Greater Ludhiana Area Development Authority V. Commissioner of Income Tax III, Ludhiana and Addl. Commissioner of Income Tax, Ludhiana

CWP/5607/2012

AI Insights

The case involves the Greater Ludhiana Area Development Authority (petitioner) challenging the orders of the Commissioner of Income Tax III, Ludhiana, and the Additional Commissioner of Income Tax, Ludhiana, which rejected the petitioner's request to stay a substantial tax demand and allowed for coercive recovery actions. The petitioner argued against the orders issued on 12.3.2012 and 20.3.2012, which demanded the payment of a tax arrear amounting to Rs.32,40,98,857. The court, after considering the arguments and the financial status of the petitioner, decided that the tax liability should not be stayed merely on the grounds of an ongoing appeal, especially given the petitioner's sound financial condition.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 677628 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 26-03-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: AKSHAY BHAN
• Keywords: Financial Position; Garnishee Order; Interim Stay; Quashing order; Tax demand; Liquidity funds
• Section: 143(3); 154; 226(3)

Judgement Text

"CWP No. 5607 of 2012 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. CWP No. 5607 of 2012 Date of decision 26.3.2012 Greater Ludhiana Area Development Authority ..Petitioner Versus Commissioner of Income Tax III, Ludhiana and another .. Respondents. CORAM: HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR. JUSTICE ALOK SINGH Present: Mr.Akshay Bhan , Advocate for the petitioner 1. To be referred to the Reporter or not ? 2. Whether the judgement should be reported in the Digest ? M.M.KUMAR,J. 1. The instant petition under Article 226 of the Constitution prays for quashing order dated 20.3.2012 (P7) passed by the Commissioner of Income Tax, Ludhiana and order dated 12.3.2012 (P.5) passed by the Addl. Commissioner of Income Tax, Ludhiana. By the later order, the application filed by the petitioner-assessee for staying the demand of tax has been dismissed and a direction has been issued for depositing the outstanding demand of crores of rupees failing which coercive steps are to be taken. A further prayer for quashing garnishee order dated 23.3.2012 (P.8) passed under Section 226(3) of the Income Tax Act, 1961 (for brevity 'the Act') attaching the accounts of the petitioner and initiation of coercive steps has also been made with a prayer for interim stay. 2. It has come on record that assessment in this case under Section 143(3) of the Act was completed on 28.12.2011 and demand of crores of rupees was created. The petitioner- assessee filed rectification application on 6.3.2012 under Section 154 of the Act which was disposed of on the same day and the total demand raised was at Rs.32,40,98,857/-. The order was duly served on the petitioner- assessee on 9.3.2012. An effort was made for securing interim order by moving an application. Personal hearing was granted. Holding that mere filing of appeal is not a CWP No. 5607 of 2012 2 sufficient reason to stay recovery of demand particularly when the petitioner- assessee is of sound financial position with good liquidity funds. The Additional Commissioner has given various reasons in para 5 of the order for rejecting the request of interim stay. Vide order dated 20.3.2012 (P7) the application for stay was also rejected by the Commissioner of Income Tax III, Ludhiana- respondent no.1. Thereafter garnishee notice dated 23.3.2012 (P8) was issued under Section 226(3) of the Act. 3. We have heard learned counsel for the petitioner at a considerable length and are of the view that tax liability ordinarily is not to be stayed. The mere fact that appeal has been filed is no ground for granting stay particularly when the petitioner- assessee has sound financial position. The huge amount of arrears of tax if not paid would unnecessarily result in the payment of interest by a public body like the assessee- petitioner. There is no provision in the Act which may come to the rescue of the petitioner-assessee. The impugned order passed by the respondent authorities do not suffer from any legal infirmity warranting interference of this Court. The writ petition fails and the same is dismissed. 4. It is made clear that any observation made in this order shall not be construed as an expression of opinion on merits of the controversy. (M.M.Kumar) Judge (Alok Singh ) 26.3.2012 Judge okg "