TMI Blog2016 (5) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... n the opinion of this court, during the pendency of the stay application, which had been filed almost immediately after the period stipulated in the notice under section 156 of the Act had expired, there was no warrant for the respondents to resort to drastic measures of making coercive recovery without first taking the decision on the application under section 220(6) of the Act. The action of the respondents in attaching the bank accounts and flats of the petitioner, therefore, cannot be sustained. Demand under the recovery notices shall remain stayed subject to the petitioner depositing with the Tax Recovery Officer a total amount of ₹ 2,25,00,000/- (Rupees two crore twenty five lacs only) in three equal installments of ₹ 75,00,000/- (Rupees seventy five lacs only) each on 31st May, 2016, 30th June, 2016 and 29th July, 2016. Shri Ankit Manubhai Kuchhadiya, Partner of the petitioner firm, shall file an undertaking before this court that he shall regularly make payment to the Tax Recovery Officer as stipulated hereinabove as well as to the effect that he will cooperate in the early disposal of the appeal, failing which the stay order will be cancelled. Upon the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 30,97,77,000/- were made in assessment year 2013-14. The petitioner came to be searched under section 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) on 17.07.2012. By order dated 31.03.2015 passed under section 153A of the Act, the petitioner came to be assessed for assessment years 2011-12 to 2013-14. Against the assessment orders, the petitioner preferred appeals before the Commissioner of Income Tax (Appeals) 4, Surat. It is the case of the petitioner that high-pitched assessments have been made on the petitioner which are highly contentious and hence, the petitioner has a good case to succeed in all the appeals. As a result of the above assessments, the Assessing Officer raised total demand of ₹ 22,94,74,880/-. The notices of demand under section 156 of the Act came to be issued and served upon the petitioner. The petitioner, through its Chartered Accountants, made three stay applications dated 04.05.2015 (one for each assessment year) to the first respondent Assessing Officer stating, inter alia, that it hopes to succeed fully; that the financial position of the petitioner is too poor to meet such huge demand even in part and that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case the petitioner fails to make such payment, he may be treated as an assessee in default. Being aggrieved, the petitioner has filed the present petition. 5. Mr. J. P. Shah, learned advocate for the petitioner, submitted that the petitioner had made an application under section 220(6) of the Act to the Assessing Officer. During the pendency of such application, the petitioner could not have been declared a defaulter and therefore, drawing up of a certificate in Form-57 by the Tax Recovery Officer treating the petitioner as an assessee in default is bad in law. It was submitted that all actions taken against the petitioner despite the pendency of the stay application before the Assessing Officer, are bad. It was submitted that the Tax Recovery Officer was not justified in withdrawing the monies from the bank account of the petitioner without giving reasonable notice of his intention to do so and in fact, while the notice was given to the petitioner on 11.08.2015, the account was attached on 06.08.2015. It was submitted that in view of the attachment of the petitioner s bank account as well as 114 flats, the petitioner is experiencing acute scarcity of working capital and is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requested the Assessing Officer to keep the demand in abeyance till the disposal of appeal, if filed by the assessee before the expiry of thirty days from the date of receipt of the notice of demand. It was submitted that in this case, the application for keeping the demand in abeyance was received by the office of the Deputy Commissioner of Income Tax, Central Circle-2, Surat, on 05.05.2015, that is, after the expiry of the period mentioned in the notice of demand. It was submitted that as per the office procedure, the applications for stay of demand or grant of installments, received after the expiry of the due date, cannot be entertained under section 220(3) of the Act in the absence of an application for extension of time, which is not the case here. Therefore, the then Assessing Officer has not entertained the application dated 04.05.2015 of the petitioner and has issued recovery certificate under sections 222/223 of the Act on 20.05.2015 for recovery of demand including interest of ₹ 22,72,130/- under section 220(2) of the Act, till the date of issuance of the recovery certificate. It was submitted that since there was no compliance with the demand notice, a letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer, however, refused to entertain such applications and on the other hand, took steps to make coercive recovery under section 226(3) of the Act. The petitioner, thereafter, moved the Principal Commissioner of Income Tax seeking a direction to the Assessing Officer to first decide the stay applications made by the petitioner. The Principal Commissioner of Income Tax, however, instead of referring the matter to the Assessing Officer for a decision on the applications made by