TMI Blog1990 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ile basis. It has been claimed that such accounts are maintained on accrual basis and thus the profit or loss is also computed on such basis, following the mercantile system of accounting and the assessments have also been made on that basis. The said company is also a registered dealer, both under the Sales Tax Acts of the States and the Centre and has stated that they are selling their products both in wholesale and retail markets from their various branches and depots. It was claimed that the sales tax payable by them is included in the invoices as raised and such tax is recovered from the customers. It was also the case of the said company that, under or in terms of the various Acts of different States, they are required to pay sales tax, turnover tax and purchase tax in respect of sales and purchases effected by them in the respective States. They are also stated to have furnished returns duly and also to have deposited sales tax and other taxes within the permissible period. It was the case of the said company that their maximum sale and turn over usually takes place in the month of December each year in comparison to the other months and following the mercantile system o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 shall be computed in accordance with the provisions in sections 30 to 43A of the Act. The said company has stated that, after completion of affidavits, the proceeding was heard by a learned single judge of this court for several days and thereafter, on December 5, 1989, by his judgment and order, the said learned judge was pleased to dismiss the writ application and discharge the rule and as a consequence thereof, vacated all interim orders. While making the judgment and order as he did, the learned judge, amongst others, has recorded that, on a consideration of the impugned orders as annexed to the writ petition, he was of the view that the Assistant Commissioner of Income-tax, respondent No. 1, had applied his mind and granted certain reliefs to the said company, as a result whereof, the said respondent had duly disposed of the application under section 220(6) of the Income-tax Act, by imposing certain conditions. He was also of the view that there was neither any summary refusal of the prayers as made nor the orders as made, were arbitrary and capricious and the court was also of the clear view that if the Income-tax Officer concerned has exercised his jurisdiction in a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch conditions as he may think fit to impose, treat the assessee as not being in default in respect of the amount in dispute in the appeal, as long as such appeal remains undisposed of, even though the time for payment has expired. And paragraph 5 In exercising this discretion, the Income-tax Officer should take into account factors such as : whether the points in dispute relate to facts ; whether they arise from different interpretations of law; whether the additions have been made as a result of detailed investigation ; whether the additions are based on materials gathered to rough enquiry/survey/search and seizure operations ; whether the disputed addition to income has been assessed elsewhere by way of protective assessment and the tax thereon has been paid by such person, etc. The magnitude of the addition to the income returned cannot be the sole determinant in this regard. Each disputed addition will need to be considered to arrive at the quantum of tax that may need to be stayed and stated, that such discretion should be the discretion of a reasonable man. On the basis of the chart which was filed by Mr. Banerjee, appearing for respondents Nos. 1 to 8, the following fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and contended that to find out whether such discretion was reasonably used, this court must have, before it some reasons where from it can form the opinion, on the basis of the reasons as disclosed, whether discretion was used in the manner as indicated. It was his submission that since no reason has been disclosed or even on the basis of the reasons as disclosed, it is not clear as to why even the discretion in favour of the said company was issued, the determinations as made by the Officer concerned should be set aside by asking him to reconsider the matter afresh and to dispose of the same by giving his reasons. In support of his submissions regarding the ouster of jurisdiction of this court in a matter of the present nature, Mr. Banerjee referred to the case of Assistant Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172 ; AIR 1985 SC 330, where the Supreme Court has observed that the tendency to grant interim orders, with a great potential for public mischief for the mere asking is deprecated by the Supreme Court. It was further observed that such interim orders, often exparte and non-speaking, are made even by the High Courts while entertaining writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty on certain goods and the Department was of the view that the company was not entitled to the exemption as it had cleared the goods earlier without paying central excise duty, the granting of an interim order restraining the excise authorities from levy and collection of excise duty merely on furnishing bank guarantees by the company was held unjustified. It was held that even assuming that the company had established a prima facie case, it was not sufficient justification for granting an interim order. Also Governments