“AO cannot ask for payment of even 20% of Disputed Tax till the disposal of the appeal by CIT-A – Bombay HC Decision”
This is very good decision which over rules the CBDT Circular dated 29-02-2016 in this regard. Though the judgement is a case specific, still it may be relevant for professional for other similar type of proceeding.
Petitioner Mr. Bhupendra M Shah, Well known builder in vashi-Bhumiraj
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.2157 OF 2018
AND
WRIT PETITION NO.2160 OF 2018
Bhupendra Murji Shah … Petitioner
Vs
Deputy Commissioner of Income Tax15(1)(1)
and Ors. … Respondents
Mr.Madhur Agarwal i/b Mr.Atul K. Jasani for the Petitioner.
Mr.Suresh Kumar for the Respondents.
CORAM : S.C. DHARMADHIKARI &
B.P.COLABAWALLA, JJ.
TUESDAY, 11TH SEPTEMBER, 2018
P.C. :
1 We have heard both sides.
2 It is undisputed that the petitioner has challenged the
demand raised in the first petition No.2157 of 2018 in the sum of
Rs.11,15,99,897/ for Assessment Year 20152016 by approaching the
Commissioner of Income Tax (Appeals). Thus, an Appeal against the
Assessment Order raising this demand is filed and is pending.
3 In the meanwhile, the petitioner approached the Assessing
Officer/Deputy Commissioner of Income Tax, Circle 15(1)(1), Aayakar
Bhavan, Mumbai. He may have made an application and termed it as a
request for stay, but what essentially he was worried and concerned
about was that since the Appeal is pending and yet to be decided, nor
was there any consideration of application for stay by Appellate
Authority, this Deputy Commissioner will treat the petitioner/assessee
as ‘assessee in default’. Thereupon, he will recover the amount by
coercive means. It is in these circumstances, this letter was addressed
and we have carefully perused that letter. That records that the subject
matter of tax is in dispute. The Assessment Order is challenged. The
Appeal under Section 246A of the Income Tax Act 1961 challenging
the Assessment Order dated 30th December 2017, received on 1st August
2018 is pending. The request of the petitioner/assessee is that the
demand be kept in abeyance till the disposal of this Appeal.
4 With marginal difference in the figures, the issue raised in
the second petition No.2160 of 2018 is also identical. Both petitions
are taken up together. It is not disputed before us that in terms of
Chapter XX styled as Appeals and Revision, the order of the Assessment
Officer is appealable under section 246 subsection (1). Once it is an
appealable order and the Appeal has been filed, it is pending, then, the
petitioner/appellant should have been given either an opportunity to
seek a stay during the pendency of the appeal, which power is also
conferred admittedly in the Commissioner or this Deputy Commissioner
should have held the demand in abeyance as prayed by the
petitioner/assessee. He does neither, but proceeds to communicate to
the petitioner/ assessee that his application for stay is dismissed. The
petitioner/ assessee should pay 20% of the outstanding amount as
prescribed in some Circulars of the Revenue and particularly, dated 29th
February 2016 and produce the challan and seek stay of demand again,
failing which collection and recovery will continue.
5 We are not concerned here with the Circular of the Central
Board of Direct Taxes. We are not concerned here also with the power
conferred in the Assessing Officer of collection and recovery by coercive
means. All that we are worried about is the understanding of this
Deputy Commissioner of a demand, which is pending or an amount,
which is due and payable as tax. If that demand is under dispute and is
subject to the appellate proceedings, then, the right of appeal vested in
the petitioner/assessee by virtue of the Statute should not be rendered
illusory and nugatory. That right can very well be defeated by such
communication from the Revenue/Department as is impugned before
us. That would mean that if the amount as directed by the impugned
communication being not brought in, the petitioner may not have an
opportunity to even argue his Appeal on merits or that Appeal will
become infructuous, if the demand is enforced and executed during its
pendency. In that event, the right to seek protection against collection
and recovery pending Appeal by making an application for stay would
also be defeated and frustrated. Such can never be the mandate of law.
6 In the circumstances, we dispose both these petitions with
directions that the Appellate Authority shall conclude the hearing of the
Appeals as expeditiously as possible and during pendency of these
Appeals, the petitioner/appellant shall not be called upon to make
payment of any sum, much less to the extent of 20% under the
Assessment Order/Confirmed Demand or claim to be outstanding by
the Revenue.
7 We clarify that we have not expressed any opinion on the
merits. This order is passed in the peculiar facts and circumstances of
the petitioner’s case and only because Mr.Agarwal informs us that the
Appellate Commissioner has scheduled the matter for hearing shortly.
In fact, he has heard it in part. It is, therefore, clear that when the
Appeal is being heard, the demand is raised on the petitioner/assessee
by treating him as an assessee in default. We have passed this order so
that the petitioner can avail of his right of appeal. In ordinary
circumstances, we would have relegated the petitioner to the remedy of
making an application for stay before the Commissioner (Appeals) and
thereafter left it to the Commissioner (Appeals) to take an appropriate
decision thereon. However, since the Appeals are being heard, we have
passed this order. This order cannot be treated as a precedent for all
cases of this nature.
8 We direct that during the pendency of the above Appeals,
the attachment, if any, levied on the petitioner’s bank account to stand
raised forthwith. However, this is without prejudice to the power
conferred in the Revenue/Department to collect and recover taxes,
which are due and payable. We record the statement made by
Mr.Agarwal on instructions as an undertaking to this Court and to this
effect that during the pendency of the Appeals before the Commissioner
(Appeals), Income Tax, the petitioner shall not dispose of or create
third party right in respect of his movable assets and properties. This,
however, shall not prevent the petitioner/assessee from utilizing his
assets and properties in the ordinary and normal course of business.
B.P. COLABAWALLA, J. S.C. DHARMADHIKARI, J..
