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M/s PUNJAB INSTITUTE OF MEDICAL SCIENCES Versus DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS) AND ORS.

2017 (5) TMI 261 - PUNJAB AND HARYANA HIGH COURT

Stay of demand - recovery proceedings u/s 226 - petitioner institute has been set up and is maintained by the State Government for advancement of scientific knowledge - Held that:- In the instant case, a bare perusal of the impugned order reveals that no reasons whatsoever have been mentioned while rejecting the case of the petitioner for stay of demand during the pendency of the appeal. It is enjoined upon the Appellate Authority to set out the reasons in support of the order passed. Giving rea .....

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rnment. The object of the petitioner institute is advancement of scientific knowledge aimed at enhancing the quality of patient care. The case of the petitioner against the assessment for the year 2011-12 has already been decided in its favour and it is stated to be entitled to refund of ₹ 5.87 crores. - The setting aside by ITAT’ of withdrawal of the registration of the petitioner institute under Section 12AA will have a bearing on the demand raised against the petitioner as well as t .....

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ult to recover the amount in case, appeal is decided against it. The petitioner has also been able to make out a prima facie case. We are, therefore, of the view that the case of the petitioner falls in exceptional circumstances which would warrant stay of demand without any pre-deposit during pendency of appeal. - CWP-25675-2016 - Dated:- 3-5-2017 - MR. S.J. VAZIFDAR AND MR. ANUPINDER SINGH GREWAL, JJ. For The Petitioner : Mr. Akshay Bhan, Senior Advocate with Mr. Alok Mittal, Advocate and Mr. .....

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ct, 1860 on 10.10.1994. It was granted registration under Section 12AA of the Income Tax Act (hereinafter referred to as the Act ) on 01.11.2000 by the Commissioner of Income Tax (for short CIT ), Chandigarh. The Society is said to have been set up with the object of providing education, training, research and related infrastructure in various branches of health sciences and working for the advancement of scientific knowledge aimed at enhancing the quality of patient care. It has been filing inc .....

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ad been raised by the Department whereagainst appeals ITA Nos.271 and 274 of 2014 preferred by the petitioner, are pending adjudication before this Court. After the cancellation of the registration of the petitioner under Section 12AA of the Act, the assessments of the petitioner for the assessment year 2007-08 to 2010-11 were re-opened and total demand of ₹ 72,19,07,560/- was raised. The appeals are stated to be pending before the CIT (Appeal). For the assessment year 2013-14, a demand of .....

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P-9 Colly.). The matter is stated to be pending before the CIT (Exemptions). Thereafter, assessment for the assessment year 2013-14 was also framed by the letter dated 30.03.2016 and further demand was created. The respondents sought the payment of outstanding amount vide order dated 04.05.2016 (Annexure P-12). The petitioner is stated to have preferred appeal against the additional demand for the assessment year 2013-14 which is pending before the CIT. In the meantime, the petitioner preferred .....

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that no coercive steps be taken against the petitioner. 3. Learned counsel for the petitioner has contended that the impugned order refusing to stay the demand during the pendency of the appeal has been passed arbitrarily and without application of mind and, therefore, deserves to be set aside. He further contended that the petitioner institute has been set up and is maintained by the Government for promoting the health and well being of the public. It has a good prima facie case for setting asi .....

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t this Court while exercising writ jurisdiction should not entertain petitions seeking stay of recovery of demand. He has also contended that in other cases pertaining to the different assessment years, the petitioner had deposited 15% of the amount and hence stay was granted in its favour. The petitioner has not deposited any amount towards demand for the assessment year 2013-14 and therefore, in terms of office memorandum dated 29.02.2016 issued by the CBDT, the demand could not be stayed with .....

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ers reported as 1994 (207) ITR 487 (MP). 4. At the outset we deem it appropriate to reproduce the relevant paragraphs of office memorandum dated 29.02.2016 (Annexure P-16) issued by the CBDT wherein Instructions No.1914 dated 21.03.1996 providing guidelines for stay of demand at the appellate stage have been modified. 4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand dis .....

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uted demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or, (b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment .....

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balance demand. (C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer. (D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assess .....

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er passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245. 5. From the reading of the modified guidelines, it is clear that in normal circumsta .....

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e accepted for staying the demand during the pendency of the appeal. They are of course illustrative and not exhaustive. 6. In the case of Kec International Ltd. Versus B.R. Balakrishnan and others (supra), the parameters for deciding the stay applications during the pendency of the appeal before the appellate authority have been set out as under:- 6. At the outset, it may be mentioned that the impugned order is passed by respondent No.2 on the administrative side. It does not give any reason. H .....

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in parameters which are required to be followed by the authorities in cases where a stay application is made by an assessee pending appeal to the first appellate authority. Parameters: (a) While considering the 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 no .....

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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 authority concerned complies with the above parameters while passing orders on the stay application, then the authoriti .....

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8. In the instant case, a bare perusal of the impugned order reveals that no reasons whatsoever have been mentioned while rejecting the case of the petitioner for stay of demand during the pendency of the appeal. It is enjoined upon the Appellate Authority to set out the reasons in support of the order passed. Giving reasons is one of the fundamentals of sound administration of justice. It is necessary to disclose the reasons which would indicate application of mind on the part of the authority .....

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It is important to note that the petitioner institute has been set up and is maintained by the State Government. The object of the petitioner institute is advancement of scientific knowledge aimed at enhancing the quality of patient care. The case of the petitioner against the assessment for the year 2011- 12 has already been decided in its favour and it is stated to be entitled to refund of ₹ 5.87 crores. Furthermore, the setting aside by the Income Tax Appellate Tribunal (hereinafter re .....

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pertaining to assessment years 2006-07 to 2010-11 has already been stayed as the petitioner has deposited an amount of 15%. It is also not a case where the petitioner institute has been a wilful defaulter and it would be difficult to recover the amount in case, appeal is decided against it. The petitioner has also been able to make out a prima facie case. We are, therefore, of the view that the case of the petitioner falls in exceptional circumstances which would warrant stay of demand without a .....

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ces. We have already spelt out the exceptional circumstances which warrant interfering with the impugned order. 12. The judgment in the case of Kanav Khanna v. Commissioner of Income-Tax and Others (supra) is clearly distinguishable as it pertains to an assessee who had claimed exemption from capital gains tax on the ground that acquired land was agricultural seeking stay of demand during pendency of appeal. It has been noted therein that the agricultural income for the land in question before t .....

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