Author: staff

Important directions of the Supreme Court to all Courts to avoid delays and speed up cases

MASTI

The Supreme Court dealt with a case where even after 41 years, the parties are still litigating as to who should be brought on record as legal representative. The Court has issued important directions to all Courts to avoid delays and speed up cases. Yashpal Jain VERSUS Sushila Devi & Others

This is a classic case and a mirror to the fact that litigant public may become disillusioned with judicial processes due to inordinate delay in the legal proceedings, not reaching its logical end, and moving at a snail’s pace due to dilatory tactics adopted by one or the other party.

Every pending case represents a soul in limbo, waiting for closure and vindication. Every delay is an affront to the very ideals that underpin our legal system. Sadly, the concept of justice delayed is justice denied is not a mere truism, but an irrefutable truth.

There is an urgent need to take proactive steps to not only clear the huge backlog of cases at all levels but there should be introspection by all stakeholders to gear up to meet the aspirations of the litigant public. When millions of consumers of justice file their cases by knocking at the doors of the courts of first instance, they expect speedy justice

The following directions are issued:

i. All courts at district and taluka levels shall ensure proper execution of the summons and in a time bound manner as prescribed under Order V Rule (2) of CPC and 49 same shall be monitored by Principal District Judges and after collating the statistics they shall forward the same to be placed before the committee constituted by the High Court for its consideration and monitoring.

ii. All courts at District and Taluka level shall ensure that written statement is filed within the prescribed limit namely as prescribed under Order VIII Rule 1 and preferably within 30 days and to assign reasons in writing as to why the time limit is being extended beyond 30 days as indicated under proviso to sub-Rule (1) of Order VIII of CPC.

iii. All courts at Districts and Talukas shall ensure after the pleadings are complete, the parties should be called upon to appear on the day fixed as indicated in Order X and record the admissions and denials and the court shall direct the parties to the suit to opt for either mode of the settlement outside the court as specified in sub-Section (1) of Section 89 and at the option of the parties shall fix the date of appearance before such forum or authority and in the event of the parties opting to any one of the modes of settlement directions be issued to appear on the date, time and venue fixed and the parties shall so appear before such authority/forum without any further notice at such designated place and time and it shall also be made clear in the reference order that trial is fixed beyond the period of two months making it clear that in the event of ADR not being fruitful, the trial would commence on the next day so fixed and would proceed on day-to-day basis.

iv. In the event of the party’s failure to opt for ADR namely resolution of dispute as prescribed under Section 89(1) the court should frame the issues for its determination within one week preferably, in the open court.

v. Fixing of the date of trial shall be in consultation with the learned advocates appearing for the parties to enable them to adjust their calendar. Once the date of trial is fixed, the trial should proceed accordingly to the extent possible, on day-to-day basis.

vi. Learned trial judges of District and Taluka Courts shall as far as possible maintain the diary for ensuring that only such number of cases as can be handled on any given day for trial and complete the recording of evidence so as to avoid overcrowding of the cases and as a sequence of it would result in adjournment being sought and thereby preventing any inconvenience being caused to the stakeholders.

vii. The counsels representing the parties may be enlightened of the provisions of Order XI and Order XII so as to narrow down the scope of dispute and it would be also the onerous responsibility of the Bar Associations and Bar Councils to have periodical refresher courses and preferably by virtual mode.

viii. The trial courts shall scrupulously, meticulously and without fail comply with the provisions of Rule 1 of Order XVII and once the trial has commenced it shall be proceeded from day to day as contemplated under the proviso to Rule (2).

ix. The courts shall give meaningful effect to the provisions for payment of cost for ensuring that no adjournment is sought for procrastination of the litigation and the opposite party is suitably compensated in the event of such adjournment is being granted.

x. At conclusion of trial the oral arguments shall be heard immediately and continuously and judgment be pronounced within the period stipulated under Order XX of CPC.

xi. The statistics relating to the cases pending in each court beyond 5 years shall be forwarded by every presiding officer to the Principal District Judge once in a month who (Principal District Judge/District Judge) shall collate the same and forward it to the review committee constituted by the respective High Courts for enabling it to take further steps.

xii. The Committee so constituted by the Hon’ble Chief Justice of the respective States shall meet at least once in two months and direct such corrective measures to be taken by concerned court as deemed fit and shall also monitor the old cases (preferably which are pending for more than 05 years) constantly.

It is also made clear that further directions for implementation of the above directions would be issued from time to time, if necessary, 51 and as may be directed by this Court

Statement showing Sanctioned strength, Working Strength and Vacancies of Judges in the Supreme Court of India and the High Courts

MASTI

Strength of Judges

Posted On: 24 MAR 2023 6:16PM by PIB Delhi

As on 21.03.2023, there is no vacancy of Judges in the Supreme Court. As far as the High Courts are concerned, against the sanctioned strength of 1114 Judges, 785 Judges are working and 329 posts of Judges are vacant. Against these 329 vacancies, 119 proposals

recommended by High Court Collegiums are at various stages of processing between the Government and the Supreme Court Collegium and recommendations against remaining 210 vacancies are yet to be received from the High Court Collegiums. TheHigh Court-wise detail of sanctioned strength, working strength and vacancy as on 21.03.2023 is at Annexure.

Appointment of Judges in higher judiciary is a collaborative and integrated process involving the executive and the judiciary. It requires consultation and approval from various constitutional authorities. Differences of opinion, if any, are mutually reconciled by the executive and the judiciary to ensure that only the apposite person is appointed to the high constitutional post of a Judge.

While every effort is made to fill up the existing vacancies expeditiously, vacancies of Judges in High Courts do keep on arising on account of retirement, resignation or elevation of Judges and also due to increase in the strength of Judges. Government is committed to filling up of vacancy expeditiously in time-bound manner.

During the period from May, 2014 to 2023 (till 21.03.2023), 54 Judges were appointed in Supreme Court of India, 893 fresh Judges were appointed in the various High Courts and 646 Additional Judges were appointed as Permanent Judges of High Courts.

The detailed statement of Pendency of Cases in Supreme Court and High Court for the past three years, showing the increase/decrease of pendency of cases in the respective courts is as below:

Year 2020 2021 2022
Supreme Court* 64,429 96,855 69,598
High Courts** 56,42,567 56,49,068 59,78,714

*Source: Supreme Court of India pendency as on 4.12.2020, 6.12.2021 and 1.12.2022 respectively.

**Source: National Judicial Data Grid pendency as on 31st December of respective years i.e. 2020, 2021 and 2022.

The pendency of cases in courts is not only due to shortage of judges in High Courts but also due to various other factors like (i) increase in number of state and central legislations, (ii) accumulation of first appeals, (iii) continuation of ordinary civil jurisdiction in some of the High Courts, (iv) appeals against orders of quasi-judicial forums going to High Courts, (v) number of revisions/appeals, (vi) frequent adjournments, (vii) indiscriminate use of writ jurisdiction, (viii) lack of adequate arrangement to monitor, tracking and bunching of cases for hearing, (ix) assigning work of administrative nature to the Judges, etc.

This information was given by the Union Minister of Law & Justice, Shri Kiren Rijiju, in a written reply in Lok Sabha today.

*****

ANNEXURE

Statement showing Sanctioned strength, Working Strength and Vacancies of Judges in the Supreme Court of India and the High Courts (As on 21.03.2023)

Sanctioned strength Working strength Vacancies
A. Supreme Court  34 34 0
B. High Court Pmt. Addl Total Pmt. Addl Total Pmt. Addl Total
1 Allahabad 119 41 160 82 21 103 37 20 57
2 Andhra Pradesh 28 9 37 26 5 31 2 4 6
3 Bombay 71 23 94 42 23 65 29 0 29
4 Calcutta 54 18 72 34 19 53 20 -1 19
5 Chhattisgarh 17 5 22 9 4 13 8 1 9
6 Delhi 46 14 60 45 0 45 1 14 15
7 Gauhati 22 8 30 14 9 23 8 -1 7
8 Gujarat 39 13 52 29 0 29 10 13 23
9 Himachal Pradesh 13 4 17 9 0 9 4 4 8
10 J & K and Ladakh 13 4 17 11 4 15 2 0 2
11 Jharkhand 20 5 25 20 1 21 0 4 4
12 Karnataka 47 15 62 40 13 53 7 2 9
13 Kerala 35 12 47 31 6 37 4 6 10
14 Madhya Pradesh 39 14 53 31 0 31 8 14 22
15 Madras 56 19 75 47 11 58 9 8 17
16 Manipur 4 1 5 3 0 3 1 1 2
17 Meghalaya 3 1 4 3 0 3 0 1 1
18 Orissa 24 9 33 21 0 21 3 9 12
19 Patna 40 13 53 32 0 32 8 13 21
20 Punjab & Haryana 64 21 85 38 27 65 26 -6 20
21 Rajasthan 38 12 50 33 0 33 5 12 17
22 Sikkim 3 0 3 3 0 3 0 0 0
23 Telangana 32 10 42 30 2 32 2 8 10
24 Tripura 4 1 5 2 0 2 2 1 3
25 Uttarakhand 9 2 11 5 0 5 4 2 6
  Total 840 274 1114 640 145 785 200 129 329

******

Appointment to the post of President, Income Tax Appellate Tribunal (ITAT)

MASTI

Immediate
No 14/5/2023-E0(SM II)
Government of India
Ministry of Personnel Public Grievances & Pensions
Department of Personnel & Training
Secratariat of the Appointments Committee of the Cabinet
North Block, New Delhi 18 10 2023

The Appointments Committee of the Cabinet has approved the proposal of the Department of Legal Affairs for appointment of Justice Chandrakant Vasant Bhadang retired Judge, Bombay High Court to the post of President, Income Tax Appellate Tribunal (ITAT) in the salary of Rs 2,50000 p m for a period of 04 years, or till attaining the age of 70 years, whichever is earlier

(Arvind Thakur) Under Secretary (EO-SM II) Tel 2309 3913
Department of Legal Affairs (Dr Niten Chandra, Secretary). Shasta Bhawan New Delhi
Copy forwarded for information to
1 Prime Minister’s Office (Shn Hrisheekesh Arvind Modak, Director) 2 Cabinet Secretariat (Ms Kavita Singh Joint Secretary) 3 Guard File

(Arvind Thakur) Under Secretary (EO-SM II) Tel 2309 3913

Appointment of Judges/Additional Judges in the High Courts

MASTI
Ministry of Law and Justice

Press Communique

Posted On: 18 OCT 2023 7:48PM by PIB Delhi

In exercise of the power conferred by the Constitution of India, the President of India, after consultation with Chief Justice of India, is pleased to appoint the following Judges/Additional Judges in the High Courts:

 

Sl.

No.

