Delhi High Court Drops Suo Moto Contempt Action Against Income Tax Officer For Allegedly Passing Unreasoned Order

The proceedings were initiated suo moto in 2019 on a prima facie opinion but on a closer scrutiny, Justice Vikas Mahajan now found that the Respondent's order though brief, was not bereft of reasons.

“Such reasons are brief and not elaborate. The order does reflect due application of mind on the part of respondent. No case is made out to proceed with the contempt petition and the contempt proceedings are, accordingly, dropped,” the bench said.

The assessee had preferred an appeal before the Commissioner of Income Tax (Appeals) against assessment orders and filed an application seeking stay of the demand.

The respondent had rejected the said application for stay and directed the assessee to deposit 20% of the entire demand.

The assessee then moved the High Court, which opined that the respondent had not furnished any reasons indicating why the exercise of discretion cannot be in favour of the assessee, i.e. imposing less than 20% demand. As such, she was directed to pass fresh orders with reasons.

The Respondent again rejected the assessee's plea, stating that he had not given any evidence regarding his weak financial position.

The assessee again approached the High Court, which this time observed that the Respondent's order was a mere reiteration of her earlier order which was set aside by the Court and she did not furnish any reasons.

Consequently, the Court issued notice calling upon her to state as to why contempt proceedings not be drawn upon her for wilful disobedience.

After hearing the Respondent, the Court found that her order was predicated on three reasons:

(i) as per CBDT circular vide OM no.404/72/93- IPCC dated 29.02.2016 and its amendment dated 31.07.2017, the assessee should pay at least 20% of the entire demand and after submission of challan, an application for stay of demand can be considered;

(ii) from the returns of Assessment Years 2011-12 to 2016-17, it is evident that the financial condition of assessee is sound and the payment of 20% demand will not cause any financial hardship to the assessee;

(iii) the assessee has not given any evidence regarding his weak financial position.

As such, the Court dropped the contempt proceedings. It relied on the Supreme Court's ruling in S.S. Roy v. State of Orissa & Anr., (1954) where it was held that a judicial officer cannot be visited with contempt, simply because he committed an error of judgment or the order passed by him is in excess of authority vested in him.

The Top Court had emphasized that the error must be a willful error proceeding from improper or corrupt motives in order that he may be punished for contempt of Court.

As such, the Court closed the matter.

Appearance: Mr. Ruchir Bhatia, Sr. SC with respondent in person.

Case title: Court On Its Own Motion v. Anuradha Misra

Case no.: CONT.CAS(C) 506/2019

Click here to read order