the petitioner, took a decision on the objection against the action of the Tax Recovery Officer and passed an order, the operative part whereof reads as under: [5] This Instruction No.1914 F.No.404/72/93 ITCC dated 2-12-1993 has been issued by the CBDT in supersession of all its earlier circulars in this regard. Considering the facts and circumstances of the case and evidences gathered, the income determined by the Assessing Officer appears to be quite reasonable and justifiable. Further, from Instruction No.1914, it is very clear that mere filing an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. On going through the grounds raised by you for keepin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 246 or section 246A, the Assessing Officer may, in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired as long as such appeal remains undisposed of. On a conjoint reading of sub-sections (3) and (6) of section 220 of the Act, it appears that while subsection (3) thereof stipulates the period within which an application under such provision is required to be made, viz., before the expiry of the due date under sub-section (1) of section 220 of the Act, sub-section (6) thereof does not provide for any period of limitation. In the opinion of this court, therefore, the Assessing Officer was not justified in reading the provisions of sub-section (3) of section 220 of the Act into the provisions of sub-section (6) of section 220 of the Act, which do not provide for any period of limitation. In fact, sub-section (6) of section 220 of the Act clearly says that the Assessing Officer may, in his discretion, treat the assessee as not being in default in respect of the amount in dispute in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o weeks of the filing of petition by the taxpayer and the assessee must be intimated of the decision without delay. In the facts of the present case, apart from the fact that the Assessing Officer has not disposed of the stay applications within the period stipulated under the said Instructions, the Assessing Officer has refused to entertain the applications on the ground that the same had been filed after the expiry of the period stipulated in the demand notice. In the opinion of this court, if for any reason, the Assessing Officer is not entertaining the application, even then, within a period of two weeks of the filing of the stay application, he should intimate the assessee about such decision. It is incumbent on the Assessing Officer to take a decision on the application under section 220(6) of the Act one way or the other, and it is not permissible for him to sit tight over the application and proceed further to make coercive recoveries without informing the assessee about the outcome to his application. 11. Paragraph (C) of the said Instructions provides for guidelines for staying demand. Sub-paragraph (ii) thereof provides that in granting stay, the Assessing Officer may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king order. 12. In the facts of the present case, while the Assessing Officer has not passed any order on the applications made by the petitioner under section 220(6) of the Act, including not informing the petitioner that the application is not being entertained, the Principal Commissioner of Income Tax, in the order dated 06.11.2015, has no where considered the relevant factors having a bearing on the demand raised, nor has he made any reference to the grounds stated by the petitioner for keeping the demand in abeyance. From various cases coming before this court wherein more or less similar orders have been passed, the court can take judicial notice of the fact that the order dated 06.11.2015 is in the nature of a standard cyclostyle type of order which is being passed on applications made under section 220(6) of the Act in a most cases, wherein all that is stated is that on going through the grounds raised by the assessee for keeping demand in abeyance, it appears that no such valid grounds have been put forth to consider his stay application favorably. On a plain reading of the order dated 06.11.2015, it is evident that it is a non-speaking order which does not deal with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions to secure the interest of the revenue. 15. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 06.11.2015 passed by the Principal Commissioner of Income Tax (Central), Surat (Annexure L to the petition) as well as the recovery notices issued by the Tax Recovery Officer (Annexures G , I and J to the petition) are hereby quashed and set aside. The fourth respondent herein Commissioner of Income Tax (Appeals) 4, Surat is requested to conclude the appeal proceedings within a period of three months from the date of receipt of a copy of this judgment. In the meanwhile the demand under the recovery notices shall remain stayed subject to the petitioner depositing with the Tax Recovery Officer a total amount of ₹ 2,25,00,000/- (Rupees two crore twenty five lacs only) in three equal installments of ₹ 75,00,000/- (Rupees seventy five lacs only) each on 31st May, 2016, 30th June, 2016 and 29th July, 2016. Shri Ankit Manubhai Kuchhadiya, Partner of the petitioner firm, shall file an undertaking before this court that he shall regularly make payment to the Tax Recovery Officer as stipulated hereinabove as we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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