Name (S/Shri) Details
1. Harinath Nunepally, Advocate  

Appointed as Additional Judges of Andhra Pradesh High Court

2. Smt. Kiranmayee Mandava Alias Kiranmayee Kanaparthy, Advocate
3. Smt. Sumathi Jagadam, Advocate
4. Nyapathy Vijay, Advocate
5. Abhay Jainarayanji Mantri, Judicial Officer Appointed as Additional Judges of Bombay High Court.
6. Shyam Chhaganlal Chandak, Judicial Officer
7. Neeraj Pradeep Dhote, Judicial Officer
8. Johnson John, Judicial Officer Appointed as Additional Judges of Kerala high Court
9. Gopinathan U. Girish, Judicial Officer
10. C. Pratheep Kumar, Judicial Officer
11. Ms. Shalinder Kaur, Judicial Officer Appointed as Additional Judges of Delhi High Court
12. Ravinder Dudeja, Judicial Officer
13. Ravindra Kumar Agrawal, Advocate Appointed as an Additional Judge of Chhattisgarh High Court.
14. Vimal Kanaiyalal Vyas, Judicial Officer Appointed as a Judge of Gujarat high Court.
15. K. V. Aravind, Advocate Appointed as an Additional Judge

of Karnataka High Court

16. Sabyasachi Datta Purkayastha, Judicial Officer Appointed as a Judge of Tripura

High Court

17. Biswajit Palit, Judicial Officer Appointed as an Additional Judge

of Tripura High Court.

Transfer of High Court Judges

MASTI
Ministry of Law and Justice

PRESS COMMUNIQUE

Posted On: 18 OCT 2023 7:50PM by PIB Delhi

In exercise of the power conferred by the Constitution of India, the President of India, after consultation with Chief Justice of India, is pleased to transfer the following High Court Judges:

 

SL
No.
Name of Judge
( S/Shri Justice)
Transfer from High
Court
Transfer to High
Court
S.P. Kesarwani Allahabad Calcutta
Raj Mohan Singh Punjab and Haryana MP
Narendar G Karnataka Andhra Pradesh
Sudhir Singh Patna P&H
M.V. Muralidaran Manipur Calcutta
Madhuresh Prasad Patna Calcutta
Arvind Singh Sangwan Punjab and Haryana Allahabad
Avneesh Jhingan Punjab and Haryana Rajasthan
Arun Monga Punjab and Haryana Rajasthan
Rajendra Kumar-IV Allahabad Madhya Pradesh
Nani Tagia Gauhati Patna
C. Manavendranath Roy Andhra Pradesh Gujarat
Munnuri Laxman Telangana Rajasthan
G. Anupama Chakravarthy Telangana Patna
  1.  _
Ms. Lapita Banerji, Addl. Judge Calcutta Punjab and Haryana
Duppala Venkata Ramana, Addl. Judge Andhra Pradesh Madhya Pradesh

 

Whether RBI is entitled to direct disclosure of confidential and sensitive information pertaining to customers’ affairs etc under the Right to Information Act, 2005?

MASTI

IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL/ APPELLATE JURISDICTION
I.A. No.68597 of 2021 AND I.A. No. 51632 of 2022
IN &
WRIT PETITION (CIVIL) NO.1159 OF 2019

HDFC BANK LTD. & ORS. …PETITIONER (S)

VERSUS
UNION OF INDIA & ORS. …RESPONDENT (S)

WITH
I.A. No.54521 of 2022
IN &
WRIT PETITION (CIVIL) NO.683 OF 2021

WRIT PETITION (CIVIL) NO. 1469 OF 2019

WRIT PETITION (CIVIL) NO.690 OF 2021

WRIT PETITION (CIVIL) NO.709 OF 2021

WRIT PETITION (CIVIL) NO.768 OF 2021

WRIT PETITION (CIVIL) NO.765 OF 2021

SPECIAL LEAVE PETITION (CIVIL) NO.14343 OF 2022

ORDER
B.R. GAVAI, J.

1. For the reasons stated in I.A. No.68597 of 2021 in Writ Petition (Civil) No.1159 of 2019 for Impleadment, the same is allowed.

2. This batch of writ petitions has been filed by various Banks including private banks, inter alia, challenging the action of the respondent­ Reserve Bank of India (hereinafter referred to as “RBI”) in directing disclosure of confidential and sensitive information pertaining to their affairs, their employees and their customers under the Right to Information Act, 2005 (hereinafter referred to as “the RTI Act”), which, in their submission, is otherwise exempt under Section 8 thereof.

3. We are treating Writ Petition (Civil) No. 1159 of 2019 as the lead matter.

4. Interlocutory Applications being I.A. No. 51632 of 2022 in Writ Petition (Civil) No.1159 of 2019 and I.A. No.54521 of 2022 in Writ Petition (Civil) No.683 of 2021 have been filed by the applicant­Girish Mittal, thereby seeking dismissal of the present writ petitions.

5. It is the contention of the applicant that the present writ petitions, in effect, are challenging the final judgment and order dated 16th December 2015, passed by this Court in the case of Reserve Bank of India vs. Jayantilal N. Mistry 1 and hence the same is not maintainable and is liable to be dismissed.

6. We have heard Mr. Prashant Bhushan, learned counsel appearing on behalf of the applicant­Girish Mittal and Mr. Rakesh Dwivedi, Mr. Mukul Rohatgi, Mr. Dushyant Dave, Mr. Jaideep Gupta, and Mr. K.V. Viswanathan, learned Senior Counsels and Mr. Divyanshu Sahay, learned counsel appearing on behalf of the writ petitioners/Banks.

7. Mr. Prashant Bhushan, learned counsel, submitted that the issue which is sought to be raised in the present writ petitions has already been put to rest by a judgment of this court in the case of Jayantilal N. Mistry (supra). It is further 1 (2016) 3 SCC 525 submitted that this Court, in the case of Girish Mittal vs. Parvati V. Sundaram and another2, while holding that the RBI has committed contempt of this Court by exempting disclosure of material that was directed to be given by this Court, has also held that the RBI was duty bound to furnish all information relating to inspection reports and other materials.

8. Mr. Prashant Bhushan relies on the judgment of a Nine­ Judge Bench of this Court in the case of Naresh Shridhar Mirajkar and others vs. State of Maharashtra and Anr. 3 in support of his proposition that a judicial decision cannot be corrected by this Court in exercise of its jurisdiction under Article 32 of the Constitution of India. He also relied on the judgment of a Seven­Judge Bench of this Court in the case of A.R. Antulay vs. R.S. Nayak and another4 to contend that the judicial proceedings in this Court are not subject to the writ jurisdiction thereof.

2 (2019) 20 SCC 747 = Contempt Petition (C) No. 928 of 2016 in Transfer Case (C) No. 95 of 2015, decided on 26th April 2019 3 (1966) 3 SCR 744 4 (1988) 2 SCC 602
9. Mr. Prashant Bhushan further submitted that this Court in the case of Anil Kumar Barat vs. Secretary, Indian Tea Association and others5 has also held that the validity of an order passed by this Court itself cannot be subject to writ jurisdiction of this Court.

10. Mr. Bhushan also relied on the judgments of a Three­ Judge Bench of this Court in the cases of Khoday Distilleries Ltd. and another vs. Registrar General, Supreme Court of India6, Mohd. Aslam vs. Union of India and others 7 and Union of India and others vs. Major S.P. Sharma and others8 and the judgment of a Five­Judge Bench of this Court in the case of Rupa Ashok Hurra vs. Ashok Hurra and another9 to buttress his submissions.

11. Mr. Bhushan further submitted that in the case of Jayantilal N. Mistry (supra), several Miscellaneous 5 (2001) 5 SCC 42 6 (1996) 3 SCC 114 7 (1996) 2 SCC 749 8 (2014) 6 SCC 351 9 (2002) 4 SCC 388 Applications were filed on behalf of the Banks for impleadment. As such, the judgment delivered in the case of Jayantilal N. Mistry (supra) is after consideration of rival submissions, which now cannot be reopened. He further submitted that this Court by order dated 28th April 2021, passed in M.A. No.2342 of 2019 in Transferred Case (Civil) No.91 of 2015 and other connected matters has specifically rejected the prayer filed by the Banks (writ petitioners herein) for recall of the judgment dated 16th December 2015 passed by this Court in the case of Jayantilal N. Mistry (supra), and as such, the present writ petitions are liable to be dismissed.

12. Per contra, the learned Senior Counsels appearing on behalf of the writ petitioners/Banks submit that though M.A. No.2342 of 2019 in Transferred Case (Civil) No.91 of 2015 and other connected matters were rejected by this Court by order dated 28th April 2021, this Court clarified that the dismissal of those applications shall not prevent the applicant­Banks therein to pursue other remedies available to them in law. It is thus submitted that the said order would not come in the way of the present petitioners in filing the present petitions.

13. It is submitted that Section 11 of the RTI Act provides that when any information relating to third party has been sought, a written notice is required to be given to such third party of the request, by the Central Public Information Officer or State Public Information Officer, as the case may be, and the submissions by such third party are required to be taken into consideration while taking a decision about the disclosure of the information. Reliance in this respect has been placed on the judgment of this Court in the case of Chief Information Commissioner vs. High Court of Gujarat and another 10. It is submitted that this Court in the case of Jayantilal N. Mistry (supra) has not taken into consideration this aspect of the matter.

14. It is further submitted on behalf of the writ petitioners/Banks that the right to privacy has been said to be 10 (2020) 4 SCC 702 as implicit fundamental right by a Five­Judge Constitution Bench of this Court in the case of Supreme Court Advocates­ on­Record Association and another vs. Union of India11. It is submitted that the said view is also reiterated by a Nine­ Judge Constitution Bench of this Court in the case of K.S. Puttaswamy and another vs Union of India and others12, which has explicitly and categorically recognised the right to privacy as a fundamental right.

15. Mr. Rakesh Dwivedi, learned Senior Counsel, relied on the judgment of this Court in the case of A.R. Antulay (supra) in support of the proposition that no man should suffer because of the mistake of the Court. He submits that the rules of procedure are the handmaidens of justice and not the mistress of justice. He relies on the maxim “ex debito justitiae”. He further relies on the judgment of this Court in the case of Sanjay Singh and another vs. U.P. Public Service 11 (2016) 5 SCC 1 12 (2017) 10 SCC 1 Commission, Allahabad and another13 in support of the submission that the petition would be tenable.

16. Mr. Mukul Rohatgi, learned Senior Counsel, submitted that the petitioners herein are private banks and not a public authority as defined under the RTI Act. He relies on the judgment of this Court in the case of Thalappalam Service Cooperative Bank Limited and others vs. State of Kerala and others14 in that regard. He submitted that RBI’s Inspection Reports in respect of the inspection carried out under Section 35 of the Banking Regulation Act, 1949 are so confidential that they cannot even be provided to the Directors individually. He relies on the communication issued by the RBI to all the Banks dated 14th March 1998 in this regard.