are not run on mere bank guarantees and very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No governmental business or, for that matter, no business of any kind can be run on mere bank guarantees ; liquid, cash is necessary for the running of a Government as indeed any other enterprise. Where matters of public revenue are concerned, it is of the utmost importance to realise that interim orders ought not to be granted merely because a prima facie case has, been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m v. CIT [1976] 102 ITR 622 (Mad), this court should not make any interference and more particularly when there is no challenge or any materials to hold that the Income-tax Officer, in the instant case, had not at all applied his mind. It was then submitted by Mr. Mitra that, admittedly, section 43B was found to be valid and an appeal was taken where no stay order was issued and, therefore, the action of the said company, as taken now, should be deemed to be an action whereby they are trying to have some benefits indirectly which they could not get directly and such procedure or process should not be allowed to be continued. Mr. Mitra further claimed that the present circular has certainly explained the scope of section 43B, but even then on the basis of the observations in the case of Siliguri Municipality v. Amalendu Das [1984] 146 ITR 624 (SC), this court would not be empowered to make any interference, in the facts and circumstances of the present case. In that case, the Supreme Court has observed that the High Court should not, in proceedings under article 226 of the Constitution of India, grant any stay of recovery of tax, save under very exceptional circumstances ; the grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also dealt with the discretion of the officer concerned to treat the assessee as not in default and what should be the character of such discretion or the duty to be exercised in such cases, it has been observed that the discretionary power conferred by section 45 of the Income-tax Act on the Income-tax Officer to treat an assessee who has not paid the tax demanded, as not being in default if he has preferred an appeal, is a power exercisable both against and in favour of the assessee or the State, as the case may be. It is not a power which could be exercised only as against the State and the discretionary power conferred by section 45 of the Income-tax Act on the Income-tax Officer is coupled with a duty to exercise his discretion when the facts calling for its exercise exist. The fact that the exercise of the power is left to the discretion of the officer does not exonerate him from discharging his duty. It has also been observed in that case that, if the Income-tax Officer refuses to exercise any discretion at all, or his discretion is exercised arbitrarily, capriciously or unreasonably or by taking into consideration extraneous and irrelevant considerations, the court can co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pects, such as, the issues raised in the case and the prospects of the appeal being successful, the position and economic circumstances of the assessee, the amount involved, or the realisation of the amount being in jeopardy ; (iv) on the facts, as in this case the officer from the very beginning had a closed mind and it did not appear that the officer had applied his mind judicially to all the relevant aspects of the case before making his order, the order should be quashed and the case remanded to the officer to consider the matter again and exercise his discretion in a judicial manner. The learned judge has further observed that quick realisation of tax may be an administrative expediency, but, by itself, it constitutes no ground for refusing stay of collection of tax. While determining such an application, the authority exercising discretion should not act in the role of a mere tax gatherer. Dr. Pal claimed that such view as expressed by the learned single judge of this court, in the case referred to hereinbefore, has also been referred to and adopted by the Kerala High Court in the case of N. Rajan Nair v. ITO, [1987] 165 ITR 650. Apart from the above, Dr. Pal also relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 to section 43B by the Finance Act, 1989, with retrospective effect from April 1, 1984, does not, in any manner, affect the non-applicability of the main provisions of section 43B with regard to the allowability of sale tax pertaining to the last quarter, which has been duly paid to the State Government before the due date of furnishing the return under section 139(1). On the basis of the above determinations, Dr. Pal claimed and contended and that too on a reference to the chart as indicated earlier, which was produced by Mr. Banerjee, that the discretion in the instant Case was not duly and properly exercised by the officer concerned and even if such discretion has been used by him, the same cannot be treated or deemed to be the discretion of a reasonable man, as even though he has given some relief to the said company, yet has not given reasons why the further exemption in respect of payment has not been allowed. In fact, the discretion, as used, was claimed by Dr. Pal. to be bald and bare and without any proper and appropriate reasons, on the basis whereof this court could found and form its opinion as to the correctness or otherwise of such use of discretion. After he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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