Commissioner of Income Tax vs Harmony Psychiatry (P.) Ltd.

The revenue is aggrieved by an order dated 17-3-2006 passed by the Income Tax Appellate Tribunal, Delhi Bench "B" in a batch of appeals. We are concerned with 10 appeals which have been mentioned in para 19 of the order under challenge.

It has been noted by the Tribunal that warrants of authorisation issued by the revenue u/s 132 of the Income Tax Act, 1961 (''the Act1)were not produced before the Tribunal in spite of many opportunities having been given and in spite of a personal assurance having been given by the learned departmental representative that the record would be produced.

The view of the failure of the revenue to produce the warrants of authorisation, the Tribunal drew an adverse inference against the revenue that the warrants were never issued consequently the block assessment proceedings were set aside.

Along with the grounds of appeal before us, the revenue has filed the warrants of authorisation.

Learned counsel for the assessee submits that as many as 19 opportunities were granted to the revenue to produce the warrants of authorisation by the Tribunal, over a period of seven or eight years. He submits that under these circumstances, the revenue should not be granted indulgence and permitted to take advantage of the situation and extreme harassment has been caused to the assessees apart from wastage of their time and resources in engaging advocates etc.

Given these facts we frame the following substantial question of law for consideration:

Whether in view of the subsequent production of the warrants of authorisation issued u/s 132 of the Income Tax Act, 1961, the Tribunal ought not to be directed to reconsider the appeal filed by the assessee afresh?

We answer the question in the affirmative, that is, in favour of the revenue and against the assessee keeping in view the facts that we have mentioned above.

However taking into consideration the manner in which the revenue has conducted these proceedings before the Tribunal and the expenses incurred and harassment caused to the assessees, we allow the appeal filed by the revenue with costs of Rs. 10,000 each. The amount be deposited in the Registry of this court in favour of the Registrar General by cheque within four weeks from today.

List for compliance on 13-12-2007.

It is made clear that in case the amount is not deposited within the time prescribed, the revenue will be liable to pay further costs. The next date of hearing before the Tribunal will be fixed after the deposit is made by the revenue in this Court.