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TMI Blog2014 (2) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of Income Tax (Exemption) having jurisdiction over the respondent No.2 assessee under the Income Tax Act, 1961 ("the Act").The respondent No.1 is the final authority under the Act dealing with appellable orders passed by authorities under the Act. The respondent No.2 assessee is a statutory corporation established under the Maharashtra Area Housing and Development Act, 1976. The respondent No.2 is engaged in the activity of constructing and providing accommodations to economically weaker sections of the society. b) On 30 September 2010, respondent No.2 filed its return of income for assessment year 201011 showing its taxable income as Nil. This was based on a claim for exemption under Section 11 of the Act. c) On 18 March 2013, the Assessing Officer passed an assessment order for assessment year 201011 denying the respondent No.2 assessee the exemption under Section 11 of the Act as the activities of respondent No.2assessee did not satisfy the amended definition of charitable purpose under Section 2(15) of the Act. Pursuant to the above assessment order dated 18 March 2013 a demand notice under Section 156 of the Act for Rs.199.82 crores (Rs.146.91 crores of tax and Rs.52.88 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013, the Assessing Officer issued a recovery notice to respondent No.2 calling upon it to pay by 15 November 2013 the outstanding demand consequent to assessment order dated 18 March 2013. Respondent No. 2 assessee by its letter to the Assessing Officer pointed out that they have not yet received the order of the CIT(A) and they would be filing an appeal and stay application to the Tribunal. Attention was also drawn to the decision of this Court in UTI Mutual Fund vs. ITO 345 ITR 71 praying that no recovery be made till the disposal of its stay application before the Tribunal. However, by communication dated 14 November2013 the Assessing Officer rejected the prayer for staying the recovery proceeding made by respondent No.2 assessee while directing compliance with the direction in letter dated 11 November 2013 latest by 15 November 2012. h) It was only on 16 November 2013 (Saturday) a certified copy of the order dated 29 October 2013 passed by CIT(A) was served upon respondent No.2. Immediately on receipt of the order of the CIT(A), the respondent No.2 prepared an appeal and stay application to the Tribunal and filed the same on 18 November 2013. The hearing of the above stay ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the amount of Rs.159.84 crores to respondent No.2 within 10 days from the receipt of its order. c) The decision of Bombay High Court in the case of UTI Mutual Fund vs. ITO(supra) as well as decision of the Tribunal in the matter of RPG Enterprises Limited vs. DCIT 251 ITR 20 (ITAT Mumbai) and Maharashtra State Electricity Board vs. JCIT 81 ITD 299 (ITAT Mumbai) relied upon in the impugned order are rendered in different fact situation and would have no application in the present facts. The distinguishing feature in this case according to the petitioner was that respondent No.2's writ petition was pending before this Court which was not so in the cases relied upon. Therefore, the Tribunal could not have directed a refund while holding it has no jurisdiction to grant stay as the matter is subjudice before this Court. and d) The notice of demand was issued to respondent No.2 under Section 156 of the Act on 18 March 2013. The application for stay filed by respondent No.2 under Section 220(6) were disposed of by the Assessing officer's order dated 23 July 2013 and further application by Commissioner of Income Tax by the order dated 4 September 2013 granting a stay of the demand sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No.2 had 60 days time to file an appeal and stay application to the Tribunal. The petitioner revenue did not wait even for four days after communicating the order of the CIT (A) to respondent No.2 before adopting coercive proceedings to take away forcibly the amount of Rs.159.84 crores from the respondent No.2's bank account. Besides this Court in UTI (supra) has laid down guidelines for the authorities under the Act and directed that no coercive proceedings should be taken till the period to file an appeal expires. Moreover, it also directed the authorities under the Act not to withdraw money from the attached bank account without giving notice to the assessee to enable the assessee to obtain appropriate orders. c) The action of the petitioner revenue in not only attaching the petitioner's bank account but also withdrawing the amount of Rs.159.84 crores on 18 November 2013 when the stay application was already fixed for hearing before the Tribunal on 22 November 2013 was only done with a malafide intent to foreclose respondent No.2 from obtaining any stay from the Tribunal. Besides rendering nugatory the powers of the Tribunal in terms of proviso to Section 254(2A) of the Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vening i.e. after attachment and withdrawal of the amounts from the bank. According to respondent No.2, the notice of hearing as well as the appeal and stay application was served on the Assessing Officer on 18 November 2013 at 12.30 p.m. It is relevant to note that the sequence of events on 18 November 2013 being urged by the petitioner is stated for the first time in its affidavit in rejoinder. This is not found mentioned in the impugned order of the Tribunal or also in its petition as filed. Therefore, it does cast a doubt on the sequence of event being suggested by the petitioner at the bar on the basis of averments made only in the affidavit in rejoinder. However, for the purposes of these proceedings we nevertheless proceed on the basis of sequence of events as stated by the revenue. 6) The Act provides a period of sixty days to an assessee to file an appeal from the order of CIT(A) to the Tribunal. This Court in the matter of UTI (supra) has laid down the following guidelines for effecting recovery of dues. "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank was before the expiry of the time limit for filing appeal was only with a view to foreclose the option of respondent No.2 of obtaining a stay from the Tribunal. The respondent No.2 had received the order of the Commissioner of Income Tax (Appeals) only on 16 November 2013. Respondent No.2 had 60 days time to prefer appeal there from. However, the petitioner revenue attached the bank account of respondent No.2 on 18 November 2013 itself i.e. within two days of communication of the order of the Commissioner of Income Tax (Appeals) by respondent No.2. Further, not only the bank account has been attached on 18 November 1013 but the amounts were forcibly withdrawn on that date itself from the bank so as to completely foreclose the remedy available to respondent No.2 under the Act. Long years ago in East India Commercial vs. Collector of Customs AIR 1962(SC) 1893 the Supreme Court had observed that the law declared by the High Court is binding on all authorities functioning within the State over which the High Court has jurisdiction. The decision of this Court in UTI Mutual Funds (supra) was binding upon the petitioner revenue and the Assessing Officer. 8) Therefore, the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer under Section 220(6) of the Act and the Administrative Head viz. Commissioner of Income Tax. However, once the CIT(A) has passed an order in appeal then from such an order an appeal would lie to the Tribunal. In terms of the proviso to Section 254(2A) of the Act, the Tribunal is empowered to grant stay against any demand, pending disposal of appeal before it. Consequently, the writ petition which was filed in this Court by respondent No.2 being Writ Petition No.2544 of 2013 would come to an end when the Tribunal is seized of a stay application filed in pending appeal from the order of CIT(A). Moreover, even if the Assessing Officer and the CIT(A) had not granted the stay of the demand, the power of the Tribunal to consider and grant application for stay of the demand in an appeal filed before it does not get extinguished or curtailed. Therefore, the emphasis placed on Paragraph 9 of the impugned order by the learned Counsel for the revenue to our mind does not in any way bar the Tribunal from restoring the status quo ante as existing on 18 November 2013 by ordering the refund of Rs.159.84 crores to respondent No.2. 11) The petitioner revenue and the Assessing ..... 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