17. Mr. Rohatgi further submitted that an earlier policy as notified by the RBI on 30th June 1992 was in tune with the provisions of Section 8 of the RTI Act, the provisions of the Reserve Bank of India Act, 1934 (hereinafter referred to as “the 13 (2007) 3 SCC 720 14 (2013) 16 SCC 82 RBI Act”) and the Banking Regulation Act, 1949. However, in view of the judgment of this Court in the case of Girish Mittal (supra), the RBI has modified the policy into a one­line policy, providing therein that the disclosure of information was to be in accordance with the judgment and order of this Court in Girish Mittal (supra). Mr. Rohatgi, learned Senior Counsel relied on the judgment of this Court in the case of Bihar Public Service Commission vs. Saiyed Hussain Abbas Rizwi and another15 in support of his submission that the Court will have to strike a balance between public interest and private interest. He also relies on the judgment of this Court in the case of Girish Ramchandra Deshpande vs. Central Information Commissioner and others16 to contend that personal information cannot be directed to be disclosed unless outweighing public interest demands it to be done.

18. Mr. K.V. Viswanathan, learned Senior Counsel submits that HDFC Bank, Kotak Bank and Bandhan Bank were not 15 (2012) 13 SCC 61 16 (2013) 1 SCC 212 parties in the case of Jayantilal N. Mistry (supra). He submits that sub­Section (5) of Section 35 of the Banking Regulation Act, 1949 provides a specific procedure as to in what manner the inspection report would be published. He submits that when a special Act provides a particular manner for disclosure of an information, it will have an overriding effect over the RTI Act. The learned Senior Counsel submits that the said provisions were not noticed in the case of Jayantilal N. Mistry (supra).

19. Mr. Jaideep Gupta, learned Senior Counsel submitted that this Court in the case of Jayantilal N. Mistry (supra) has not taken into consideration the provisions of the Credit Information Companies (Regulation) Act, 2005.

20. Mr. Dushyant Dave, learned Senior Counsel, submitted that Section 45NB of the RBI Act emphasizes on the confidentiality of certain information with regard to non­ banking companies. He submits that sub­section (4) of Section 45NB of the RBI Act, which is a non­obstante clause, provides that, notwithstanding anything contained in any law for the time being in force, no court or tribunal or other authority shall compel the Bank to produce or to give inspection of any statement or other material obtained by the Bank under any provisions of this Chapter. He submits that this provision has not been noticed in the case of Jayantilal N. Mistry (supra).

21. It is submitted on behalf of all the writ petitioners/Banks that what is under challenge is the action of the RBI compelling the petitioners to disclose certain information which itself is exempted under the provisions of the RBI Act. It is submitted that various other special enactments specifically prohibit such information to be disclosed. It is submitted that since the RBI’s directions are issued in pursuance to the judgments of this Court in the cases of Jayantilal N. Mistry (supra) and Girish Mittal (supra), the petitioners cannot approach the High Court and the only remedy that is available to the petitioners is by way of the present writ petitions. It is submitted by learned Senior Counsels appearing on behalf of the writ petitioners/Banks that this Court in Jayantilal N. Mistry (supra) does not notice the judgment of this Court in the case of Supreme Court Advocates­on­Record Association and another (supra). The judgment of this Court in the case of Supreme Court Advocates­on­Record Association and another (supra) was rendered on 16th October 2015, whereas the judgment of this Court in the case of Jayantilal N. Mistry (supra) was rendered on 16th December 2015. It is further submitted that, in view of the judgment of the Constitution Bench consisting of Nine Hon’ble Judges in the case of K.S. Puttaswamy and another (supra) clearly recognizing the right to privacy as a fundamental right, the law laid down by this Court in the case of Jayantilal N. Mistry (supra) to the contrary is no more a good law and, therefore, requires reconsideration by a larger Bench.

22. In the case of Naresh Shridhar Mirajkar and others (supra), a Nine­Judge Constitution Bench of this Court was considering as to whether an order passed by the High Court on original side in the proceedings before it could be challenged under Article 32 of the Constitution for enforcement of fundamental rights guaranteed under Article 19(1)(a), (d) and

(g) of the Constitution of India. It will be relevant to refer to the following observations of this Court in the said case:

“The basis of Mr Setalvad’s argument is that the impugned order is not an order inter­ partes, as it affects the fundamental rights of the strangers to the litigation, and that the said order is without jurisdiction. We have already held that the impugned order cannot be said to affect the fundamental rights of the petitioners and that though it is not inter­partes in the sense that it affects strangers to the proceedings, it has been passed by the High Court in relation to a matter pending before it for its adjudication and as such, like other judicial orders passed by the High Court in proceedings pending before it, the correctness of the impugned order can be challenged only by appeal and not by writ proceedings. We have also held that the High Court has inherent jurisdiction to pass such an order.
But apart from this aspect of the matter, we think it would be inappropriate to allow the petitioners to raise the question about the jurisdiction of the High Court to pass the impugned order in proceedings under Article 32 which seek for the issue of a writ of certiorari to correct the said order. If questions about the jurisdiction of superior courts of plenary jurisdiction to pass orders like the impugned order are allowed to be canvassed in writ proceedings under Article 32, logically, it would be difficult to make a valid distinction between the orders passed by the High Courts inter­partes, and those which are not inter­partes in the sense that they bind strangers to the proceedings. Therefore, in our opinion, having regard to the fact that the impugned order has been passed by a superior court of record in the exercise of its inherent powers, the question about the existence of the said jurisdiction as well as the validity or propriety of the order cannot be raised in writ proceedings taken out by the petitioners for the issue of a writ of certiorari under Article 32.” [emphasis supplied]

23. It could thus be seen that the Nine­Judge Bench of this Court, speaking through P.B. Gajendragadkar, CJ., categorically held that the impugned orders could not affect the fundamental rights of the petitioners. It has further been held that since the order was passed in the proceedings pending before the High Court, the correctness of the impugned order could be challenged only by appeal and not by writ proceedings. It has been further held that, having regard to the fact that the order had been passed by a superior court of record in the exercise of its inherent powers, the question about the existence of the said jurisdiction as well as the validity or propriety of the order could not be raised in writ proceedings taken out by the petitioners for the issue of a writ of certiorari under Article 32. This Court further observed thus:

“We are, therefore, satisfied that so far as the jurisdiction of this Court to issue writs of certiorari is concerned, it is impossible to accept the argument of the petitioners that judicial orders passed by High Courts in or in relation to proceedings pending before them, are amenable to be corrected by exercise of the said jurisdiction. We have no doubt that it would be unreasonable to attempt to rationalise the assumption of jurisdiction by this Court under Article 32 to correct such judicial orders on the fanciful hypothesis that High Courts may pass extravagant orders in or in relation to matters pending before them and that a remedy by way of a writ of certiorari should, therefore, be sought for and be deemed to be included within the scope of Article 32. The words used in Article 32 are no doubt wide; but having regard to the considerations which we have set out in the course of this judgment, we are satisfied that the impugned order cannot be brought within the scope of this Court’s jurisdiction to issue a writ of certiorari under Article 32; to hold otherwise would be repugnant to the well­recognised limitations within which the jurisdiction to issue writs of certiorari can be exercised and inconsistent with the uniform trend of this Court’s decisions in relation to the said point.” [emphasis supplied]
24. It could thus be seen that this Court held that it would be unreasonable to hold that this Court, under Article 32, could correct the judicial orders on the fanciful hypothesis that High Courts may pass extravagant orders in or in relation to matters pending before them and therefore this Court can correct the same by issuance of a writ of certiorari under Article 32. This Court held that though the words used in Article 32 are wide, the order impugned before it could not be brought within the scope of this Court’s jurisdiction to issue a writ of certiorari under Article 32.

25. Insofar as the judgment of this Court in the case of Khoday Distilleries Ltd. and another (supra), on which Mr. Prashant Bhushan placed reliance, is concerned, this Court in the said case was considering therein a challenge to the correctness of the decision on merits after the appeal as well as review petition were dismissed.

26. In the case of Mohd. Aslam (supra), this Court held that Article 32 of the Constitution was not available to assail the correctness of a decision on merits or to claim reconsideration. It, however, considered the contention raised on behalf of the petitioners that the judgment in the case of Manohar Joshi vs. Nitin Bhaurao Patil and another17 was in conflict with the Constitution Bench judgement of this Court in the case of S.R. Bommai and others vs. Union of India and others 18. This Court after considering the submissions found that the opinion so expressed was misplaced.

27. Insofar as the judgment of this Court in the case of Major S.P. Sharma and others (supra) is concerned, in the said case, the first round of litigation arising out of termination of respondent­employee had reached finality upto this Court. 17 (1996) 1 SCC 169 18 (1994) 3 SCC 1 However, the same was sought to be reopened by filing another writ petition before the High Court. In this background, this Court observed thus:

“90. Violation of fundamental rights guaranteed under the Constitution have to be protected, but at the same time, it is the duty of the court to ensure that the decisions rendered by the court are not overturned frequently, that too, when challenged collaterally as that was directly affecting the basic structure of the Constitution incorporating the power of judicial review of this Court. There is no doubt that this Court has an extensive power to correct an error or to review its decision but that cannot be done at the cost of doctrine of finality. An issue of law can be overruled later on, but a question of fact or, as in the present case, the dispute with regard to the termination of services cannot be reopened once it has been finally sealed in proceedings inter se between the parties up to this Court way back in 1980.”
28. It could thus be seen that this court has held that when a question of fact has reached finality inter se between the parties, it cannot be reopened in a collateral proceeding. However, it has been observed that an issue of law can be overruled later on.

29. Mr. Prashant Bhushan strongly relied on the judgment of this Court in the case of Rupa Ashok Hurra (supra). It will be relevant to refer to the following observations of this Court in the judgment of Quadri, J.

“41. At one time adherence to the principle of stare decisis was so rigidly followed in the courts governed by the English jurisprudence that departing from an earlier precedent was considered heresy. With the declaration of the practice statement by the House of Lords, the highest court in England was enabled to depart from a previous decision when it appeared right to do so.

