Apex Encon Projects Private Limited, V. The Joint Commissioner of Income-Tax,

WP/8665/2013

AI Insights

The case involves Apex Encon Projects Private Limited, the petitioner, who filed a writ petition against the order of the Joint Commissioner of Income-Tax, the 1st respondent, which rejected the petitioner's request for a stay on the collection of tax demanded for the Assessment Year 2011-2012. The petitioner argued that the rejection was without valid reasons and based on an erroneous view of law and fact. The court found that the 1st respondent did not exercise the discretion conferred under Section 220(6) of the Income-tax Act, 1961, appropriately, leading to the setting aside of the impugned order and a directive for reconsideration.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 695473 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 22-03-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S R ASHOK
• Assessee Lawyers: A V KOUNDINYA
• Keywords: Assessment Order; CBDT circulars; Judicial discretion; Stay of collection; Tax demand
• Section: 246; 246A; 220(6); 226(3)

Judgement Text

"THE HON’BLE Ms. JUSTICE G.ROHINI And THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR WRIT PETITION No.8665 OF 2013 Dated: 22.03.2013 Between: Apex Encon Projects Private Limited .. Petitioner And The Joint Commissioner of Income-Tax and another .. Respondents THE HON’BLE Ms. JUSTICE G.ROHINI And THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR WRIT PETITION No.8665 OF 2013 ORDER: (Per Hon’ble Ms. Justice G.Rohini) This writ petition is filed aggrieved by the order of the 1st respondent dated 15.03.2013 whereunder the petitioner’s request for stay of collection of tax demanded for the Assessment Year 2011- 2012 till the appeal pending before the 2nd respondent is decided, has been rejected. We have heard the learned senior counsel Sri A.V.Krishna Koundinya, appearing for the petitioner as well as Sri S.R.Ashok, the learned senior counsel appearing for the respondents. The fact that under Sub-Section 6 of Section 220 of the Income Tax Act, 1961 (for short, ‘the Act’), the assessing officer is empowered to grant stay of recovery of the amounts in dispute pending the appeal under Section 246 or Section 246A of the Act is not in dispute. Admittedly, this is a case where the petitioner preferred an appeal before the 2nd respondent against the original assessment order passed by the 1st respondent dated 08.02.2013. The fact that the said appeal is pending before the 2nd respondent is also not in dispute. It is submitted by the learned counsel for the petitioner that the impugned order was passed by the 1st respondent without assigning any reasons on a wholly erroneous view of law and fact and without exercising the discretion judiciously. It is also contended that the impugned order is a predetermined one and in fact a notice under Section 226 (3) was already issued to the petitioner’s Banker on 14.3.2013 itself. The further contention is that as per the Circulars issued by the Central Board of Direct Taxes (for short, CBDT), payment of disputed tax cannot be insisted till the disposal of the first appeal. A perusal of the impugned order shows that the request of the petitioner for stay of collection was rejected merely on the ground that the Instruction No.96 of CBDT, dated 21.8.1969 relied upon by the petitioner was superseded by Instruction No.1914, dated 2.12.1993 which among other circumstances states that mere filing of an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. It was also observed in the impugned order that as the assessment order came to be passed in terms of the liberty granted by this Court while granting interim stay in a writ petition filed by the petitioner himself, the assessee is liable to pay the tax levied. Having given our thoughtful consideration to the submissions made by the learned counsel for both the parties and the material available on record, it appears to us that the reasons assigned by the 1st respondent while rejecting the petitioner’s request for stay of collection of the tax demanded are untenable and do not stand the judicial scrutiny. The first respondent is exercising the discretionary power conferred under Section 220 (6) of the Income-tax Act, 1961 while considering the application for stay pending appeal under Section 246 or Section 246A before the appellate authority. Therefore, it is obligatory on his part to give valid reasons while passing an order particularly when the assessee’s request is rejected. It may be true that Instruction No.96 of CBDT is superseded, however according to the learned counsel for the petitioner even as per Instruction No.1914 which is in operation as of today there is no change in the position as regards stay pending first appeals. It is also the specific case of the petitioner that the mere fact that this Court while granting interim order in W.P.No.34226 of 2012 left it open to proceed with regular assessment, does not in any way preclude the 1st respondent to exercise his discretionary power conferred under Section 220 (6) of the Income-tax Act, 1961. In the light of the facts and circumstances noticed above, we find force in the above noticed submissions of the learned counsel for the petitioner that the 1st respondent failed to exercise the discretion conferred under sub-section (6) of Section 220 of the Income-tax Act. Hence, the matter requires reconsideration. Accordingly, the impugned order is hereby set aside and the Writ Petition is disposed of with a direction to the 1st respondent to reconsider the petitioner’s request for stay and pass appropriate orders afresh in accordance with law. No fresh notice need be given by the 1st respondent and the writ petitioner shall appear before the 1st respondent on 25.03.2013 and make its submissions, if any, in support of the application for stay. No costs. Consequently, Miscellaneous Petitions, if any, pending in this Writ Petition shall stand closed. _____________ G.ROHINI, J _______________________ C.PRAVEEN KUMAR, J Date: 22.03.2013 Ivd/ssp "