TMI Blog2023 (2) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... parameters have not been considered by the respondents in true letter and spirit as is evident from the orders passed that are based on the petitioner s status as a Firm instead of as a Trust. Apropos the judgment in the case of UTI MUTUAL FUND [ 2012 (3) TMI 333 - BOMBAY HIGH COURT] held that in considering whether a stay of demand granted, the Court is duty bound to consider not merely the issue of financial hardship if any, but also whether a strong prima facie case is made out and serious triable issues are raised that would warrant a dispensation of deposit. It was further held that calling upon petitioner to deposit, would itself occasion undue hardship where a strong prima facie case has been made out. We are of the opinion that the respondents have failed to consider the ratio of the judgment in its true letter and spirit inasmuch as respondents called upon the petitioner to deposit 10% of the demand when the petitioner had a strong prima facie case. In our view, the deposit would itself occasion undue hardship to the petitioner who are Trust created for the purpose of benefiting the employees. In the case UMUZA CONSULTANTS [ 2022 (12) TMI 804 - BOMBAY HIGH COURT] h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts : 4. On 9th March, 1981 the Petitioner trust was formed for the benefit of the employees of the erstwhile Bajaj Auto Ltd. The Petitioner formerly known as Bajaj Auto Employees Welfare Fund No.4 was allotted a permanent account number (PAN) AABFB9453F with a status of a firm. 5. As per the scheme of demerger of Bajaj Auto Limited approved by this Court, by its order dated 18th December 2007, the automobile business was transferred to Bajaj Auto Limited, and finance was transferred to Bajaj Finserv Limited with effect from 31st March 2007. Bajaj Auto Limited s name was changed to Bajaj Holdings and Investment Limited (for short BHIL ) on 5th March 2008. 6. Pursuant to the scheme of demerger, the name of Bajaj Auto Employees Welfare Fund No. 4 was changed to BHIL Employees Welfare Fund No.4 as per trust deed dated 16th February 2015. The Petitioner on application, was allotted a new PAN bearing no.AACTB8382L with a status of a trust. 7. On 31st March 2021 the Respondent no.1 issued a notice under section (u/s) 148 of the Income Tax Act, 1961 (the Act) as they had reason to believe that the Petitioners income chargeable to tax for AY-2014-15 had escaped assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addressed a letter to Respondent nos.1 and 3 and pointed out that the earlier notice was missed since most employees of the Petitioners were working from home during the second wave of covid pandemic and their tax personnel Mr. Eugene Waradkar had quit the organization in September 2021 and the new personnel joined only in November 2021 in addition to the technical difficulties faced by them on account of the change of name and status of the PAN from firm to trust. The letter also pointed out that the Income Tax Utility auto selected the status of the Petitioner as a firm in view of the old PAN and directly computed tax at the rate of 30% plus surcharge and cess instead of applying slab rates and allowing the basic exemption limit for income upto Rs.2 lakhs. It was further pointed out that the income tax utility did not allow the Petitioner to select any other status other than the firm on account of which they were unable to file the return of income. It was urged that even if the assessment was reopened, the reopening proceeding should be conducted on the new PAN and not the old one. 11. On 14th March, 2022 the Respondent no.3 issued a notice u/s 142(1) of the Act asking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to fulfil the conditions it will be treated as an assessee in default and recovery proceedings shall be initiated as per the Act. 15. The Petitioner filed an application for stay of demand on 18th May 2022 with Respondent no.2 and pointed out the factual position. The Petitioner contended that no addition could be made u/s 69 of the Act and that the assessment had been done on the basis that the Petitioner was a firm instead of an individual. The Petitioner also contended undue financial hardship if demand was recovered from Petitioner. 16. On 13th July 2022 the Respondent no.2 passed an order disposing of the stay application of the Petitioner for AY 2014-15 and AY 2017-18 by relying on the CBDT instruction no.1914 dated 2nd December 1993. Respondent No. 2 granted stay of demand for AY 2017-18 on the condition that the Petitioner paid 10% of the total disputed demand i.e. Rs. 21,05,721 on or before 31st August 2022. 17. On 22nd July 2022 the Respondent No. 1 addressed a letter to the Petitioner calling upon them to pay the outstanding income tax dues for AY 2012-13, AY 2014-15 and AY 2017-18 and furnish proof within 10 days of the receipt of the notice. The Petitioner w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner to pay 20 % of the demand within 15 days without appreciating the facts and circumstances of the case and without considering the merits of the addition made in the assessment order. 20. The learned counsel further submitted that the Respondent no. 2 passed an order by simply relying on the CBDT Instruction no. 1914 dated 2nd December 1993 and wrongly held that demand will be stayed only if there are valid reasons and mere filing an appeal against the assessment order will not be a sufficient reason to stay recovery of the demand. He submitted that the Respondent no. 2 ought to have considered the stay application and thereby considered the factual position that the income tax return could not be filed since the old PAN no. was in the name of the firm and consequently the utility computes tax at the rate of 30% plus applicable surcharge and cess instead of giving the benefit of basic exemption limit and computing tax at slab rates applicable to individuals, AOPs and AJPs. He further submitted that the Respondent no. 2 ought to have considered the merits of the addition and followed the guidelines issued by the CBDT for recovery of taxes as per the office memorandum dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The learned counsel for the Respondent relied upon the assessment order and more particularly paragraph 5.2 at page 234 and page 268 and submitted that the AO has considered all the contentions of the Petitioner. Conclusion: 28. We have heard the counsels. 29. We are unable to accept the contentions of the respondents that they have considered all the contentions of the petitioner inasmuch as the revert relied upon at page no.234 and page no.269 clearly evince that the respondents have not considered the various letters addressed by the petitioner from time to time and their request to change their status from a Firm to a Trust. 30. Apropos the judgement in the case of UPI Mutual Fund v/s. Income Tax Officer reported in [2012] 345 ITR 71 (Bombay) wherein it followed the judgement of the division bench of this court in KEC International Ltd. v/s. B. R. Balakrishnan [2011] 251 ITR 158 / 119 Taxman 974 (Bom) laying down the parameters for disposing of the application for stay, more particularly, the parameter that: In exercising the powers of stay, the Income Tax Officer should not act as a mere tax gatherer but as a quasi judicial authority veste ..... X X X X Extracts X X X X X X X X Extracts X X X X
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