9911796707
TMI Blog2012 (3) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... to Assessment Year 2009-2010. The petitioner is a Trust registered with the Securities and Exchange Board of India as a Mutual Fund. The income of the petitioner is exempt under the provisions of Section 10(23D) . On 20 May 2008 a Trust by the name of India Corporate Loan Securitisation Trust, 2008 Series 14 was constituted by IL & FS Trust Company Ltd. The petitioner is one of the beneficiaries of the Trust. The Trust was set up for securitising a loan of Rs.300 crores which was granted by Yes Bank Ltd. to Hindustan Petroleum Corporation Ltd. The loan was securitised by the Trust. The Trust issued Pass Through Certificates (PTCs) in various series. The petitioner, amongst other funds, had subscribed to the PTCs, the beneficial interest of the petitioner being proportionate to the PTCs subscribed. The loan was assigned to the Trust on the same day as the constitution of the Trust. The Trust received interest of Rs.21.49 crores from HPCL on account of the loan which had been assigned to it. The Trust distributed the income to its beneficiaries including the petitioner in their respective shares. 4. The Trust filed its return of income for Assessment Year 2009-2010. An order of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner to pay over to the Revenue an amount upto Rs.26.70 crores for and on account of the arrears claimed from the petitioner. 7. Counsel appearing on behalf of the petitioner submits that the entire action of the Revenue is arbitrary on the following grounds: (i) The action appears to have been in pursuance of a communication dated 7 February 2012 addressed by the Chairman of the Central Board of Direct Taxes to all the Chief Commissioners, Director Generals, Commissioners and Directors (International Taxation) requiring expeditious steps to be taken for recovery of arrears and informing the officers that in considering their postings for 2012, achievements in terms of revenue collection targets would be given the highest weightage; (ii) The income of the petitioner is exempt from the provisions of Income Tax Act, 1961 by virtue of the provisions of Section 10(23D); (iii) The Trust cannot be considered as being an Association of Persons having regard to several judgments of Division Benches of this Court. In that case, the provisions of Section 177(3) cannot be invoked against the petitioner. Besides the petitioner is not a member of the Trust and cannot be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner on the basis of the provisions of Section 177(3). The Petitioner has not been independently assessed and the issue which falls for determination is whether the petitioner has made out a substantial prima facie case to seek protection against coercive proceedings at this stage pending an appeal filed by the Trust against the assessment made in respect of the Trust. Sub-section (3) of Section 177 provides that where a business which has been carried on by an association of persons has been discontinued, every person who was at the time of such discontinuance or dissolution a member of the association of persons, shall be jointly and severally liable for the amount of tax, penalty or other sum payable and all the provisions of the Act, so far as may be, shall apply to any such assessment or imposition of penalty, or other sum. Prima facie, the submission of the petitioner that the Trust itself cannot be regarded as being an association of persons finds support from a judgment of a Division Bench of this Court in Commissioner of Income Tax Vs. Marsons Beneficiary Trust. (1991) 188 ITR 224 The Division Bench of this Court in that case held that the beneficiaries of a trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer. The next day, 8 March 2012, was a public holiday. The petitioner moved the CIT on 9 March 2012 with a request for intervention in the matter. The petitioner received a communication recording that the application had been disposed of, only on 13 March 2012. In the mean time a garnishee notice dated 12 March 2012 was addressed to the bankers of the petitioner calling upon them to deposit an amount of Rs.26.70 crores. Administrative directions for fulfilling recovery targets for the collection of revenue should not be at the expense of foreclosing remedies which are available to assessees for challenging the correctness of a demand. The sanctity of the rule of law must be preserved. The remedies which are legitimately open in law to an assessee to challenge a demand cannot be allowed to be foreclosed by a hasty recourse to coercive powers. Assessing Officers and appellate authorities perform quasi-judicial functions under the Act. Applications for stay require judicial consideration. Rejecting such applications without hearing the assessee, considering submissions and indicating at least brief reasons is impermissible. The judgment of the Division Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that such instances do not occur in future. The caution which was addressed by the Division Bench in Coca Cola India has again not been followed. In N. Rajan Nair v. ITO (1987) 165 ITR 650 , the Kerala High Court observed thus: "In exercising his power, the Income-tax Officer should not act as a mere tax gatherer but as a quasi judicial authority vested with the power of mitigating hardships to the assessee." These are, we may say so with respect, sage observations which must be borne in mind by the assessing authorities. Consistent with the parameters which were laid down by the Division Bench in KEC International and the observations in the judgment in Coca Cola, we direct that the following guidelines should be borne in mind for effecting recovery: 1. No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; (b) Disposal of a stay application, if any, moved by the assessee and for a reasonable period thereafter to enable the assessee to move a higher forum, if so advised. Coercive steps may, however, be adopted where the authority has reason to believe that the assessee may defeat the demand, in which case brief reasons may be indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
