Date: 11.04.2016
Place: Bangalore
To
The Hon’ble President
of India
New Delhi
Respected Sir,
Sub: Reply
to Memorandum F.No. C-14011/5/2016-V&L Dtd. 04.03.2016
Ref-1 : CVC
OM No. 015/ITX/011/301272 Dated 03.12.2015
Ref-2 : C.No
34/VIG/2015-16/Pr. CC Dated 14.03.2016
I received a sealed
cover vide C.No 34/VIG/2015-16/Pr. CC
Dated 14.03.2016 on 16.03.2016 at my residential premise in my absence. The
same sealed cover came into my hand on 19.03.2016. After opening the sealed
cover I went through the Memorandum
F.No. C-1v 4011/5/2016-V&L Dtd. 04.03.2016 which was based on CVC OM No. 015/ITX/011/301272 Dated
03.12.2015. I also found that the CVC
OM No. 015/ITX/011/301272 Dated 03.12.2015 was based on the report of DGIT(V)SZ/COM/18/08 dated 05/08/2015.
2.
I was directed to give a reply within 10 days from the
receipt of memorandum a written statement in my defence and was also asked to
state whether I desire to be heard in person. I have already filed a letter on
21.03.2016 to your good self by requesting to enhance 10 days to 30 working
days, keeping in light the principle of natural justice so that I get
sufficient time to defend myself. As the written statement requires going
through exhaustive material it will be impossible to furnish a written
statement in response to Memorandum
F.No. C-14011/5/2016-V&L Dtd. 04.03.2016.
3.
I deny specifically each article of charge i.e. all the eight
Articles of charge levelled against me. The summary of the written statement
for the denial of Article of Charges as under:
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Article – I
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Committed
irregularities in passing assessment orders in the case of Shri H R Ravichandra
Reddy for assessment years 2000-01 to 2003-04 by assessing the income(s) for
these assessment years in the search assessments made after search below the
income returned/assessed originally before the search resulting in issue of
refunds in respect of taxes paid on income returned/regular assessment
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BASIS
OF DENIAL OF ARTICLE OF CHARGE-I
The
search assessment under section 153A r.w.s 143(3) 153 of the Income-tax Act,
1961 for the assessment years 2000-01 to 2003-04 were passed 30.08.2006 and the
assessed income was equal to the income reflected return of income filed in
response to notice issued under section 153A Income-tax Act, 1961.
It
is correct to say that assessed income under section 153A r.w.s 143(3) 153 of
the Income-tax Act, 1961 was less than to the extent of Rs. 67,75,690/-
vis-à-vis returned income under section under section 139 (1) of the Income-tax
Act, 1961 (Original Return), However, if the income of five partnership firms
alongwith Income declared by Shri H R Ravichandra Reddy, are taken to into
account, then it shows a corresponding increase of income to the tune of Rs.
77,66,198/- between the quantum of income as per the original return and
income reflected in return of income filed in response to notice under
section 153A of the Income-tax Act, 1961.
It
was alleged in the Articles of Charge-1 that there is a prima facie loss of Rs. 18,69,320/-. Whereas, the search assessments
on this issue by the charged officer brought additional revenue of Rs. 31,47,213/- to the excehquer in the
form of enhanced Income-tax and Interest under Section 234 B & C.
Thus,
it may be seen that the allegation mentioned in the Article of Charge-I is
not only baseless but contrary to facts on record.
It
can also be verified from records that no order under section 263 of the
Income-tax Act, 1961 is passed by the CIT in respect of this issue, which
clearly proves that neither the order passed by C.O. was erroneous nor it was
prejudicial to the interest of revenue.
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Article – II
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Committed
irregularities by not adhereing to the Instructions of the CBDT and other
established administrative practices in the Central Charges of the Income-tax
Department on the subject of completing search assessments in the group cases
of Shri G Prasada Reddy, Shri S Ramana Prasad Reddy, Shri H R Ravichandra
Reddy and others for the assessment years 2000-01 to 2006-07 by completing
the assessments without obtaining administrative approval of the Range Head.
