the basis of very same allegations, proceedings had beeninitiated by the respondents against the Commissioner of Income Taxand he was let off only with a warning and therefore, thepunishment of stoppage of increment without cumulative effectimposed on the second respondent is grossly disproportionate to thecharges. It is also submitted that because of the pendency of suchproceedings, the second respondent could not get his promotion innormal course and therefore a lenient view must be taken.15.In normal course, we would have remanded the matter tothe disciplinary authority for re-considering the question ofpunishment. However, in view of the fact that the occurrence tookplace in the year 1997 for which punishment was imposed against thesecond respondent only in October 2006, remanding the matter wouldonly further delay and prolong the agony of the second respondent.Accordingly, we feel that interest of justice would be served bydirecting that instead of punishment of stoppage of increment forthree years without cumulative effect, stoppage of increment for aperiod of one year without cumulative effect would meet the ends ofjustice. https://hcservices.ecourts.gov.in/hcservices/

16.Accordingly, the writ petition is allowed in part. Nocosts.rsh Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar ToThe RegistrarThe Central Administrative TribunalCity Civil Court BuildingsHigh Court Campus, Chennai1 cc to Mr.M.Veluswami, Advocate, SR. 715081 cc to Mr.S.Sridharan, Advocate, SR. 70935bs (co)dv/28.1.WP No. 26503 of 2008