The next step forward by the highest court to do justice was to review its judgment inter partes to correct injustice. So far as this Court is concerned, we have already pointed out above that it has been conferred the power to review its own judgments under Article 137 of the Constitution. The role of the judiciary to merely interpret and declare the law was the concept of a bygone age. It is no more open to debate as it is fairly settled that the courts can so mould and lay down the law formulating principles and guidelines as to adapt and adjust to the changing conditions of the society, the ultimate objective being to dispense justice. In the recent years there is a discernible shift in the approach of the final courts in favour of rendering justice on the facts presented before them, without abrogating but bypassing the principle of finality of the judgment. In Union of India v. Raghubir Singh [(1989) 2 SCC 754] Pathak, C.J. speaking for the Constitution Bench aptly observed: (SCC pp. 766­67, para

10) “10. But like all principles evolved by man for the regulation of the social order, the doctrine of binding precedent is circumscribed in its governance by perceptible limitations, limitations arising by reference to the need for readjustment in a changing society, a readjustment of legal norms demanded by a changed social context. This need for adapting the law to new urges in society brings home the truth of the Holmesian aphorism that ‘the life of the law has not been logic it has been experience’ (Oliver Wendell Holmes : The Common Law, p. 5), and again when he declared in another study (Oliver Wendell Holmes : Common Carriers and the Common Law, (1943) 9 Curr LT 387, 388) that ‘the law is forever adopting new principles from life at one end’, and ‘sloughing off’ old ones at the other. Explaining the conceptual import of what Holmes had said, Julius Stone elaborated that it is by the introduction of new extra­legal propositions emerging from experience to serve as premises, or by experience­guided choice between competing legal propositions, rather than by the operation of logic upon existing legal propositions, that the growth of law tends to be determined (Julius Stone : Legal Systems & Lawyers Reasoning, pp.

58­59).”

42. The concern of this Court for rendering justice in a cause is not less important than the principle of finality of its judgment. We are faced with competing principles — ensuring certainty and finality of a judgment of the Court of last resort and dispensing justice on reconsideration of a judgment on the ground that it is vitiated being in violation of the principles of natural justice or giving scope for apprehension of bias due to a Judge who participated in the decision­ making process not disclosing his links with a party to the case, or on account of abuse of the process of the court.

Such a judgment, far from ensuring finality, will always remain under the cloud of uncertainty. Almighty alone is the dispenser of absolute justice — a concept which is not disputed but by a few. We are of the view that though Judges of the highest court do their best, subject of course to the limitation of human fallibility, yet situations may arise, in the rarest of the rare cases, which would require reconsideration of a final judgment to set right miscarriage of justice complained of. In such case it would not only be proper but also obligatory both legally and morally to rectify the error. After giving our anxious consideration to the question, we are persuaded to hold that the duty to do justice in these rarest of rare cases shall have to prevail over the policy of certainty of judgment as though it is essentially in the public interest that a final judgment of the final court in the country should not be open to challenge, yet there may be circumstances, as mentioned above, wherein declining to reconsider the judgment would be oppressive to judicial conscience and would cause perpetuation of irremediable injustice.

xxx xxx xxx

49. The upshot of the discussion in our view is that this Court, to prevent abuse of its process and to cure a gross miscarriage of justice, may reconsider its judgments in exercise of its inherent power.” [emphasis supplied]

30. This Court in the aforesaid case held that the concern of this Court for rendering justice in a cause is not less important than the principle of finality of its judgment. The Court has to balance ensuring certainty and finality of a judgment of the Court of last resort on one hand and dispensing justice on reconsideration of a judgment on the valid grounds on the other hand. This Court has observed that though Judges of the highest court do their best, yet situations may arise, in the rarest of the rare cases, which would require reconsideration of a final judgment to set right miscarriage of justice complained of. It has been held that in such a case it would not only be proper but also obligatory both legally and morally to rectify the error. This Court further held that to prevent abuse of its process and to cure a gross miscarriage of justice, the Court may reconsider its judgments in exercise of its inherent power.

31. This Court in the case of A.R. Antulay (supra), speaking through Sabyasachi Mukharji, J. observed thus:

“82. Lord Cairns in Rodger v. Comptoir D’escompte De Paris [(1869­71) LR 3 PC 465, 475 : 17 ER 120] observed thus:
“Now, Their Lordships are of opinion, that one of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression ‘the act of the court’ is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case.
It is the duty of the aggregate of those Tribunals, if I may use the expression, to take care that no act of the court in the course of the whole of the proceedings does an injury to the suitors in the court.
83. This passage was quoted in the Gujarat High Court by D.A. Desai, J., speaking for the Gujarat High Court in Soni Vrajlal v. Soni Jadavji [AIR 1972 Guj 148 : (1972) 13 Guj LR 555] as mentioned before. It appears that in giving directions on 16­2­1984, this Court acted per incuriam inasmuch it did not bear in mind consciously the consequences and the provisions of Sections 6 and 7 of the 1952 Act and the binding nature of the larger Bench decision in Anwar Ali Sarkar case [AIR 1952 SC 75 : 1952 SCR 284 : 1952 Cri LJ 510] which was not adverted to by this Court. The basic fundamentals of the administration of justice are simple. No man should suffer because of the mistake of the court. No man should suffer a wrong by technical procedure of irregularities. Rules or procedures are the handmaids of justice and not the mistress of the justice. Ex debito justitiae, we must do justice to him. If a man has been wronged so long as it lies within the human machinery of administration of justice that wrong must be remedied. This is a peculiar fact of this case which requires emphasis.”

32. It could thus be seen that the principle of ex debito justitiae has been emphasized. This Court held that no man should suffer because of the mistake of the court. No man should suffer a wrong by technical procedure of irregularities. It has been held that the rules of procedure are the handmaidens of justice and not the mistress of justice. It has further been held that if a man has been wronged, so long as the wrong lies within the human machinery of administration of justice, that wrong must be remedied.

33. Ranganath Misra, J., in his concurrent opinion, observed thus:

“102. This being the apex court, no litigant has any opportunity of approaching any higher forum to question its decisions. Lord Buckmaster in Montreal Street Railway Co. v. Normadin [1917 AC 170] (sic) stated:
All rules of court are nothing but provisions intended to secure proper administration of justice. It is, therefore, essential that they should be made to serve and be subordinate to that purpose.

This Court in State of Gujarat v. Ramprakash P. Puri [(1969) 3 SCC 156 : 1970 SCC (Cri) 29 : (1970) 2 SCR 875] reiterated the position by saying [SCC p. 159 : SCC (Cri) p. 31, para 8] Procedure has been described to be a handmaid and not a mistress of law, intended to subserve and facilitate the cause of justice and not to govern or obstruct it. Like all rules of procedure, this rule demands a construction which would promote this cause Once judicial satisfaction is reached that the direction was not open to be made and it is accepted as a mistake of the court, it is not only appropriate but also the duty of the court to rectify the mistake by exercising inherent powers. Judicial opinion heavily leans in favour of this view that a mistake of the court can be corrected by the court itself without any fetters. This is on the principle as indicated in (Alexander) Rodger case [(1969­71) LR 3 PC 465 : 17 ER 120] . I am of the view that in the present situation, the court’s inherent powers can be exercised to remedy the mistake. Mahajan., J.
speaking for a Four Judge Bench in Keshardeo Chamria v. Radha Kissen Chamria [1953 SCR 136 : AIR 1953 SC 23] at Page 153 stated:

The judge had jurisdiction to correct his own error without entering into a discussion of the grounds taken by the decree­holder or the objections raised by the judgment­debtors.
103. The Privy Council in Debi Bakhsh Singh v. Habib Shah [ILR (1913) 35 All 331] pointed out that an abuse of the process of the court may be committed by the court or by a party. Where a court employed a procedure in doing something which it never intended to do and there is an abuse of the process of the court it can be corrected. Lord Shaw spoke for the Law Lords thus:

Quite apart from Section 151, any court might have rightly considered itself to possess an inherent power to rectify the mistake which had been inadvertently made.

It was pointed out by the Privy Council in The Bolivar [AIR 1916 PC 85] that:

Where substantial injustice would otherwise result, the Court has, in Their Lordships’ opinion, an inherent power to set aside its own judgments of condemnation so as to let in bona fide claims by parties…
Indian authorities are in abundance to support the view that injustice done should be corrected by applying the principle actus curia neminem gravabit — an act of the court should prejudice no one.

104. To err is human, is the oft­quoted saying. Courts including the apex one are no exception. To own up the mistake when judicial satisfaction is reached does not militatte against its status or authority. Perhaps it would enhance both.”
34. It has been held that this being the apex court, no litigant has any opportunity of approaching any higher forum to question its decisions. It has further been held that once a judicial satisfaction is reached that the direction was not open to be made and it is accepted as a mistake of the court, it is not only appropriate but also the duty of the court to rectify the mistake by exercising its inherent powers. It has been held that, to err is human, and the Courts including the Apex Court are no exception.

35. This Court in the case of Sanjay Singh and another (supra) has observed thus:

“10. The contention of the Commission also overlooks the fundamental difference between challenge to the final order forming part of the judgment and challenge to the ratio decidendi of the judgment. Broadly speaking, every judgment of superior courts has three segments, namely, (i) the facts and the point at issue; (ii) the reasons for the decision; and (iii) the final order containing the decision. The reasons for the decision or the ratio decidendi is not the final order containing the decision.

In fact, in a judgment of this Court, though the ratio decidendi may point to a particular result, the decision (final order relating to relief) may be different and not a natural consequence of the ratio decidendi of the judgment. This may happen either on account of any subsequent event or the need to mould the relief to do complete justice in the matter. It is the ratio decidendi of a judgment and not the final order in the judgment, which forms a precedent. The term “judgment” and “decision” are used, rather loosely, to refer to the entire judgment or the final order or the ratio decidendi of a judgment. Rupa Ashok Hurra [(2002) 4 SCC 388] is of course, an authority for the proposition that a petition under Article 32 would not be maintainable to challenge or set aside or quash the final order contained in a judgment of this Court. It does not lay down a proposition that the ratio decidendi of any earlier decision cannot be examined or differed in another case. Where violation of a fundamental right of a citizen is alleged in a petition under Article 32, it cannot be dismissed, as not maintainable, merely because it seeks to distinguish or challenge the ratio decidendi of an earlier judgment, except where it is between the same parties and in respect of the same cause of action. Where a legal issue raised in a petition under Article 32 is covered by a decision of this Court, the Court may dismiss the petition following the ratio decidendi of the earlier decision. Such dismissal is not on the ground of “maintainability” but on the ground that the issue raised is not tenable, in view of the law laid down in the earlier decision. But if the Court is satisfied that the issue raised in the later petition requires consideration and in that context the earlier decision requires re­examination, the Court can certainly proceed to examine the matter (or refer the matter to a larger Bench, if the earlier decision is not of a smaller Bench). When the issue is re­examined and a view is taken different from the one taken earlier, a new ratio is laid down. When the ratio decidendi of the earlier decision undergoes such change, the final order of the earlier decision as applicable to the parties to the earlier decision, is in no way altered or disturbed. Therefore, the contention that a writ petition under Article 32 is barred or not maintainable with reference to an issue which is the subject­matter of an earlier decision, is rejected.” [emphasis supplied]

36. After referring to the judgment of this Court in the case of Rupa Ashok Hurra (supra), this Court has held that it does not lay down a proposition that the ratio decidendi of an earlier decision cannot be examined or differed with in another case. It has been held that if the Court is satisfied that the issue raised in the later petition requires consideration and in that context, the earlier decision requires re­examination, the Court can certainly proceed to examine the matter or refer the matter to a larger Bench, if the earlier decision is not of a smaller Bench. This Court, therefore, specifically rejected the contention that a writ petition under Article 32 of the Constitution was barred or not maintainable with reference to an issue which was the subject matter of an earlier decision.