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BASIS
OF DENIAL OF ARTICLE OF CHARGE-II
The
Article of Charge-II is also false and baseless as no search assessment in
Central Range-2 was subjected to the administrative approval. This fact can
also be verified from the search assessments passed by all the assessing
officers in Central Range-2, Bangalore. Thus, it may be seen that the
allegation mentioned in the Article of Charge-III is not only baseless but
contrary to facts on record.
The
Article of Charge-II is also vague and ambiguous in as much as it mentions
that the charged officer has committed irregularities by not adhereing to
instructions of CBDT and the other established administrative practice.
Only
one CBDT instruction dated 22.12.2006 is relied upon and the charged officer
has completed assessment as on 02.01.2007, this instruction was never brought
to the notice of charged officer. It is pertinent to mention that the said
instruction was issued on 22.12.2006 and date of assessment is 02.01.2007 i.e
almost ten days and no evidence has been brought to record to show that this
instruction was brought to the notice of charged before 02.01.2007.
As
far as the issue of “established administrative practices” is concerned, the
moot question remains “as to whether
violation of a practice can tantamount to a misconduct” under CCS(CCA) Rules.
Besidews, provisions of section 153A have been on statue w.e.f.1.06.2003,
therefore, instruction no. 1886 dated 18.07.1991 is not related to this
section, as it relates to penalty proceedings and not related to ssessment
proceedings under section 153A. Last but not least, as on 2.01.2007,
provision of section 153D i.e. prior approval of Joint CIT was not on statue,
as the same was introduced by Finance Act’2007 w.e.f. 1.06.2007.
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Article – III
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Committed
irregularities by not adhereing to the
Instructions of the CBDT on the subject of
completing search assessments in the case of Shri G Prasada Reddy for the assessment years 2003-04 to 2006-07
by assessing undisclosed income less than the income disclosed by the DDIT
(Inv.) in the appraisal report and in the case of H R Ravichandra Reddy for
the assessment years 2000-01 to 2006-07 by assessing the undisclosed income
less than the one quantified by the DDIT (Inv) in the Appraisal Report and the
one declared by the assessee.
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BASIS
OF DENIAL OF ARTICLE OF CHARGE-III
The
Article of Charge-III is vague and ambiguous in as much as it mentions that
the charged officer has committed irregularities by not adhereing to
instructions of CBDT.
Only
one CBDT instruction dated 22.12.2006 is relied upon and the charged officer
has completed assessment as on 02.01.2007, this instruction was never brought
to the notice of charged officer. It is pertinent to mention that the said
instruction was issued by CBDT on 22.12.2006 and date of assessment is
02.01.2007 i.e almost ten days later and no evidence has been brought to
record to show that this instruction was brought to the notice of charged
before 02.01.2007. Law cannot expect an authority to follow certain
instructions, without being brought to the notice of the C.O.
Thus,
it may be seen that the allegation mentioned in the Article of Charge-III is
not only baseless but contrary to facts on record.
It
can also be verified from records that no order under section 263 of the
Income-tax Act, 1961 is passed by the CIT in respect of this issue, which
clearly proves that neither the order passed by C.O. was erroneous nor it was
prejudicial to the interest of revenue.
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Article – IV
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Committed
irregularities ignosirng specific suggestions and other points raised in the
Appraisal Report in the cash G Prasada Reddy by not verifying the foreign
currencies and not examining the transactions with E K Land Developers
regarding purchase of lands at Nageshwara Village and in the case of H R Ravichandra by
allowing the calim to set off of Rs. 187 Lakhs disclosed during the survey as
wrong claim of expenditure
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BASIS
OF DENIAL OF ARTICLE OF CHARGE-IV
The
Article of Charge IV is vague and ambiguous. Both the issues relating to
foreign currency and transaction of E.
K. Land Developers have been dealt in the assessment order of Shri G Prasada
Reddy.
Further
the appraisal report does not mention the factum of finding of foreign
currency, i.e. amount thereof and no suggestion has been made by the DDIT to
verify this issue in the appraisal report.
It
can also be verified from records that no order under section 263 of the
Income-tax Act, 1961 is passed by the CIT in respect of this issue, which
clearly proves that neither the order passed by C.O. was erroneous nor it was
prejudicial to the interest of revenue.
