TMI Blog2015 (12) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... anner. Hence, the powers under Sections 220(3) & 220(6) of IT Act have to be exercised in accordance with the letter and spirit of CBDT Instruction No.95 dated 21.08.1969, which is binding on all the assessing authorities created under the Act. Therefore, the impugned order passed by the respondent without considering CBDT Instruction No.95, dated 21.08.1969 is against the principles laid down in the judgments stated supra. In the absence of any specific bar to provide an opportunity in the provision, the respondent ought to have provided an opportunity to get absolute stay till the disposal of the appeal as well as in consideration of the reasons to treat the assessee as 'not being in default', in order to avoid interest and penalty. Whereas in this case the Assessing Officer had failed to provide an opportunity of being heard prior to disposal of the application under Section 220(3) for stay. Hence, the impugned orders are liable to be set aside. The respondent is directed to consider the petition filed by the petitioner under Section 220(3) and 220(6) of IT Act, in conformity with CBDT Instruction No.95, dated 21.08.1969, by providing an opportunity of being heard to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh pitched assessment in an arbitrary manner and biased mind, determining the income of the petitioner at ₹ 59,91,680/-, by rejecting the petitioners claim of Agricultural Income and treating the same as regular income from undisclosed source. 2-2. It is stated by the petitioner that the respondent/Assessing Officer has not taken into consideration cultivation of Jasmine and teak wood in Periakooda Kovil Village, Madurai District on a leased land from the petitioner's mother in Survey No.106 and 108 in an extent of 7.22 acres and to that effect evidences were produced by way of Patta, Adangal, Sales Bills and pesticides Bills and affidavit of petitioner's mother. Though necessary documents viz., Patta, Adangal in the name of the petitioner, Sale Bills, Pesticides Bills etc., were produced by the petitioner, the respondent/Assessing Officer did not take into consideration the same and made a high pitched assessment. It is the case of the petitioner that the petitioner proved ownership of land, leased land of his mother in Periakoodakovil Village on a total extent of 16.05 acres and that agricultural operations were carried on by the petitioner. 2-3. It is furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent seeking stay of recovery of demand amount. But, by way impugned orders the respondent disposed of the said petition filed under Sections 220(3) 220(6) of the Income Tax Act, directing the petitioner to pay 50% of the demand amount, pending the appeal. 2-5.Aggrieved over the same, the present writ petition has been filed by the petitioner for the relief as stated supra, contending that in the present case, very high pitched assessment was made by the assessing authority for the assessment year 2012-2013 without taking into consideration agricultural income and made assessment with a ten fold increase on total income; that by considering the petition filed by the petitioner under Sections 220(3) 220(6) of the Income Tax Act, the respondent ought to have treated the petitioner as not being in default in respect of the amount in dispute; on the other hand, the respondent in a usual manner simply passed an order dismissing the petition filed under Sections 220(3) 220(6) of the Income Tax Act, without assigning any reason in a mechanical manner. Further, Instruction No.95 of the Central Board of Direct Taxes, dated 21.08.1969, is squarely applicable to the case of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly. Additions have been made because of the petitioner's failure to satisfy the Assessing Officer regarding the genuineness of agricultural operations and the income derived thereof. The petitioner had requested for a blanket stay of entire demand merely on the ground that he has filed appeal against the additions; but no reasons explaining the genuine hardship faced by him in payment of the disputed taxes have been given in the petition under Sections 220(3) 220(6) of the Income Tax Act. Thus, the respondent sought for dismissal of the writ petition. 4. Heard the submissions made on either side and perused the materials available on record. 5. It is the submission of the learned counsel for the petitioner that the petitioner herein is an assessee of Income Tax, having permanent account No.ADWPJ 3312 K/1(2)/MDU with the status as 'individual'. For the assessment year 2012-13, original return of income was filed by the petitioner for the accounting period 01.04.2011 to 31.03.2012, wherein the total income of the petitioner was furnished as ₹ 4,91,680/- and agricultural income to the tune of ₹ 45,00,000/-. After deducting rebate on agricultural inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a high pitched one, as per CBDT Instruction No.95, dated 21.08.1969, the petitioner should be treated as not being in default in respect of the amount in dispute in the appeal , within the ambit of Section 220(3) and 220(6) of the Act in view of the pending appeal to avoid penal interest as well as for granting absolute stay. 9. But, according to the learned counsel for the respondent, CBDT Instruction No.95 dated 21.08.1969, has been superseded by CBDT Instruction No.1914 dated 02.12.1993 and only after taking into consideration all the relevant facts of the case of the petitioner, the respondent/Assessing Officer has rejected the petition filed by the petitioner under Sections 220(3) 220(6) of IT Act for stay of the demand, and directed the petitioner to pay 50% of the demand amount, pending the disposal of the appeal. 