I-T officers must follow ITAT order, return Rs 16L seized from lawyer: HC
Mumbai, Aug 15, 2023
Underlining the importance of juridical discipline, the Bombay high court recently directed the incometax department to return Rs 16 lakh seized by its Air Intelligence Unit (AIU) from a Mumbai lawyer headed to the Supreme Court in two cases.
“It is of utmost importance that revenue officers are bound by the decision of the appellate authority,” ruled a bench of Justices K R Shriram and F P Pooniwalla. The Income Tax Appellate Tribunal (ITAT) accepted the lawyer’s explanation in May that it was his professional income from his clients on which he subsequently paid tax.
“The principal of juridical discipline requires that orders of the higher appellate authority should be followed by the subordinate authorities,” the HC bench said, observing that the tribunal’s order is binding on the additional commissioner and his subordinate officers.
Advocate Ram Mendadkar, in practice for over 25 years, had petitioned the HC to get back his “illegally seized” money. The AIU had intercepted Mendadkar at Delhi airport in July 2018 and found Rs 16 lakh in Rs 2,000, Rs 500 and Rs 100 notes in his luggage. The department said it was unexplained income.
Following his plea after the ITAT ruled in his favour, the HC directed the I-T department to return the entire Rs 16 lakh seized from Mendadkar by August 31, failing which it would have to pay interest on it from May 12, the date of the ITAT order.
Mendadkar explained the cash was for fees to be paid to the advocate on record in the SC for two clients to enable him to engage a senior counsel for both cases. His petition did not mention the name of the senior counsel they wished to engage.
He explained that his clients had deposited almost Rs 6 lakh in cash as well as Rs 17 lakh through various cheques in April 2018 as his professional fees. The IT assessing lawyer and commissioner (appeals) rejected his explanation but the ITAT perused his professional fee ledger and was satisfied that the amounts were accounted for.
Mendadkar said the I-T commissioner cannot demand an explanation of the source of his client’s money.
The I-T department opposed Mendadkar’s plea, and requested the HC not to consider the ITAT order which “erred in considering the justification given by CIT (A)…”. After the HC called it “highly objectionable”, the officer withdrew the affidavit.
“If the officers of the income-tax department are allowed to continue this way, it will result only in undue harassment to assessees and chaos in administration of tax laws,” said the HC order, and hoped the Union finance ministry, I-T and the central director, direct taxes, will have “an orientation session” to train its officers “suitably”.
[The Times of India]
