Andhra Pradesh Housing Board V. Income Tax Department

WP/7296/2011

AI Insights

The case involves the Andhra Pradesh Housing Board (petitioner) challenging the decision of the Income Tax Appellate Tribunal (ITAT), Hyderabad, which denied the extension of stay on the recovery of income tax dues for the assessment years 2005-06 and 2006-07. The ITAT initially granted a stay which expired, leading to the attachment of the petitioner's bank accounts. The petitioner argued that the adjournments sought were due to ongoing legislative amendments to the A.P. Housing Board Act, 1961, which were relevant to the tax issues being contested. The ITAT's refusal to extend the stay was based on the grounds that the delays were attributable to the petitioner, which the High Court found to be an irrational exercise of discretion.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 679907 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 11-04-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, A.P. Housing Board Act, 1961, Article 289 of the Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: S; CH KIRAN
• Keywords: Adjournments; Assessment years; Coercive Measures; Income Tax; Income tax appellate tribunal; Stay of recovery
• Section: 254(2A)

Judgement Text

"THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE P. DURGA PRASAD WRIT PETITION No.7296 of 2011 ORDER: (per Hon’ble Sri Justice Goda Raghuram) Heard Sri S.Ravi, learned Senior Counsel instructed by Sri Ch.Pushyam Kiran, learned Counsel for the petitioner-Andhra Pradesh Housing Board and Sri J.V.Prasad, learned Senior Standing Counsel for the Income Tax Department-respondent Nos.1 and 2. The Writ Petition is directed against the order of the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench ‘A’ dated 15.03.2011, whereby and whereunder the applications filed by the petitioner seeking extension of stay of recovery of the income tax dues for the assessment years 2005-06 and 2006-07 in ITA.Nos.44 & 45/Hyd/10 were rejected. The petitioner preferred the appeals before the ITAT against assessment orders for the assessment years 2005-06 and 2006-07. In exercise of powers conferred under the 1st and 2nd provisos to Section 254 (2A) of the Income Tax Act, 1961 (for short ‘the Act’), the ITAT by its order dated 05.02.2010 granted stay of the tax demand for the assessment years in question, for a period of 180 days. The State Government had on the anvil amendments to the A.P. Housing Board Act, 1961, to incorporate a provision for vesting of the surplus funds of the A.P. Housing Board in the State Government. The amendment was eventually incorporated by gazette notification dated 07.08.2010 of A.P. Act No.12 of 2010. The petitioner qua the above amendment asserted immunity from taxation claiming benefit under the provisions of Article 289 of the Constitution of India. The ITAT is now required to consider the claim of the petitioner qua the provisions of Article 289 of the Constitution of India. It is represented by Sri S.Ravi, learned Senior Counsel for the petitioner, that the learned ITAT has concluded hearing in ITA.Nos.44 & 45/Hyd/10 and pronouncement of the judgment is awaited. Since the earlier order of stay dated 05.02.2010 for a period of 180 days had expired, the Revenue has attached the bank accounts of the petitioner. The petitioner therefore filed stay application Nos.28 & 29/Hyd/11 in its two appeals seeking further grant of stay for a period of 180 days. These were rejected by the order impugned, by the ITAT. The reason recorded by the ITAT is that the assessee/petitioner herein had taken several adjournments on 04.03.2010, 05.10.2010 and 07.03.2010, for hearing of the appeals and therefore non-disposal of the appeals is attributable to the assessee and in the circumstances exercise of discretion for granting stay is declined. On a true and fair construction of the 1st and 2nd provisos to Section 254(2-A) of the Act, the Appellate Tribunal may, after considering the merits of an application by the assessee, pass an order of stay in any proceedings under sub-section (1) of Section 253, for a period not exceeding 180 days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in the said order (first proviso). The second proviso is to the effect that where such appeal is not so disposed of within the period of stay as specified in the first proviso, the Appellate Tribunal may, on an application made by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed 365 days. Sri S.Ravi, learned Senior Counsel for the petitioner, contends that the petitioner-assessee had sought adjournments for the singular reason that the Amendment by the State legislature of the provisions of the A.P. Housing Board Act, 1961 were in active contemplation; eventually the amendments were incorporated by Act No.12 of 2010. In the circumstances, the order of the Tribunal declining stay on the ground that the delay in non-disposal of the appeal was attributable to the assessee is an irrational exercise of discretion. The petitioner- assessee is an instrumentality of the State. It is not the case of the revenue that recovery of the Income Tax dues would be difficult in case stay is granted. Sri J.V.Prasad, learned Senior Standing Counsel for the Income Tax Department, does not content that the petitioner-assessee had sought adjournments in the appeals on irrelevant or casual grounds; other than processing of the Amendments, by the State legislature. In the totality of the circumstances, this Court is of the view that the order of the ITAT, impugned herein, declining grant of stay on the applications of the petitioner warrant interference and the petitioner is entitled to grant of stay particularly as it is represented that the learned ITAT has concluded hearing of the Appeals and is about to pronounce judgment in the appeals preferred by the petitioner. Accordingly, there shall be a direction to the respondents not to employ coercive measures for recovery of income tax dues for the assessment years 2005-06 and 2006-07 from the Petitioner till the pronouncement of the judgments/orders by the ITAT in ITA.Nos.44 & 45/Hyd/10 or for a period of 180 days whichever is earlier. The Writ Petition is allowed as above and at the admission stage, after hearing Sri S.Ravi, learned Senior Counsel for the petitioner, and Sri J.V. Prasad, learned Senior Standing Counsel for the Income Tax Department. There shall be no order as to costs. GODA RAGHURAM,J P.DURGA PRASAD,J Date : 11.04.2011 Note : Furnish copy by 13.04.2011. b/o usd/ndr THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE P. DURGA PRASAD WRIT PETITION No.7296 of 2011 (per Hon’ble Sri Justice Goda Raghuram) Date : 11.04.2011 "