37. In the present case, admittedly, the writ petitioners/Banks were not parties in the case of Jayantilal N. Mistry (supra). Though the Miscellaneous Applications filed by HDFC Bank and others for recall of the judgment and order in the case of Jayantilal N. Mistry (supra) were rejected by this Court vide order dated 28 th April 2021, this Court in the said order specifically observed thus:

“The dismissal of these applications shall not prevent the applicants to pursue other remedies available to them in law.”
38. It is thus clear that this Court did not foreclose the right of the petitioners/Banks to pursue other remedies available to them in law.

39. In view of the judgment of this Court in the case of Jayantilal N. Mistry (supra), the RBI is entitled to issue directions to the petitioners/Banks to disclose information even with regard to the individual customers of the Bank. In effect, it may adversely affect the individuals’ fundamental right to privacy.

40. A Nine­Judge Constitution Bench of this Court in the case of K.S. Puttaswamy and another (supra) has held that the right to privacy is a fundamental right. No doubt that the right to information is also a fundamental right. In case of such a conflict, the Court is required to achieve a sense of balance.

41. A perusal of the judgments of this Court cited supra would reveal that it has been held that though the concept of finality of judgment has to be preserved, at the same time, the principle of ex debito justitiae cannot be given a go­bye. If the Court finds that the earlier judgment does not lay down a correct position of law, it is always permissible for this Court to reconsider the same and if necessary, to refer it to a larger Bench.

42. Without expressing any final opinion, prima facie, we find that the judgment of this Court in the case of Jayantilal N. Mistry (supra) did not take into consideration the aspect of balancing the right to information and the right to privacy. The petitioners have challenged the action of the respondent­RBI, vide which the RBI issued directions to the petitioners/Banks to disclose certain information, which according to the petitioners is not only contrary to the provisions as contained in the RTI Act, the RBI Act and the Banking Regulation Act, 1949, but also adversely affects the right to privacy of such Banks and their consumers. The RBI has issued such directions in view of the decision of this Court in the case of Jayantilal N. Mistry (supra) and Girish Mittal (supra). As such, the petitioners would have no other remedy than to approach this Court. As observed by Ranganath Misra, J. in the case of A.R. Antulay (supra) that, this being the Apex Court, no litigant has any opportunity of approaching any higher forum to question its decision. The only remedy available to the petitioners would be to approach this Court by way of writ petition under Article 32 of the Constitution of India for protection of the fundamental rights of their customers, who are citizens of India.

43. We, therefore, hold that the preliminary objection as raised is not sustainable. The same is rejected. I.A. No.51632 of 2022 in Writ Petition (Civil) No.1159 of 2019 and I.A. No.54521 of 2022 in Writ Petition (Civil) No.683 of 2021 are accordingly dismissed.

………………………….J.

[B.R. GAVAI] ………………………….J.

[C.T. RAVIKUMAR] NEW DELHI;

SEPTEMBER 30, 2022.

CBDT Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2022-23

MASTI

F.No.225/ 81/2022/ITA-11
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes (ITA-II division)

North Block, New Delhi, the2 September, 2022

To

All Pr. Chief Commissioners of Income-tax/ Chief Commissioners of Income-tax All Pr. Director Generals of Income-tax/ Director Generals of Income-tax.

Madam/Sir

Subject: Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2022-23 — procedure for compulsory selection in such cases — regarding.

Kindly refer to CBDT’s Guidelines dated 11.05.2022 and 03.06.2022 on the above-mentioned subject (copies enclosed).

  1. With reference to the above, I am directed to state that SI.No.2.2 of para no.2 of CBDT’s Guidelines dated 03.06.2022 shall be substituted as under:
Si. No. r                                 Parameter Procedure      for      compulsory

selection

2 Cases pertaining to search & seizure/requisition
2.2 Search           &    seizure/requisition    on    or   after The cases shall be selected for

scrutiny                    with            prior

administrative    approval        of Pr.

CIT/Pr. DIT/CIT/DIT concerned, who shall ensure that such cases are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act by the Assessing Officer concerned.

01.04.2021: Assessments in cases arising from
search & seizure actions/requisitions u/s 132/132A conducted on or after 01.04.2021.

 

  1. All other contents of the said Guidelines will remain unchanged.
  2. The above may be brought to the notice of all concerned for necessary compliance. Enclosure: As above

tici)qt 24

(Ravinder Maini)

Director (ITA-H), CBDT

Copy to:

  1. PS to FM/PS to MoS (F)
  2. PS to Secretary (Revenue)
  • Chairman, CBDT & All Members, CBDT
  1. All Joint Secretaries/CsIT, CBDT
  2. DGIT (Systems)
  3. Web Manager with request to upload on the Departmental website
  • JDIT, Data-Base Cell for uploading on irsofficersonline website

2:671 12622—

(Ravinder Maini) Director (ITA-II), CBDT

 

F.No.225/ 81/2022/ITA-11
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes (ITA-II division)

North Block, New Delhi, the tLJune, 2022

To

All Pr. Chief Commissioners of Income-tax/ Chief Commissioners of Income-tax

All Pr. Director Generals of Income-tax/ Director Generals of Income-tax.

Madam/Sir

Subject: Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2022-23 — procedure for compulsory selection in such cases — regarding.

Kindly refer to CBDT’s Guidelines dated 11.05.2022 on the above-mentioned subject (copy enclosed).

  1. With reference to the above, I am directed to state that Sl.No.2 of para no.2 of CBDT’s Guidelines dated 11.05.2022 shall be substituted as under:
Si. No. Parameter Procedure for compulsory selection
2 Cases pertaining to search & seizure/requisition
2.1 Search          &     seizure/requisition           prior     to The cases shall be selected
for     scrutiny        with      prior

administrative     approval     of

Pr.             CIT/Pr.             DIT/CIT/DIT
concerned, who shall ensure
that    such                            cases            are

transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act by the Assessing Officer concerned.

01.04.2021: Assessments in search & seizure cases
to be made under Section(s) 153A, 153C read with section 143(3) of the Act and also for return filed for assessment year relevant to previous year in which the search was conducted u/s 132 or requisition was made u/s 132A of the Act.

 

    Where such cases are not centralized and Return of Income is filed in response to notice u/s 153C, the Assessing Officer concerned shall serve notice u/s 143(2) of the Act.

Where such cases are not centralized and no Return of Income is filed in response to notice u/s 153C, the Assessing Officer concerned shall serve notice u/s 142(1) of the Act calling for information.

2.2 Search          &   seizure/requisition    on         or        after The cases shall be selected for scrutiny with prior administrative approval of Pr. CIT/Pr. DIT/CIT/DIT concerned, who shall ensure that such cases are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act by the Assessing Officer concerned.
01.04.2021: Assessments in cases arising from
search & seizure actions/requisitions u/s 132/132A conducted on or after 01.04.2021, for returns pertaining to A.Y. 2021-22.

 

  1. All other contents of the said Guidelines will remain unchanged.
  2. The above may be brought to the notice of all concerned for necessary compliance.

Enclosure: As above

6TP 612121

(Ravinder Mai i) Director (ITA-II), CBDT

 

Copy to:

  1. PS to FM/PS to MoS (F)
  2. PS to Secretary (Revenue)
  • Chairman, CBDT & All Members, CBDT
  1. All Joint Secretaries/CsIT, CBDT
  2. DGIT (Systems)
  3. Web Manager with request to upload on the Departmental website
  • JDIT, Data-Base Cell for uploading on irsofficersonline website

a oto2-2(Ravinder Maini

Director (ITA-II), CBDT

 

F.No.225/ 81/2022/ITA-11
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes (ITA-II division)

North Block, New Delhi, the 11 to May, 2022

To

All Pr. Chief Commissioners of Income-tax/ Chief Commissioners of Income-tax All Pr. Director Generals of Income-tax/ Director Generals of Income-tax.

Madam/Sir

Subject: Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2022-23 — procedure for compulsory selection in such cases — regarding.

Kindly refer to the above.

  1. The parameters for compulsory selection of returns for Complete Scrutiny during Financial Year 2022-23 and procedure for compulsory selection in such cases are prescribed as under:
S
No
Parameter Procedure for compulsory selection
  Cases pertaining to survey u/s 133A of the Income-tax Act,1961(Act)
Returns filed for the assessment year relevant to The cases shall be selected for compulsory
  the previous year in which survey was conducted scrutiny with prior administrative approval
  under section 133A of the Act subject to exclusion below: of Pr.        CIT/Pr.DIT/CIT/D1T concerned,

who      shall ensure that such cases    are
transferred to Central Charges u/s 127 of

  Exclusion: the Act within 15 days of service of notice
  Cases, where following conditions are satisfied, are excluded from selection for compulsory scrutiny: u/s 143(2) of the Act by the Assessing Officer concerned.
  1.      books of accounts, documents, etc. were not impounded;

2.      returned income (excluding any disclosure

of hitherto undisclosed                 income made

 

 

  during the Survey) is not less than returned .1 income of preceding assessment year; and

3.            assessee     has        not     retracted   from    the

disclosure referred to in point 2 above.

 
2 Cases pertaining to Search and Seizure
  Assessments in Search and Seizure cases to be made under section(s) 153A, 153C read with section 143(3) of the Act and also for return filed for assessment year relevant to previous year in which the Search was conducted under section 132 or requisition was made under section 132A of the Act. The cases shall be selected for compulsory scrutiny with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned, who shall ensure that such cases are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice airs 143(2)1142(1) of the Act by the Assessing Officer concerned.

Where such cases are not centralized and Return of Income is filed in response to notice u/s I 53C, the Assessing Officer concerned shall serve notice u/s 143(2) of the Act.

Where such cases are not centralized and no Return of Income is filed in response to notice this 153C, the Assessing Officer concerned shall serve notice u/s 142(1) of the Act calling for information.

3 Cases in which notices uis 142(1) of the Act, calling for return, have been issued & no returns have been furnished
  Cases where no return has been furnished in response to a notice u/s 142(1) of the Act. I The Assessing Officer shall upload the underlying documents, on the basis of which notice u/s 142(1) was issued, on ITBA, for access by National Faceless Assessment Centre (NaFAC).

The Directorate of Income-tax (Systems) shall forward these cases to NaFAC, which will take further necessary action.

