Development Authority of Andhra Pradesh V. Income Tax Department

WP/29142/2016

AI Insights

The case involves a statutory development authority of the State of Andhra Pradesh, which challenged the rejection of its stay application by the Assessing Officer under Section 220(6) of the Income Tax Act, concerning tax demands for the assessment years 2009-10 to 2013-14. The petitioner, a non-profit organization, argued that the tax demands jeopardized its statutory functions, especially as it was running at a loss and sought exemption under Section 12A. The court examined the powers of the CIT (Appeals) and the Principal Commissioner of Income Tax in granting stays and found that the Assessing Officer's decision to reject the stay was not sustainable, leading to the setting aside of the impugned orders.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 795560 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 22-09-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: T VINOD KUMAR
• Assessee Lawyers: A V KRISHNA KAUNDINYA
• Keywords: Assessment; Exemption; Income Tax; Non-profit organization; Statutory Authority; Stay of Proceedings
• Section: 147; 144; 263; 12A; 220(6); 264(1)

Judgement Text

"THE HON’BLE SRI JUSTICE V. RAMASUBRAMANIAN AND THE HON’BLE SMT JUSTICE ANIS WRIT PETITION Nos. 29136, 29138, 29141, 29142 & 29143 of 2016 COMMON ORDER: (Per VRS,J) The petitioner has come up with these five writ petitions, challenging an order passed by the Assessing Officer under Section 220(6) of the Income Tax Act, rejecting the prayer for stay of further proceedings, pursuant to the orders of assessment relating to the assessment years 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14. 2. Heard Mr. A.V. Krishna Kaundinya, learned senior counsel appearing for the petitioner, and Mr. T. Vinod Kumar, learned senior standing counsel for the Income Tax Department, appearing for the respondents. 3. The petitioner is actually a development authority constituted by the erstwhile combined State of Andhra Pradesh, in terms of Section 3 of the Andhra Pradesh Urban Areas (Development) Act, 1975. It is actually a statutory authority vested with certain powers under the aforesaid Act, for regulating the development of properties within the jurisdiction conferred upon it. Since it is a VRS,J & ANIS,J WP Nos.29136 of 2016 & Batch 2 statutory authority, not transacting any business, the petitioner applied for exemption under Section 12A. Simultaneously, the petitioner also filed returns for the relevant assessment years. 4. Thereafter, the Assessing Officer passed orders under Section 144 read with Section 147, for all the five assessment years, namely, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14, demanding a total tax amount of Rs.78,42,06,940/-. 5. The petitioner filed statutory appeals as against the orders of assessment before the Commissioner (Appeals). The appeals are now pending. 6. In the meantime, the petitioner moved applications for stay under Section 220(6) of the Act before the Assessing Officer himself. By an order, dated 11.05.2016, the Assessing Officer rejected the request for stay. 7. Being a statutory authority, riddled with its own inherent drawbacks and red tapism, the petitioner started acting in different directions. It appears that they moved the Principal Commissioner of Income Tax for a temporary reprieve. They also moved the Government for sanctioning funds for at least 15% of the tax demand, since they were already running at a loss. VRS,J & ANIS,J WP Nos.29136 of 2016 & Batch 3 8. Taking advantage of the request forwarded by the petitioner to the Government to sanction funds for payment of 15% of the tax demand, the Principal Commissioner of Income Tax appears to have passed an order, dated 22.07.2016, giving time up to 31.07.2016 to the petitioner to make payment of 15% of the tax demand. In the meantime, the petitioner has come up with the present writ petitions, challenging the order of the Assessing Officer passed under Section 220(6). 9. The primary objection of the respondents/Department to the maintainability of the writ petitions is that after having moved the Principal Commissioner of Income Tax and after having obtained an order in their favour granting relief partially, it was not open to the petitioner to challenge the original order of rejection passed by the Assessing Officer. 10. But, it appears from the scheme of the Income Tax Act, 1961 that the CIT (Appeals) himself does not have the power to grant stay of an order of assessment, pending a regular appeal. In contrast, the Assessing Officer himself is conferred the power under Section 220(6) to grant stay, subject to certain conditions and in his own discretion. VRS,J & ANIS,J WP Nos.29136 of 2016 & Batch 4 11. Since the CIT (Appeals) is not conferred with any power to grant stay pending a regular appeal, it is doubtful whether the Principal Commissioner of Income Tax could have the power to grant stay or not. However, our contention is drawn by Mr. T. Vinod Kumar, learned senior standing counsel for the Income Tax Department, to Section 264(1) of the Act, which confers a power of revision upon the Commissioner, to be exercised either suo motu or on an application. Therefore, it is contended by the learned standing counsel for the Income Tax Department that the order of the Assessing Officer, dated 11.05.2016, impugned in the writ petitions, should be taken to have been modified by the Commissioner under Section 264(1), exercising the power of revision. 12. But, we doubt the correctness of the aforesaid contention. What a regular appellate authority is not entitled to do, due to the absence of any express power conferred upon him to grant stay, we do not think that any other officer of the same rank could be construed to have. Though all the Commissioners in the hierarchy may be of the same rank, it is only some Commissioners who were vested with the powers to deal with statutory appeals. Similarly, a Commissioner is vested with the power under Section 263. Therefore, to say that the Principal Commissioner is entitled to exercise the revisional jurisdiction under Section 264(1) would be that he would be competent to do what the VRS,J & ANIS,J WP Nos.29136 of 2016 & Batch 5 CIT (Appeals) himself is not competent to do. Therefore, we are of the considered view that the objection relating to the maintainability of the writ petitions, cannot be sustained. 13. Coming to the merits of the case, there is no doubt about the fact that the petitioner is a statutory authority of the State Government. They have already made an application for exemption under Section 12A. They are running at a loss, by virtue of being a non-profit organization. Unless they receive financial backup, it is impossible for them to survive. The performance of the statutory functions cannot be allowed to be jeopardized, especially when statutory first appeals are pending before the appellate authority. Therefore, the cases of this nature are to be treated in a different manner, than the cases of individual or Company assesses who engage in a business venture. 14. In view of the above, all the Writ Petitions are allowed and the impugned orders of the Assessing Officer, dated 11.05.2016, are set aside. The CIT (Appeals), before whom the appeals are pending, is directed to dispose of the statutory appeals, within a period of four (4) weeks from the date of receipt of a copy of this order. Till the disposal of the appeals, the orders of assessment shall not be enforced against the petitioner. VRS,J & ANIS,J WP Nos.29136 of 2016 & Batch 6 Consequently, miscellaneous petitions if any pending in the writ petitions shall stand dismissed. There shall be no order as to costs. __________________________ V. RAMASUBRAMANIAN, J ____________________ ANIS, J. 22nd September, 2016 cbs VRS,J & ANIS,J WP Nos.29136 of 2016 & Batch 7 THE HON’BLE SRI JUSTICE V. RAMASUBRAMANIAN  AND THE HON’BLE SMT JUSTICE ANIS Writ Petition Nos. 29136, 29138, 29141, 29142 and 29143 of 2016 (Per VRS,J) 22nd September, 2016 cbs "