TMI Blog2014 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... T] the court ordered 25% of deposit out of the total tax demand - the assessee has raised the issue of it being an agent of the Government of the Maharashtra and its income not being taxable in view of Article 289 of the Constitution before the AO - an unconditional stay would be warranted, pending the disposal of the Appeal by the CIT(A) – the assessee will not be treated as an assessee in default – Stay granted. - Writ Petition (L) No. 2348 of 2014 - - - Dated:- 29-10-2014 - M. S. Sanklecha And M. S. Sonak,JJ. For the Petitioner : Mr. S E Dastur, Sr. Adv Madhur Agrawal Mr P C Tripathi Mr A K Jasani For the Respondents : Mr A K Jasani Mr Suresh Kumar JUDGMENT (Per: M. S. Sanklecha,J. ) At the request of the counsel for the parties, Petition is being disposed of at the stage of admission. 2. This Petition challenges the orders dated 2nd June, 2014 passed by the Assessing Officer and 18th August, 2014 passed by the Director of Income Tax (Exemption)[Director] under Section 220(6) of the Income Tax Act, 1961 (the Act). By the impugned orders the Petitioner's application for unconditional stay of demand of ₹ 961.92 Crores consequent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the rejection of stay application pending disposal of the appeal by CIT(A). This Court by order dated 18th November 2013 in W. P. (L) No.2158 of 2013 was of the prima facie view that the Petitioner's case is covered by the Tribunal's decision in CIDCO (supra). However, as the issue was not raised during Assessment Proceedings, the Assessing Officer had no occasion to examine the claim of the Petitioner. In the above circumstances, it directed that a deposit 25% of the demand be made pending the disposal of appeal by CIT(A) for the purpose of stay. 6. On 28th February 2013 the Petitioner filed its return of income (revised) for the Assessment Year 2011-12 declaring its income as 'Nil'. During the assessment proceedings, benefit of exemption under Section 11 of the Act was claimed relying upon the orders of the CIT(A) for the earlier Assessment Years. Alternatively, the Petitioner also claimed that it is an agent of the State Government and not chargeable to tax. In support, reliance was placed upon the decision of Tribunal in CIDCO (supra) as it had stepped into the shoes of CIDCO. Nevertheless, the Assessing Officer did not accept the contention of the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, this issue of being an agent of the State has been raised during the Assessment Proceedings and yet the decision of the Tribunal was not followed for any justifiable reason. Even otherwise, the order of CIT(A) for the earlier Assessment Year granting exemption under Section 11 of the Act should be applied and unconditional stay be granted. 10. Mr. Suresh Kumar, learned Counsel appearing for the Respondent Revenue relies upon the impugned order. It is further submitted that in view of the amendment to Section 2(15) of the Act by addition of a proviso, no interference with the impugned order is called for. 11. We have today, disposed of another Petition bearing No.2542 of 2014 filed by the Slum Rehabilitation Authority and set out the parameters in deciding stay application as laid down by this Court in KEC International Limited v/s. B. R. Balakrishnan 251 ITR 158; UTI Mutual Funds v/s. ITO 345 ITR 71 and UTI Mutual Fund v/s. ITO in W. P.(L) No.523 of 2013 rendered on 6th March 2013 which can for the purposes of disposing an application of stay can be summarized as under: (a) The order on stay application must briefly set out the issue and the submission of the assessee/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee with the protection of the Revenue. The above guidelines are only illustrative and the authority concerned would have to have exercise his discretion in matters of stay on the facts of the case before him. Keeping in view of the above broad parameters we shall now examine whether the authorities have properly exercised their jurisdiction. 12. The order dated 2nd June 2014 of the Assessing Officer disposing of the application for stay has in fact been passed in total defiance of the law as laid down by this court as pointed above. The first ground in the order for refusing stay is that no financial hardship is pleaded This issue was a subject matter of consideration by the Court in UTI Mutual Fund v/s. ITO in W. P.(L) No.523 of 2013 (supra) and it was held that where a strong prima facie case is made out, a direction to deposit would itself cause financial hardship. However before the financial situation of an applicant can be considered, the authority has to first consider the prima facie case pleaded by the applicant and if the same is covered against the revenue in view of a decision of a superior forum, then the question of considering the issue of financial hardship is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of chalk and cheese in the impugned order appears to have been done only so as is to deprive Petitioner the benefit of binding decision in the case of CIDCO(supra). 14. Further, the impugned order dated 18 August 2014 of the Director states that in similar circumstances when the application of the Petitioner for stay was rejected for A.Y. 2010-11 this Court in W.P. (L) No.2158 of 2013 rendered on 18 November 2013 directed the Petitioner to pay 25% of the demand and relies upon para 5 thereof which reads as follows: Having heard the learned Counsel for the parties, we find that the demand has been raised upon the Petitioner consequent to the Assessment Order dated 11 March 2013. The issue of petitioner being an agent of the Government was not raised before the Assessing Officer and thus not examined in the Assessment order. The decision in the case of CIDCO(supra) of the Tribunal does prima facie appear to apply to this case, however, the same is subject to detailed examination of the activity of the petitioner in the context of being an Agent of the Government. This requires some factual examination and would be done by the Authorities. In view of the above, we were incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of these additions have been deleted by the CIT(A) for earlier Assessment Years has not even been considered. In view of the above reasons, we direct that pending the disposal of the Appeal by the CIT(A) for the Assessment Year 2011-12 from the order dated 28th February, 2014, the Petitioner will not be treated as an assessee in default. We further make it clear that in case the order of CIT(A) is adverse to the Petitioner then as held by this Court in UTI Mutual Fund v/s. ITO 345 ITR 71, the Revenue will not take any steps for recovery of tax dues till the expiry of the time limit for filing an Appeal and where a stay application is filed with the higher forum till the disposal of the stay application. 16. Before closing, we would like to clarify that observations in the present decision are confined only to the disposal of the application for stay and the recovery of the demand. The observations made in this order should in no manner prejudice the rights and contentions of the assessee and the Revenue in the pending appellate proceedings under the Act. 17. Petition is accordingly, disposed of in the above terms, with no order as to costs. - - TaxTMI - TMITax - In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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