 

    Notice u/s 142(1) of the Act calling for information shall be served on the assessee through NaFAC.
4  Cases in which notices u/s 148 of the Act have been issued
  Cases where return is either furnished or not furnished in response to notice u/s 148 of the Act. (i)   Cases, where notices u/s 148 of the Act have been issued pursuant to search & seizure/survey actions conducted on or after the 15‘ day of April, 2021:

These      cases    shall      be    selected    for

compulsory           scrutiny          with       prior

administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned who shall ensure that such cases, if lying outside Central Charges, are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)1142(1) of the Act calling for information by the Assessing Officer concerned.

(ii) Cases not covered in (i) above:

The Assessing Officer shall upload the underlying documents, on the basis of which notice u/s 148 was issued, on ITBA, for access by NaFAC.

The Directorate of Income-tax (Systems) shall forward these cases to NaFAC, which will take further necessary action.

Notice u/s 143(2)1142(1) of the Act calling for information shall be served on the assessee through NaFAC.

5 Cases related to registration/ approval under various sections of the Act, such as 12A, 35(1)(ii)/ (Ha)/ (iii), 10(23C), etc.
  Cases where registration/approval under various sections of the Act, such as section 12A, 35(I)(ii)/ (Ha)/ (iii), 10(23C), etc. have not been granted or have been cancellediwithdrawn by the Competent The Assessing Officer shall prepare a list
of cases falling under this parameter with

 

 

Authority, yet the assessee has been found to be claiming tax-exemption/deduction in the return. However, where such orders of withdrawal of registration/approval have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

prior administrative approval of P CIT/Pr.DITICIT/DIT concerned.

The list of such cases shall be submitted by the Pr. CITIPr.DITICIT/DIT to the Pr.CCIT concerned for onward transmission to NaFAC with a copy marked to DGIT(Systems).

 

Notice u/s 143(2) of the Act shall be served on the assessee through NaFAC.

Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact and/or law and fact

 

Where the addition in an earlier assessment year(s) on a recurring issue of law or fact and/or law and fact (including transfer pricing issue) is:

  1. exceeding Rs. 25 lakhs in eight metro charges at Ahmedabad, Bengalura„ Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune;
  2. exceeding Rs. 10 lakhs in charges other than eight metro charges;

and where such an addition:

  1. has become final, as no further appeal has been preferred against the assessment order; or
  2. has been upheld by the Appellate Authorities in favor of Revenue; even if further appeal of assessee is pending, against such order.

 

Cases related to specific information regarding taxevasion

 

Cases, in respect of which:

(a) specific information pointing out tax-evasion for the relevant assessment year is provided by any law-enforcement agency, (Investigation Wing/ Intelligence/ Regulatory Authority/ Agency, etc.) ; and

The Assessing Officer shall prepare a list of cases falling under this parameter with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned.

The Assessing Officer shall upload the
underlying documents containing specific

 

(b) the return for the relevant assessment year information regarding tax evasion, for is furnished by the assessee.                            access by NaFAC.

The list of such cases shall be submitted by the Pr. CIT/Pr.DIT/CIT/DIT to the Pr.CCIT concerned for onward transmission to NaFAC with a copy marked to DGIT(Systems).

Notice uls 143(2) of the Act shall be served on the assessee through NaFAC.

  1. It is clarified that where return has been furnished in response to notice ids 142(1) of the Act and such notice u/s 142(1) of the Act was issued due to the information contained in NMS Cycle/SFT information/information received from Directorate of I&CI, such return will not be taken up for compulsory scrutiny. Selection of such cases for scrutiny will be done through CASS cycle.
  2. The cases shall be selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above prescribed parameters and procedure with prior administrative approval of CIT/Pr.DIT/CIT/DIT concerned. The cases which are selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above prescribed parameters and procedure, shall, as earlier, continue to be handled by these charges.
  3. As per the amendments brought by Finance Act 2021, the time limit for service of notice u/s 143(2) of the Act has been reduced to three months from end of the Financial Year in which the return is filed. Therefore, selection of cases and transfer of cases, wherein assessments have to be completed in faceless manner, to NaFAC shall be completed positively by 05.2022. In cases selected for compulsory scrutiny, service of notice u/s 143(2) of the Act shall be completed by 30.06.2022.
  4. These instructions may be brought to the notice of all concerned for necessary compliance.

ICIJA”-+ACtl-t2 2- (Ravinder maini)

Director (ITA-II), CBDT

Copy to:

  1. PS to FM/PS to MoS (F)
  2. PS to Secretary (Revenue)
  • Chairman, CBDT & All Members, CBDT

CBDT Revised Guidelines for compounding of offences under the Income tax Act, 1961

MASTI

Government of India Ministry of Finance

Department of Revenue Central Board of Direct Taxes

New Delhi, 17 September, 2022

PRESS RELEASE

CBDT issues Revised Guidelines for compounding of offences under the Income tax Act, 1961

In conformity with the Government’s policy of facilitating Ease of Doing Business and decriminalisation of offences, CBDT has taken steps in this direction and issued revised Guidelines for Compounding of offences under the Income-tax Act, 1961(the ‘Act’) dated 16.09.2022 with reference to various offences covered under the prosecution provisions of the Act.

Some of the major changes made for the benefit of taxpayers include making offence punishable under Section 276 of the Act as compoundable. Further, the scope of eligibility for compounding of cases has been relaxed whereby case of an applicant who has been convicted with imprisonment for less than 2 years being previously non compoundable, has now been made compoundable. The discretion available with the competent authority has also been suitably restricted.

The time limit for acceptance of compounding applications has been relaxed from the earlier limit of 24 months to 36 months now, from the date of filing of complaint. Procedural complexities have also been reduced/simplified.

Specific upper limits have been introduced for the compounding fee covering defaults across several provisions of the Act. Additional compounding charges in the nature of penal interest @ 2% per month up to 3 months and 3% per month beyond 3 months have been reduced to 1% and 2% respectively.

The revised Guidelines for Compounding of offences dated 16.09.2022 are available on http://www.incometaxindia.gov.in.

(SurabhiAhluwalia)

Pr. Commissioner of Income Tax(OSD)

(Media & Technical Policy)

Official Spokesperson, CBDT

What is “reason to believe”? Can Courts look into the sufficieny of the reasons?

MASTI

The Court relied upon S. Narayanappa v. CIT AIR 1967 SC 523, a case of re-assessment for the reason that income had escaped assessment where the Supreme Court held the Revenue must have reason to believe that the income, profits or gains chargeable to income tax had been underassessed. The Court held as under:

“2. ….. ….. But the legal position is that if there are in fact some reasonable grounds for the Income Tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of underassessment that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notice under Section 34″.

It was also held that whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income Tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income Tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression “reason to believe” in Section 34 of the Income Tax Act does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The belief must be held in good faith: it cannot be merely a pretence. To put it differently it is open to the court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income Tax Officer in starting proceedings under Section 34 of the Act is open to challenge in a court of law. (See Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I, Calcutta [41 ITR 191] xxx xxx xxx 15 AIR 1967 SC 523
4. ………….. The earlier stage of the proceeding for recording the reasons of the Income Tax Officer and for obtaining the sanction of the Commissioner are administrative in character and are not quasi-judicial. The scheme of Section 34 of the Act is that, if the conditions of the main section are satisfied a notice has to be issued to the assessee containing all or any of the requirements which may be included in a notice under sub-section (2) of Section If the action of the officer issuing the authorization, or of the designated officer is challenged the officer concerned must satisfy the Court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the Court. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed. But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the Officers will not vitiate the exercise of the power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the officer has in executing the authorisation acted bona fide.

Ultimately, the Court summed up the law as follows:

i) The formation of opinion and the reasons to believe recorded is not a judicial or quasi-judicial function but administrative in character;

ii) The information must be in possession of the authorised official on the basis of the material and that the formation of opinion must be honest and bona fide. It cannot be merely pretence. Consideration of any extraneous or irrelevant material would vitiate the belief/satisfaction;

iii) The authority must have information in its possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce books of accounts or other documents for production of which summons or notice had been issued, or such person will not produce such books of accounts or other documents even if summons or notice is issued to him; or

iv) Such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed;

v) Such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the competent authority in which event the Court would be entitled to examine the reasons for the formation of the belief, though not the sufficiency or adequacy thereof. In other words, the Court will examine whether the reasons recorded are actuated by mala fides or on a mere pretence and that no extraneous or irrelevant material has been considered;

vi) Such reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order;

vii) The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds which induced the competent authority to act is not a justiciable issue;

viii) The relevance of the reasons for the formation of the belief is to be tested by the judicial restraint as in administrative action as the Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. The Court shall not examine the sufficiency or adequacy thereof;

Requirement in S. 10B(8) to file the declaration before due date of filing the return is mandatory and not directory: Supreme Court in Wirpo

MASTI

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1449 OF 2022
(Arising out of SLP(Civil) No. 7620/2021)

Principal Commissioner of Income Tax-III,
Bangalore and another …Appellants

Versus

M/s Wipro Limited …Respondent

JUDGMENT
M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 30.11.2020 passed by the High Court of Karnataka at Bengaluru in Income Tax Appeal No. 462/2017, by which the High Court has dismissed the said appeal preferred by the Revenue and has confirmed the judgment and order dated 25.11.2016 passed by the Income Tax Appellate Tribunal, Bangalore Bench ‘C’, Bangalore (for short, ‘ITAT’), allowing the assessee’s claim for carry forward of losses under Section 72 of the Income Tax Act, 1961 (for short, ‘IT Act’), the Signature Not Verified Revenue has preferred the present appeal.

2. The respondent-assessee is a 100% export-oriented unit and engaged in the business of running a call centre and IT Enabled and Remote Processing Services. Assessee filed its return of income on 31.10.2001 for Assessment Year 2001-2002, declaring loss of Rs.15,47,76,990/- and claimed exemption under Section 10B of the IT Act. Along with the original return filed on 31.10.2001, the assessee annexed a note to the computation of income in which the assessee clearly stated that the company is a 100% export-oriented unit and entitled to claim exemption under Section 10B of the IT Act and therefore no loss is being carried forward. That thereafter, the assessee filed a declaration dated 24.10.2002 before the Assessing Officer (AO) stating that the assessee does not want to avail the benefit under Section 10B of the IT Act for A.Y. 2001-02 as per Section 10B (8) of the IT Act. The assessee filed the revised return of income on 23.12.2002 wherein exemption under Section 10B of the IT Act was not claimed and the assessee claimed carry forward of losses.

2.1 Assessing Officer passed an order dated 31.03.2004 rejecting the withdrawal of exemption under Section 10B of the IT Act holding that the assessee did not furnish the declaration in writing before the due date of filing of return of income, which was 31.10.2001. Thereby, the AO made the addition in respect of denial of claim of carrying forward of losses under Section 72 of the IT Act.

2.2 Assessee filed an appeal before the Commissioner of Income Tax (Appeals), New Delhi (for short, ‘CIT(A)’). By order dated 19.01.2009, the CIT(A) upheld the order passed by the Assessing Officer making addition in respect of denial of claim of carrying forward of losses under Section 72 of the IT Act.