10. But, it is the assertive submission of the learned counsel for the petitioner that the respondent is bound to grant stay by treating the petitioner as not being in default in respect of the amount in dispute in the appeal , as per Section 220(6) of the Income Tax Act. In this regard, the learned counsel for the petitioner has also relied upon number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose the circumstances of the case. 15. But, so far as the case of the petitioner is concerned, it falls within the ambit of Sections 220(3) 220(6), in view of the pendency of the appeal, in order to treat the petitioner/Assessee being not in default, to avoid penal/interest as well as granting absolute stay, since the assessment made by the Assessing Officer is high pitched assessment. High Pitched Assessment means where the income determined and assessment was substantially higher than the returned income, say twice the later amount or more, the collection of the tax in dispute should be kept in abeyance till the decision on the appeal provided there were no lapses on the part of the assessee. In the instant case, the assessment in question in the pending appeal before the Commissioner of Income Tax (Appeals) is a High Pitched Assessment, because the petitioner has submitted his return for the accounting period, that is 01.04.2011 to 31.03.2012 for the assessment year 2012-2013 as ₹ 4,91,680/- including agricultural income of ₹ 45,00,000/-. But, the respondent having formed adverse opinion, as set out in the assessment order dated 31.3.2015, negativing agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically states that it is in supersession of all earlier instructions, the position obtaining after the decision of this Court in Valvoline Cummins Ltd., (Supra) is not altered at all. This is so because paragraph No.2(A) which speaks of responsibility specifically indicates that it shall be the responsibility of the Assessing Officer and the TRO to collect every demand that has been raised except the following', which includes (d) demand stayed in accordance with the paras B and C below . Para B relates to stay petitions. As extracted above, Sub-clause (iii) of para B clearly indicates that a higher/superior authority could interfere with the decision of the Assessing Officer/TRO only in exceptional circumstances. The exceptional circumstances have been indicated as - where the assessment order appears to be unreasonably high pitched or where genuine hardship is likely to be caused to the assessee. . The very question as to what would constitute the assessment order as being reasonably high pitched in consideration under the said Instruction No.96 and, there, it has been noted by way of illustration that assessment at twice the amount of the returned income would amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stay application, the authority concerned will at least briefly set out the case of the assessee. (b) In cases where the assessed income under the impugned order far exceeds returned income, the authority will consider whether the assessee has made out a case for unconditional stay. If not, whether looking to the questions involved in appeal, a part of the amount should be ordered to be deposited for which purpose, some short prima facie reasons could be given by the authority in its order. (c) In cases where the assessee relies upon financial difficulties, the authority concerned can briefly indicate whether the assessee is financially sound and viable to deposit the amount if the authority wants the assessee to so deposit. (d) The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order. (e) We clarify that if the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh instruction No.1914 specifically states that it is in supersession of earlier instructions, the position obtaining after the decision of the case in Volvoline Cummins Limited Vs. DCIT (2008) 307 ITR 103 (Del) is not altered at all. This is so, the DBDT Instruction No.95, dated 21.08.1969 was issued with the consent of the informal consultative committee held on 13th May, 1969 formed under the business rules of the Parliament, which even now holds the field. 18. Hence, I am of the opinion that the tendency of making high pitched assessments by the Assessing Officer is not unknown and it may result in serious prejudice to the assessee and miscarriage of justice sometimes may even result into insolvency or closure of the business if such power was to be exercised only in a pro-revenue manner. Hence, I am of the opinion that the powers under Sections 220(3) 220(6) of IT Act have to be exercised in accordance with the letter and spirit of CBDT Instruction No.95 dated 21.08.1969, which is binding on all the assessing authorities created under the Act. 19. Therefore, the impugned order passed by the respondent without considering CBDT Instruction No.95, dated 21.08.1969 is a ..... 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