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2015 (7) TMI 556 - MADRAS HIGH COURT

2015 (7) TMI 556 - MADRAS HIGH COURT - [2015] 378 ITR 658 (Mad) - Stay of demand - disallowances under Section 40(a)(ia) for the alleged violation of Section 194A, 194H and Section 194J - Held that:- It shall be the duty of the assessing authority to collect every demand which has not fallen due or has been stayed by a Court or Tribunal etc.

It appears in the case Income Tax Officer, Ward-II(3), Coimbatore v. M/s Veerakeralam Primary Agricultural Cooperative Credit Society, Coimbator .....

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pears to be clear, this Court does not find any justification why the assessing authority has not considered the guidelines under the Instruction No.1914 dated 2.12.93. Moreover, it is well settled legal position that all authorities, civil, criminal and judicial, coming within the territory of the High Court, shall act in the aid of the High Court. While so, the assessing authority is bound by the order passed by the jurisdictional Tribunal without taking any stand that the Tribunal or High Cou .....

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ction to dispose of the main appeal itself, as the petitioner had received the notice dated 4.2.2015, hereby directs the second respondent-appellate authority to dispose of the appeal. Needless to mention that till then, the first respondent shall not proceed with the recovery, as it is well settled law that during the pendency of the appeal before the appellate authority, the department is not entitled to initiate the recovery proceedings. Decided in favour of assessee. - W.P.No.15959 of 2015 - .....

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of the disputed demand pursuant to the order of assessment in P.A.No./G.I.R.No.AAAAK1570G dated 10.03.2015 relating to the assessment year 2009-10. 2. Dr.Anita Sumanth, learned counsel for the petitioner submitted that the petitioner, being a primary agricultural cooperative credit society, maintains regular books of accounts and has been filing the returns of income regularly in terms of the provisions of the Income Tax Act within the statutory period, hence, assessments were also completed by .....

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d 10.3.2015 was passed under Section 143(3) effecting disallowance of ₹ 91,92,883/- under Section 40(a)(ia) for the alleged violation of Section 194A and ₹ 3,20,686/- and ₹ 27,500/- as disallowances under Section 40(a)(ia) for the alleged violation of Section 194H and Section 194J of the Act, the order of re-assessment under Section 143(3) read with Section 147 erroneously resulted in the determination of the income of the petitioner at ₹ 1,28,87,139/- and the tax payable .....

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d in the present writ petition has been decided in favour of the assessee by the jurisdictional bench of the Income Tax Appellate Tribunal 'D' Bench, Chennai in I.T.A.No.197/Mds/2013 dated 11.2.2014 (Income Tax Officer, Ward-II(3), Coimbatore v. M/s Veerakeralam Primary Agricultural Cooperative Credit Society, Coimbatore) in respect of the very same assessment year, therefore, the assessing authority cannot pass the assessment order nor refuse to grant stay during the pendency of the app .....

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sing authority arbitrarily passed an order directing the petitioner to pay 50% of the demand raised for the assessment year 2009-10 as preliminary measure even before the disposal of the stay petition. Such an approach is a clear violation of the procedure and also running contrary to the issue decided in favour of the assessee by the jurisdictional Bench of the Tribunal as mentioned supra. 3. Continuing her arguments, Dr.Anitha Sumanth contended that in spite of bringing to the notice of the as .....

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oard of Direct Taxes in File No.404/10/2009-ITCC dated 1.12.2009 affirming Instruction No.1914 dated 2.12.93, which mandates that stay of recovery is liable to be granted if the issue covered by orders of the superior authority, directly applicable to the present case. In support of her submissions, she also brought to the notice of this Court the various decisions of the Income Tax Appellate Tribunal, Panaji and Chennai Benches in (1) I.T.A.Nos.1 to 3/PNJ/2012 dated 30.3.2012 (Deputy Commission .....

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b-section (4) of Section 80P, therefore, would not apply. 4. Taking support from the above decisions, it was contended that when the petitioner had filed an appeal against the assessment order and the same is also pending consideration before the appellate authority, in the meanwhile, as against the demand of entire tax by the first respondent, a petition for stay was moved before the first respondent-assessing officer seeking to grant an order of stay of recovery till such time the appeal is fi .....

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recover the entire demand. The learned counsel further submitted that aggrieved by the demand of 50% tax as a condition precedent even for consideration of the stay petition, the petitioner again approached the second respondent-appellate authority seeking an absolute stay of the recovery proceedings pending appeal. When the appeal/stay petition has been pending consideration before the second respondent-appellate authority, the first respondent has wrongly rejected the stay petition by order da .....

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15 passed by the first respondent is explicitly clear that a mere pendency of the appeal would not be a ground for the petitioner to escape from the payment of the disputed liability, it is not open to the petitioner to bypass the pending appeal to maintain the present writ petition. The learned senior standing counsel also submitted that if at all the petitioner wants an early disposal of the matter, a direction may be issued to the second respondent-appellate authority to take up the stay peti .....

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e circular issued by the Central Board of Direct Taxes in File No.404/10/2009-ITCC dated 1.12.2009 affirming Instruction No.1914 dated 2.12.93 clearly enlightens the duty, responsibility and the guidelines cast on the assessing authority for staying demand. In this context, it is appropriate to extract the relevant portions of the Instruction No.1914 dated 2.12.93, as follows:- ''A. Responsibility (i) It shall be the responsibility of the Assessing Officers and the TRO to collect every d .....

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out delay. (ii) Where stay petitions are made to the authorities higher than the Assessing Officer (DC/CIT/CC), it is the responsibility of the higher authorities to dispose of the petitions without any delay, and in any event within two weeks of the receipt of the petition. Such a decision should be communicated to the assessee and the Assessing Officer immediately. (iii) The decision in the matter of stay of demand should normally be taken by Assessing Officer/TRO and his immediate superior. A .....

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y if there are valid reasons for doing so. Mere filing an appeal against the assessment order will not be sufficient reason to stay the recovery of demand. A few illustrative situations where stay could be granted are- (a) If the demand in dispute relates to issues that have been decided in assessee's favour by an appellate authority or Court earlier; or (b) if the demand in dispute has arisen because the Assessing Officer had adopted an interpretation of law in respect of which there exist .....

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ictional Income Tax Appellate Tribunal 'D' Bench in I.T.A.No.197/Mds/2013 dated 11.2.2014 (Income Tax Officer, Ward-II(3), Coimbatore v. M/s Veerakeralam Primary Agricultural Cooperative Credit Society, Coimbatore), while dealing with a similar issue, placing reliance on the judgment of the Gujarat High Court in the case of Commissioner of Income Tax v. Jatari Momin Vikas Cooperative Credit Society Ltd., 2014 (2) TMI 28, has held as follows:- ''7. From the above clarification, it .....

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those fulfilling the description contained therein but also credit societies, which are not cooperative banks. In the present case, respondent assessee is admittedly not a credit cooperative bank but a credit cooperative society. Exclusion clause of sub-section (4) of Section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed. The Revenue has tried to establish that the assessee although a credit cooperative society is carrying on banking business and is thus not eligible. .....

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