2.3 Aggrieved by the order passed by the CIT(A), the assessee filed an appeal before the ITAT. Vide order dated 25.11.2016, the ITAT decided the issue in favour of the assessee stating that the declaration requirement under Section 10B (8) of the IT Act was filed by the assessee before the AO before the due date of filing of return of income as per Section 139(1) of the IT Act. ITAT allowed the assessee’s claim for carrying forward of losses under Section 72 of the IT Act. 2.4 Feeling aggrieved and dissatisfied with the order passed by the ITAT, allowing the assessee’s claim for carrying forward of losses under Section 72 of the IT Act, the Revenue preferred an appeal before the High Court. By the impugned judgment and order, the High Court has dismissed the said appeal. Hence, the Revenue is before this Court by way of present appeal.

3. Shri Balbir Singh, learned Additional Solicitor General of India appearing for the Revenue has vehemently contended that in the present case, as the conditions mentioned in Section 10B (8) of the IT Act are not complied with, inasmuch as the declaration was not filed before the due date of filing of return, both, the ITAT and the High Court have committed a grave error in allowing the assessee’s claim for carrying forward of losses under Section 72 of the IT Act. 3.1 It is submitted that in the present case, the original return of income was filed on 31.10.2001, which was the due date for filing return of income. The assessee filed a declaration on 24.10.2002 before the AO stating that the assessee does not want to avail the benefit under Section 10B of the IT Act for A.Y. 2001-02. That thereafter the assessee filed the revised return of income on 23.12.2002 claiming carry forward of losses under Section 72 of the IT Act. It is submitted that therefore as the declaration required under Section 10B (8) of the IT Act was filed beyond the due date of filing of return and hence the assessee was not entitled to carry forward of losses under Section 72 of the IT Act. It is submitted that in the present case, the ITAT has wrongly noted that the declaration under Section 10B (8) of the IT Act was filed before the due date.

3.2 It is further contended that the High Court has erred in observing that the requirement under Section 10B (8) of the IT Act is a procedural requirement.

3.3 It is submitted that the High Court has not properly appreciated the consequences of not filing the declaration within the time as required under Section 10B (5) and non-compliance of Sections 10B (5) and 10B(8) of the IT Act. It is submitted that if the view taken by the High Court is accepted, in that case, it shall nullify the provisions of Sections 10B (5) and 10B (8) of the IT Act.

3.4 Shri Balbir Singh, learned ASG appearing on behalf of the Revenue further submitted that in the present case the assessee filed the revised return of income on 23.12.2002, wherein for the first time the assessee did not claim the exemption under Section 10B of the IT Act and claimed carrying forward of losses under Section 72 of the IT Act. That such a claim could not have been made while submitting the revised return of income. That the revised return of income can be filed under Section 139(5) of the IT Act only to remove the omission and mistake and/or correct the arithmetical error. It is submitted that the revised return of income under Section 139(5) of the IT Act cannot be filed for altogether a new claim. Reliance is placed on the decision of the Andhra Pradesh High Court in the case of Commissioner of Income Tax v. Andhra Cotton Mills Limited, [1996] 219 ITR 404 (AP). That in the aforesaid decision, the Andhra Pradesh High Court has held that a revised return under Section 139(5) can be filed only if there is an omission or a wrong statement. That in the aforesaid case, the assessee in the original return filed the P&L account containing provision for depreciation and did not opt for the option of not providing details regarding depreciation in its P&L account. Therefore, the High Court held that the intention of the assessee was to withdraw the claim for deduction of depreciation only to get a set-off and since particulars were furnished along with the original return, the ITO was bound to allow the deduction of depreciation in computing the income from business. 3.5 It is submitted that in the present case while filing the original return of income, the assessee specifically declared a loss of Rs. 15,47,76,990/- and claimed exemption under Section 10B of the IT Act. That as per the note annexed to the computation of income, annexed with the original return of income, the assessee specifically stated that “the company is registered as 100% export-oriented unit and is entitled to claim exemption under Section 10B of the IT Act. No loss is therefore being carried forward.” 3.6 It is submitted that as an afterthought the assessee filed a declaration as required under Section 10B (5) belatedly and after the due date mentioned in Section 10B (5) and claimed carry forward of losses under Section 72 of the IT Act, withdrawing its claim for deduction under Section 10B of the IT Act. It is contended that the High Court has not properly appreciated the fact that by filing a declaration subsequently and filing the revised return of income, the intent of the assessee was to frustrate the purpose of Section 10B of the IT Act and file a declaration under Section 10B (8) belatedly. It is submitted that the High Court has not properly appreciated the fact that the assessee’s intention to file the revised return was only as an afterthought and with the intention to extend the period of filing the declaration beyond the period specified in Section 10B (8) of the IT Act.

3.7 It is further submitted by learned ASG appearing on behalf of the Revenue that the High Court has seriously erred in observing that the requirement of submission of declaration under Section 10B (8) is mandatory in nature, but the time limit within which the declaration is to be filed is directory in nature, as the provision does not provide for any adverse consequence for not filing of the declaration by the time limit. It is submitted that the High Court has not properly appreciated and/or considered the fact that non-filing of declaration before the due date, i.e., filing of the return of income would result in denial of the benefit under Section 10B (8) of the IT Act. Therefore, it cannot be said that there is no consequence of not filing of declaration before the due date of return of income.

3.8 It is contended that the High Court has materially erred in following and relying upon the decision of the Delhi High Court in the case of Commissioner of Income Tax, Delhi-III, New Delhi v. Moser Baer India Limited, decided on 14.05.2008 in ITA No. 950/2007, wherein it was considering the requirement of Section 10B (7) of the IT Act. 3.9 It is next contended that there is a clear distinction between the provisions seeking exemption and the provisions for deduction. That Chapter III of the IT Act deals with exemptions. However, Chapter VIA deals with deductions. That Section 10B of the IT Act is an exemption provision and the condition for seeking an exemption is required to be complied with strictly with the provision.

3.10 Learned ASG submitted that as held by this Court in a catena of cases that a taxing statute should be strictly construed and that the machinery provisions must be so construed to effectuate the object and purpose of statute and that the exemption provisions must be construed strictly and by a strict interpretation. Reliance is placed on the judgments of this Court in the case of Commissioner of Income Tax-III v. Calcutta Knitwears, Ludhiana (2014) 6 SCC 444 and Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and others (2018) 9 SCC 1.

3.10 Making the above submissions and relying upon the aforesaid decisions, it is prayed to allow the present appeal.

4. The present appeal is vehemently opposed by Shri S. Ganesh, learned Senior Advocate appearing on behalf of the respondent – assessee.

4.1 Learned counsel appearing on behalf of the assessee has submitted that the only question of law which arises in the present case is with regard to the interpretation of Section 10B (8) of the IT Act, viz., whether the requirement of submission of the declaration before the last date for submission of the return is mandatory or directory. It is submitted that on a true interpretation of Sections 10B (5) and 10B (8) of the IT Act, the High Court has rightly observed and held that the requirement of filing a declaration is mandatory in nature, while the time limit in filing the declaration is directory in nature. It is submitted that the High Court has rightly held the requirement of filing the declaration by the time limit directory as non-filing of the declaration within the time limit does not envisage any consequence. It is urged that the High Court has rightly relied upon the decision of the Delhi High Court in the case of Moser Baer (supra). It is submitted that the issues of validity of the revised return of income; whether the respondent was entitled to carry forward its losses under Sections 10B and 80 of the IT Act; and whether the assessee had duly complied with Section 80 and Section 10B (5) of the IT Act were not raised before the High Court.

4.2 It is submitted that apart from the above, even on merits also, the Revenue has no case. This is because Section 80 of the IT Act only requires that an assessee claiming carry forward of loss should file a return showing the loss before the last date for submitting the return. It is submitted that in the instant case the assessee filed the original return in time declaring the loss and thereby complied with Section 80 of the IT Act.

4.3 It is further submitted that though it was not necessary for the exercise of option under Section 10B (8) of the IT Act, the assessee filed a revised return only to bring to the notice of the AO the factum of exercise of option under Section 10B. Even if the revised return had not been filed and instead, the assessee had submitted the declaration in writing to the AO during the assessment proceedings, it would have made no difference whatsoever to the exercise of option under Section 10B (8) of the IT Act. It is submitted that therefore the validity of the revised return is wholly immaterial and irrelevant. 4.4 It is further submitted that the accountant’s certificate under Section 10B (5) is required only if the assessee claims the deduction under Section 10B. This certificate only certifies the profit/loss of Section 10B unit and the amount of deduction under Section 10B (1), if any. The certificate, if already submitted, becomes irrelevant if the claim is withdrawn under Section 10B. In any event, the contents of this certificate regarding profit/loss are not in any way affected by the withdrawal of the Section 10B claim. It is submitted that in the present case, the loss set out in Section 10B certificate remained exactly the same after withdrawal of the claim made under Section 10B and the respondent making the claim for carry forward of loss. It is submitted that there was no claim for any deduction under Section 10B (1) at any time.

4.5 It is submitted that the incontrovertible position set out in paragraphs 4.2 to 4.4 above is the precise reason why these points were not even attempted to be raised, either before the ITAT or before the High Court, and are sought to be raised before this Court for the first time and without disclosing the correct and complete facts. 4.6 It is further submitted by Shri S. Ganesh, learned counsel appearing on behalf of the assessee that on interpretation of Section 10B (8) of the IT Act, the case is squarely covered by the judgment of this Court in the case of CIT, Maharashtra v. G.M. Knitting Industries Pvt. Ltd. (2016) 12 SCC 272. It is submitted that the case involved a claim for additional depreciation on plant and machinery under Section 32(1) (ii-a) of the IT Act. That provision gave the assessee the option to claim additional depreciation, over and above the usual or ordinary depreciation mandatorily allowed under Section 32(1) of the IT Act. This option had to be exercised by the assessee by filing a statutory Form 3- AA along with the Return of Income, which gave details of the plant and machinery and also a certificate that the claim for additional depreciation was correctly made. Therefore, if the said Form 3-AA was not filed with the Return, it was a clear indication that the assessee had opted not to claim additional depreciation. In the case of G.M. Knitting (supra), the assessee did not file Form 3-AA along with the return of income, but chose to file the Form much later, but before the passing of the assessment order, which may be passed as long as 26 months after the return was filed as provided under Section 153(1) of the IT Act. The Revenue rejected the form on the ground that it had not been filed along with the return of income and declined to grant additional depreciation as claimed by the assessee. It is submitted that this Court held that the requirement that Form 3-AA should be submitted along with return was only directory and that therefore even though the Form had been submitted long after the filing of the return, the assessee was entitled to claim additional depreciation under Section 32(1)(ii-a) of the IT Act. 4.7 It is submitted that exactly the same principle applies to the interpretation of Section 10B (8) of the IT Act. Section 10B (8) enables an assessee to exclude the applicability of the deduction under Section 10B by filing a declaration to that effect before the last date in which the return of income is required to be filed. It is submitted that as held in G.M. Knitting (supra), the requirement that the Form should be submitted by a certain deadline is directory, though the submission of the Form itself may be regarded as mandatory. It is urged that the present case stands on a far stronger footing and on a far higher pedestal as compared to G.M. Knitting (supra). This is because Section 10B (8) specifically and unequivocally gives the assessee a statutory right to exercise his option and to decide not to avail of the benefit of section 10B (8) in a particular Assessment Year. For the purpose of Section 32(1)(ii-a) of the IT Act, by permitting the assessee to file the Form 3-AA long after the return, this Court has in effect permitted the assessee to make one option at the time of filing the return and change the option long thereafter, at any time before the assessment is made. That if such change of option could be permitted under Section 32(1)(ii-a), the case for permitting it is far stronger under Section 10B (8) where the statute itself expressly and unequivocally gives the assessee the right to change his option. It is submitted that the basic premise is that a substantive claim, which the assessee considers to be more beneficial, must be allowed to be made until the conclusion of assessment and the time within which any form which enables the claim should be filed, is only directory.