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Article – V
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Committed
irregularities by not scrutinizing the cases of i) G Prasada Reddy, ii) M/s
Royal Placid, iii) H R Ravichandra, iv) M/s R S Developers and v) M/s P R
Developers as he has failed to verify various claims made by the assessee
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BASIS OF
DENIAL OF ARTICLE OF CHARGE-V
The
Article of Charge V is vague and ambiguous in as much as it says that the
charged officer has not scrutinized the cases of i) G Prasada Reddy, ii) M/s
Royal Placid, iii) H R Ravichandra, iv) M/s R S Developers and v) M/s P R Developers.
The
CIT has passed order under section 263 of the Income-tax Act, 1961 in respect
of three cases and the assessment order r.w.s 143(3) is before honourable
ITAT Bangalore for adjudication. In the absence of finality regarding the addition
made in the assessment order, the allegation of misconduct on the part of
charged officer is premature. Last but not the least an error of judgment
cannot be treated as misconduct, as has been decided by the Hon’ble Supreme
Court in the case of Union of India and Ors. v. J.Ahmed, AIR 1979
SC 1022 “There may be negligence in
performance of duty and a lapse in performance of duty or error of judgment
in evaluating the developing situation may be negligence in discharge of duty
but would not constitute misconduct unless the consequences directly
attributable to negligence would be such as to be irreparable or the
resultant damage would be so heavy that the degree of culpability would be
very high.” In the instant case it may be seen that damage is not
irreparable as CIT has invoked the provisions of section 263 and at the most
error of judgement can be attributable to C.O. at this stage of appellate
proceedings. Beside, as per Apex Court judgement cited above an error of
judgement will not tantamount to misconduct, expecially when it is
repairable.
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Article – VI
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Committed
irregularities in passing the assessment orders resulting in loss of revenue
in the cases of i) H R Ravichandra for the assessment year 2005-06, ii) M/s
Royal Shelters for the assessment year 2001-02
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BASIS OF
DENIAL OF ARTICLE OF CHARGE-VI
The
Article of Charge VI is vague and ambiguous in as much as it says that the
charged officer has committed irregularities in passing the assessment orders
resulting in loss of revenue in the
cases of i) H R Ravichandra for the assessment year 2005-06, ii) M/s Royal
Shelters for the assessment year 2001-02.
It
can also be verified from records that no order under section 263 of the
Income-tax Act, 1961 is passed by the CIT in respect of this issue, which
clearly proves that neither the order passed by C.O. was erroneous nor it was
prejudicial to the interest of revenue.
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Article – VII
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Committed
irregularities by completing the assessments in a hasty manner in the group
cases of i) Shri G Prasada Reddy Group, ii) H R Ravichandra Group, and iii),
Shri S Ramana Prasad Group without
proper verification of various issues when sufficient time was available
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BASIS
OF DENIAL OF ARTICLE OF CHARGE-VII
The
Article of Charge VII is vague and ambiguous in as much as it says that the
charged officer has committed irregularities by completing the assessments in
a hasty manner in the group cases of i) Shri G Prasada Reddy Group, ii) H R
Ravichandra Group, and iii), Shri S Ramana Prasad Group without proper
verification of various issues when sufficient time was available.
The
Provision of section 153 of the Income-tax Act, 1961 prescribes the last date
of passing of assessment order and does not mention that no order can be
passed before the last date.
It
can also be verified from records that no order under section 263 of the
Income-tax Act, 1961 is passed by the CIT in respect of this issue, which
clearly proves that neither the order passed by C.O. was erroneous nor it was
prejudicial to the interest of revenue.
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Article – VIII
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Committed
irregularities by dropping the penalty
proceedings initiated u/s 271(1)(c) of the Income-tax Act, 1961, in contravention
of the provisions of the Income-tax Act, 1961, in the case of i0 G Prasada
Reddy, ii) P R Developers, iii), M/s Royal Placid, iv) Smt. K M Lakshmi, v) H
R Ravichandra, vi) R S Developers, vii) M/s Royal Heights, viii) S Ramana
Prasad Reddy, ix) Anupama Reddy and x) Rasi Developers even though the income
disclosed in the returns of Income filed originally was less than the income
admitted after search operations and in some cases, the income assessed was
more than the income admitted in the returns filed after the search
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BASIS
OF DENIAL OF ARTICLE OF CHARGE-II
As
per the Provision of section 274 of the Income-tax Act, 1961, the assessing
officer is vested with the discretion to drop the penalty proceedings initiated
by the assessing officer in the light of explanation submitted by the
assessee under section 273B of the Income-tax Act, 1961 . In the instant case
the charged officer has dropped the pernalty proceedings while exercising his
discretion conferred upon him by the Statute.
