TMI Blog2004 (1) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Income-tax (Appeals) are disposed of. - - - - - Dated:- 28-1-2004 - Judge(s) : A. K. PATNAIK., M. PAPANNA. JUDGMENT The miscellaneous case and the two writ petitions have been filed by one and the same petitioner the Bhubaneswar Stock Exchange and as they are connected with each other, they are being disposed of by this common order and judgment. The relevant facts are that the Bhubaneswar Stock Exchange was taken over on January 6, 2003, by the administrator appointed by the Central Government under section 11 of the Securities Contracts (Regulation) Act, 1956. After taking over, the administrator found that the Assistant Commissioner of Income-tax, Circle-1(I), Bhubaneswar (hereinafter referred to as "the Assistant Commissioner") had issued notices to the petitioner under section 148 of the Income-tax Act, 1961 (for short, "the Act") for the assessment years 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01 and 2001-02 stating that its income had escaped assessment and pending assessment had provisionally attached the fixed deposits of the petitioner in different banks and in response thereto the petitioner had claimed that its income was exempt from tax u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within seven days of service of notice instead of the normal period of thirty days after holding that there was no basis for the Assessing Officer to hold that it would be detrimental to the Revenue if the full period of thirty days was allowed to the petitioner to make the payment since the accounts of the petitioner had been frozen by the provisional orders of attachment. Since by the time the said order dated March 28, 2003, was passed by this court the Income-tax Department had collected some pay orders from the banks pursuant to the notices of demand which were quashed, the court also passed orders directing the Department to restitute the petitioner to the original position by March 31, 2003. By the said order dated March 28, 2003, the court also granted liberty to the petitioner to move the appropriate authority for drawing interest from the frozen accounts and further observed that if any such prayer was made, the authorities concerned will consider the same keeping in view the fact that the institution of the petitioner was a public institution. Soon thereafter, Miscellaneous Case No. 3179 of 2003 was filed by the Department for some clarification and by order dated Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner. On or about May 22, 2003, the administrator of the petitioner was informed by the U.T.I. Bank Ltd., Satyanagar, Bhubaneswar, Canfin Homes, Kharavela Nagar, Bhubaneswar, Vysya Bank Ltd., Ashok Nagar, Bhubaneswar and Canara Bank, Cuttack Road Branch, Bhubaneswar that notices under section 226(3) of the Act had been issued by the Assistant Commissioner to pay the amounts due from the banks to the petitioner to the Department towards the arrears of income-tax liability remaining unpaid by the petitioner. Aggrieved, the petitioner filed writ petition W.P. (C) No. 5356 of 2003 praying for quashing of the said notices under section 226(3) of the Act issued by the Assistant Commissioner to the four banks. Along with the said writ petition the petitioner also filed Miscellaneous Case No. 5402 of 2003 for appropriate interim orders staying the operation of the said impugned notices under section 226(3) of the Act and directing release of the accounts of the petitioner. On May 27, 2003, the vacation judge passed orders issuing notice to the opposite parties and directing release of the accounts of the petitioner by squeezing Rs. 4,71,05,427 and for directing the four banks to all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 2003. He further submitted that the fixed deposits of the petitioner in the said two banks, namely, Canfin Homes and Canara Bank, which were encashed carried a higher rate of interest than the fresh fixed deposits which were created on July 4, 2003, and this has also resulted in loss to the petitioner. He vehemently submitted that orders should be passed by this court in Miscellaneous Case No. 3703 of 2003 directing the aforesaid two banks, namely, Canfin Homes and Canara Bank, to pay back the money in the same fixed deposits from which they were encashed and paid to the Department so that the petitioner is restored to its original position as on March 28, 2003, in accordance with the direction of this court in the order dated March 28, 2003 in W.P.(C) No. 3137 of 2003 and the petitioner is entitled to interest on the fixed deposits on and from March 28, 2003, at the old rate. In reply, Mr. J.P. Chowdhury, learned counsel for the two banks (opposite parties nos. 4 and 6) submitted that during the period March 28, 2003 to April 3, 2003, after encashment of the fixed deposits the money was with the Department and hence the banks were not liable for interest for the said period. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Department and pay interest at the old rate on such fixed deposits. Miscellaneous Case No. 3703 of 2003 for implementation of the order dated March 28, 2003 is accordingly disposed of. Mr. Das, learned counsel for the petitioner submitted that the question as to whether the petitioner was entitled to claim exemption of its income under section 10(23C)(iv) and (v) of the Act arose also in the assessment year 1992-93 and the Commissioner of Income-tax (Appeals), Orissa, Cuttack in his order dated July 16, 1996, in Income-tax Appeal No. 23/Co/95-96, after considering the objects for which the petitioner has been promoted has held that the petitioner-company is a general public utility and has been established for charitable purposes and its income will be exempt from tax under section 11 of the Act. Mr. Das submitted that the Department has not assailed the said order dated July 16, 1996, of the Commissioner of Income-tax (Appeals), Orissa and the said order of the Commissioner of Income-tax (Appeals) was binding on the Assessing Officer. Mr. Das cited the decision of the Division Bench in Orissa Forest Corporation Ltd. v. Asst. Collector, Central Excise [1982] ELT 875 (Orissa), f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1922 under section 5(8) of the said Act. He pointed out that similar provisions as in section 5(8) of the Indian Income-tax Act, 1922 have also been made in section 119 of the Income-tax Act, 1961, empowering the Central Board of Direct Taxes to issue instructions to other income-tax authorities from time to time as it may deem fit for the proper administration of the Act and such authorities and all other persons employed for execution of the Act are to follow and observe such instructions issued by the Board. Mr. Das also cited the decision of a Division Bench of this court in State of Orissa v. Janamohan Das, AIR 1993 Orissa 180, for the proposition that no authority should be vested with unlimited or unfettered discretion. Mr. Das submitted that the petitioner presently has no income other than interest from the fixed deposits in different banks and if the fixed