4.8 It is further submitted that this Court in G.M. Knitting (supra) has specifically approved the judgment of the Bombay High Court in the case of Commissioner of Income Tax v. Shivanand Electronics ((1994) 209 ITR 63). That judgment dealt with an assessee’s claim for deduction under Section 80HHC. Section 80HHC specifically prohibited the grant of deduction under Section 80HHC unless the stipulated audit report was filed along with the return of income. The assessee filed the required audit report long after the return. The Bombay High Court held that while the filing of the audit report was mandatory, the requirement that it should be filed along with the return was only directory, notwithstanding the peremptory language of the prohibition in Section 80HHC (5). It is of vital importance to note that there is no such prohibition in Section 10B. Further, as already pointed out, Section 10B (8) itself expressly gives the assessee the right to opt out of section 10B. This substantive statutory right cannot in law be nullified by construing the purely procedural time element requirement regarding the filing of the declaration under Section 10B (8) as mandatory. Reliance is placed on the judgment of the Telangana High Court in the case of Telangana State Pollution Board v. CBDT (Writ Petition No. 4834/2020, decided on 26.07.2021). 4.9 It is further submitted by the learned counsel appearing on behalf of the assessee that the submission on behalf of the revenue that by the impugned judgment and order and the interpretation by the High Court, the statutory option expressly given by Section 10B (8) is in effect nullified and that Section 10B (8) is rewritten by introducing in it a prohibition similar to Section 80HHC(5), though the legislature did not enact any such prohibition and it completely overlooks and ignores the legislative background of section 10B has no substance. It is urged that as such the issue involved in the present case is directly covered by the decision of the Delhi High Court in the case of Moser Baer (supra), against which a special leave petition was preferred in this Court and the same was dismissed as withdrawn. That the decision of Moser Baer (supra) has been subsequently followed in the case of CIT v. Rana Polycot Ltd. 2011 SCC OnLine P&H 17591. That both these judgments are on Section 10B itself and they clearly and unequivocally stated that while the submission of the declaration is mandatory, the requirement that it should be submitted before the due date of return is only directory and Section 10B deduction could not be disallowed if the declaration was filed before the assessment was made. 4.10 Shri Ganesh, learned counsel appearing on behalf of the assessee has submitted that there are a large number of judgments dealing with other sections of the IT Act which expressly provide that a particular deduction would not be allowed if a particular report or certificate of declaration was not filed along with the return of income. It is submitted that in each of the cases, it is held that the requirement of submission of the document is mandatory, but the stipulation that it should be filed along with the return of income is only directory. Shri Ganesh, learned counsel has referred to the following decisions:

i) Moser Baer (supra);
ii) Rana Polycot Ltd. (supra);
iii) G.M. Knitting Industries Pvt. Ltd. (supra);
iv) CIT v. Panama Chemical Works, 2006 SCC OnLine MP 704;
v) CIT v. Punjab Financial Corp. ILR 2002 (1) P&H 438;
vi) CIT v. Hardeodas Aggarwala Trust; 1991 SCC OnLine Cal.414;
vii) CIT v. Gupta Fabs, 2005 SCC OnLine P&H 1315;
viii) Murali Export House v. CIT, 1995 SCC OnLine Cal. 286;

ix) CIT v. Berger Paints India Ltd., 2002 SCC OnLine Cal.869; and
x) CIT v. Ramani Relators (P) Ltd., 2014 SCC OnLine Mad.12717.

It is submitted that therefore on the principle of stare decisis, this Court may not interfere with the impugned judgment and order passed by the High Court.

4.11 Now so far as the submission on behalf of the Revenue that Section 10B is an exemption provision, it is vehemently submitted by the learned counsel appearing on behalf of the assessee that as held by this Court in the case of CIT v. Yokogawa India Ltd. (2017) 2 SCC 1, Section 10B is a deduction provision and not an exemption provision. 4.12 Making the above submissions and relying upon the aforesaid decisions, it is prayed to dismiss the present appeal.

5. We have heard Shri Balbir Singh, learned ASG appearing on behalf of the Revenue and Shri S. Ganesh, learned Senior Advocate appearing on behalf of the assessee at length and perused the material on record.

The short question which is posed for consideration of this Court is, whether, for claiming exemption under Section 10B (8) of the IT Act, the assessee is required to fulfil the twin conditions, namely, (i) furnishing a declaration to the assessing officer in writing that the provisions of Section 10B (8) may not be made applicable to him; and (ii) the said declaration to be furnished before the due date of filing the return of income under sub-section (1) of Section 139 of the IT Act.

6. In the present case, the High Court as well as the ITAT have observed and held that for claiming the so-called exemption relief under Section 10B (8) of the IT Act, furnishing the declaration to the assessing officer is mandatory but furnishing the same before the due date of filing the original return of income is directory. In the present case, when the assessee submitted its original return of income under Section 139(1) of the IT Act on 31.10.2001, which was the due date for filing of the original return of income, the assessee specifically and clearly stated that it is a company and is a 100% export-oriented unit and entitled to claim exemption under Section 10B of the IT Act and therefore no loss is being carried forward. Along with the original return filed on 31.10.2001, the assessee also annexed a note to the computation of income clearly stating as above. However, thereafter the assessee filed the revised return of income under Section 139(5) of the IT Act on 23.12.2002 and filed a declaration under Section 10B (8) which admittedly was after the due date of filing of the original return under Section 139(1), i.e., 31.10.2001.

7. It is the case on behalf of the Revenue that as there was a non- compliance of twin conditions under Section 10B (8) of the IT Act, namely, the declaration under Section 10B (8) was not submitted along with the original return of income, the assessee shall not be entitled to the exemption/benefit under Section 10B (8) of the IT Act. According to the Revenue, furnishing of declaration under Section 10B (8) before the due date of filing original return of income is also mandatory. On the other hand, it is the case on behalf of the assessee, which has been accepted by the High Court, that the requirement of submission of declaration under Section 10B (8) is mandatory in nature, but the time limit within which the declaration is to be filed is directory in nature.

8. While considering the issue involved, whether the time limit within which the declaration is to be filed as provided under Section 10B (8) is mandatory or directory, Section 10B (8) is required to be referred to, which reads as under:

“10B (8) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date for furnishing the return of income under sub-section (1) of Section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years.” On a plain reading of Section 10B (8) of the IT Act as it is, i.e., “where the assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of Section 10B may not be made applicable to him, the provisions of Section 10B shall not apply to him for any of the relevant assessment years”, we note that the wording of the Section 10B (8) is very clear and unambiguous. For claiming the benefit under Section 10B (8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of section 139 of the IT Act are required to be fulfilled and/or satisfied. In our view, both the conditions to be satisfied are mandatory. It cannot be said that one of the conditions would be mandatory and the other would be directory, where the words used for furnishing the declaration to the assessing officer and to be furnished before the due date of filing the original return of income under sub-section (1) of section 139 are same/similar. It cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee.

9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under Section 139(1) and cannot transform it into a return under Section 139(3), in order to avail the benefit of carrying forward or set-off of any loss under Section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set- off of any loss. Filing a revised return under Section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 10B (8) and furnishing the declaration as required under section 10B (8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 10B (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature.

10. Even the submission on behalf of the assessee that it was not necessary to exercise the option under section 10B (8) of the IT Act and even without filing the revised return of income, the assessee could have submitted the declaration in writing to the assessing officer during the assessment proceedings has no substance and the same cannot be accepted. Even the submission made on behalf of the assessee that filing of the declaration subsequently and may be during the assessment proceedings would have made no difference also has no substance. The significance of filing a declaration under section 10B (8) can be said to be co-terminus with filing of a return under section 139(1), as a check has been put in place by virtue of section 10B (5) to verify the correctness of claim of deduction at the time of filing the return. If an assessee claims an exemption under the Act by virtue of Section 10B, then the correctness of claim has already been verified under section 10B (5). Therefore, if the claim is withdrawn post the date of filing of return, the accountant’s report under section 10B (5) would become falsified and would stand to be nullified.

11. Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries Pvt. Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee is concerned, Section 10B (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with “incomes which do not form a part of total income”, cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with “deductions to be made in computing total income”. Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under Section 10B (8) of the IT Act.

12. Even the submission on behalf of the assessee that the assessee had a substantive statutory right under Section 10B (8) to opt out of Section 10B which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under Section 10B (8) as being mandatory also has no substance. As observed hereinabove, the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement.

13. So far as the submission on behalf of the assessee that against the decision of the Delhi High Court in the case of Moser Baer (supra), a special leave petition has been dismissed as withdrawn and the revenue cannot be permitted to take a contrary view is concerned, it is to be noted that the special leave petition against the decision of the Delhi High Court in the case of Moser Baer (supra) has been dismissed as withdrawn due to there being low tax effect and the question of law has specifically been kept open. Therefore, withdrawal of the special leave petition against the decision of the Delhi High Court in the case of Moser Baer (supra) cannot be held against the revenue.

14. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 10B (8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 10B (8) of the IT Act. We hold that for claiming the benefit under Section 10B (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with. Accordingly, the question of law is answered in favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under Section 10B (8) of the IT Act on non- compliance of the twin conditions as provided under Section 10B (8) of the IT Act, as observed hereinabove. The present Appeal is accordingly Allowed. However, in the facts and circumstances of the case, there shall be no order as to costs.

……………………………….J.

[M.R. SHAH]

NEW DELHI; ………………………………..J.
JULY 11, 2022. [B.V. NAGARATHNA]