It
can also be verified from records that no order under section 263 of the
Income-tax Act, 1961 is passed by the CIT in respect of this issue, which
clearly proves that neither the order passed by C.O. was erroneous nor it was
prejudicial to the interest of revenue.
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4.
Moreover, at the very outset, after denying all the articles
of charge levelled against the undersigned, I would like to categorically
mention that the memorandum served on me on 16.03.2.16, relates to happenings
of January, 2007 i.e. there is inordinate and unexplained delay in issuing
charge memo after more than 9 years, and in the light of judicial pronouncement,
as mentioned hereinbelow,
In
P.V. Mahadevan Vs. M.D. Tamil Nadu Housing Board, JT 2005 (7) SC 417, a charge
memo was issued to the appellant on 8th January, 2000 for the irregularity in
issuing a sale deed in the year 1990. There was no explanation for the
unordinary delay of 10 years in initiating the proceedings. The respondent
explained that the irregularities for which disciplinary action had been
initiated had came to light only in the second half of 1994-95, when the audit
report was released. The Hon’ble Supreme court did not accept the contentions
of the respondent that the period from date of commission of the irregularities
by the appellant to the date on which it came to the knowledge of the Housing
Board WPC-4757 of 2007 Page 11 of 12 cannot be reckoned for the purpose of
ascertaining whether there was any delay on the part of the Board in initiating
disciplinary proceedings. The Hon’ble Supreme court felt that allowing the
respondent to proceed further with the enquiry would be very prejudicial to the
petitioner and would cause unbearable mental agony and distress to the offcer
concerned. During the course of judgment the Hon’ble Supreme court observed as
under:-
“The protracted
disciplinary enquiry against a Government employee should, therefore, be
avoided not only in the interests of the Government employee but in public
interest and also in the interests of inspiring confidence in the minds of the
Government employees. At this stage, it is necessary to draw the curtain and to
put an end to the enquiry. The appellant had already suffered enough and more
on account of the disciplinary proceedings. As a matter of fact, the mental
agony and sufferings of the appellant due to the protracted disciplinary
proceedings would be much more than the punishment. For the mistakes committed
by the department in the procedure for initiating the disciplinary proceedings,
the appellant should not be made to suffer.”
5.
Therefore, the memorandum issued to the undersigned may
please be withdrawn immediately, as there is inordinate and unexplained delay
of more than 9 years in the case of undersigned, in accordance with the
ratio-decidendi of the Apex Court’s judgement relied upon and quoted above.
6.
The foundation of the Central Vigilance Commission is also
based on transparent and fair proceedings where instructions must be available
which shall explicitly mean that Vigilance as a tool shall not be used for
witch-hunting or victimising a person. But in my case the Vigilance case was
orchestered by Shri A K Agarwal, the then CIT Central and Shri D K Kha, the
then Addl. CIT Central Range-1 as a tool to victimise and harass me. Does the
Commission know that:-
a.
The officers involved in the vigilance proceedings had
threatened the charged officer to remove from the job and then had caste and
other prejudices.
b.
The officers involved in the vigilance proceedings attempted
to spoil the ACR of the charged officer for the year 2006-07?
c.
There is a background to this Vigilance case having a motive
to deliberately fix an officer when the ACR of the charged officer could not be
spoilt.
d.
While initiating vigilance proceedings the officers connected
were partial, biased and unfair?
e.
The officers involved in the vigilance proceedings lacked integrity
and devotion to duty?
7.
However, in case the memorandum is not withdrawn, then, I request
for giving me an opportunity to be heard in person.
Yours faithfully
Sd/-
(Sanghi Sri Hari Rao)
Joint Commissioner of Incme-tax
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