deposits are encashed and appropriated by the Income-tax Department, the petitioner will not be able to meet its even establishment expenses and the petitioner will suffer immense hardship. Mr. Das further submitted that the petitioner has not moved the Commissioner of Income-tax in revision because the nil a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2003 will have to be quashed by the court. Mr. Akhil Kumar Mohapatra, learned standing counsel for the Income-tax Department, on the other hand, submitted that the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 1992-93 holding that the petitioner is entitled to exemption under section 11 of the Act would not be binding on the Assistant Commissioner for making the assessments for the subsequent assessment years as it is the settled law that each assessment year can be assessed independently of the findings in the earlier assessment years. Mr. Mohapatra argued that the language of section 10(23C)(iv) and (v) of the Act would show that it is only a fund, institution or trust established for charitable purposes that is notified by the Central Government in the Official Gazette which is exempt from tax on its income and therefore in the absence of a notification by the Central Government in the Official Gazette notifying the institution of the petitioner under section 10(23C)(iv) and (v), the income of the petitioner is not exempt from tax. Relying on the averments in paragraph 10 of the counter-affidavit Mr. Mohapatra submitted that in instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titions under article 226 of the Constitution and has also held that where statutory remedies are available, the court must have good and sufficient reason to bypass the alternative statutory remedy while entertaining a writ petition under article 226 of the Constitution. According to Mr. Mohapatra, since there are sufficient statutory remedies available to the petitioner against the impugned order dated May 7, 2003, of the Assistant Commissioner, this court should dismiss the writ petition under article 226 of the Constitution. The first question to be decided is whether the petitioner has any alternative statutory against the order dated May 7, 2003, of the Assistant Commissioner which is under challenge in W.P. (C) No. 4937 of 2003. Against this order dated May 7, 2003, rejecting the application under sub-section (6) of section 220 of the Act, no appeal has been provided under the Act as in the appeal provisions in sections 246 and 246A of the Act, we do not find any mention of the order under sub-section (6) of section 220 as an appealable order either before the Deputy Commissioner of Income-tax (Appeals) or before the Commissioner of Income-tax (Appeals). The petitioner, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 663; AIR 1983 SC 603, held: "It is only where statutory remedies are entirely ill suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to article 226 of the Constitution. But then the court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the Revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged." In the aforesaid decision, the Supreme Court has held that matters involving revenue where statutory remedies are available are not matters where the court should bypass the statutory remedy, but this is not to say that in no matter involving revenue where statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion under section 220(6) of the Act (subject to such conditions as he may think fit to impose) so as to treat the assessee as not being in default in respect of the amount in dispute in the appeal in the following situations: (i) the demand in dispute has arisen because the Assessing Officer had adopted an interpretation of law in respect of which, there exists conflicting decisions of one or more High Courts, or, the High Court of jurisdiction has adopted a contrary interpretation but the Department has not accepted that judgment, or (ii) the demand in dispute relates to issues that have been decided in favour of the assessee in an earlier order by an appellate authority or court in the assessee's own case. 3. It is clarified that in the situations mentioned in paragraph 2 above the assessee will be treated as not in default only in respect of the amount attributable to such disputed points. Further, where it is subsequently found that the assessee has not co-operated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or court alters the situation referred to in paragraph 2 above, the Assessing Officer will no longer b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s objects, for which the income was being accumulated and the deposit of the accumulated income in Canara Bank, a nationalized bank, the appellant has satisfied the conditions of section 11(2) and, as a result, exemption under section 11 will be available to the appellant on the accumulated income as well. In other words, the appellant's income of Rs. 19,98,038, for the year relevant to the assessment year 1992-93 will be exempt under section 11. 4. Appeal allowed. (Sd).......... S.K. Sircar, Commissioner of Income-tax (Appeals), Orissa, Cuttack." Thus, in the very case of the petitioner the appellate authority had held that the petitioner was entitled to exemption under section 11 of the Act even though the institution of the petitioner had not been notified by the Central Government under section 10(23C)(iv) and (v) of the Act. The demands in respect of which appeals have now been filed by the petitioner before the Commissioner of Income-tax (Appeals) for the years 1996-97 to 2001-02 relate to issues which have been decided earlier in favour of the petitioner by the appellate authority in the very case of the petitioner and as per the instructions issued in Circular N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act and lay down the condition that the petitioner will not withdraw the amount of Rs. 4,71,05,427 kept in fixed deposit and may only operate the current accounts or any other account over and above the said amount till the appeals pending before the Commissioner of Income-tax (Appeals) are disposed of. By our order dated July 4, 2003, we had directed that the Commissioner of Income-tax (Appeals) will expedite hearing of the appeals against the assessment under section 147 of the Act for the assessment years 1996-97 to 2001-02. We now direct that the Commissioner of Income-tax (Appeals) will finally dispose of the appeals of the petitioner by February 28, 2004. In case the petitioner does not co-operate in the hearing of the appeals before the Commissioner of Income-tax (Appeals), the petitioner will not be entitled to the benefit of para. 2 of Circular No. 530 dated March 6, 1989, of the Central Board of Direct Taxes, as has been clarified in paragraph 3 of the said circular itself and it will be open for the Department to move this court for appropriate orders in that regard. As a consequence of the aforesaid order, the notices under section 226(3) of the Act issued by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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