Uttar Pradesh Shram Evam Nirman Sahkari Sangh Ltd., Lucknow V. Dy. Commissioner of Income Tax, Lucknow

ITA 642/LKW/2015

• Counselvise Citation: 64223714 RSA 2015
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R RASTOGI
• Keywords: Application of stay
• Section: 43B; 40A(3); 153A; 133(6); 12AA; 147; 263; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.642/LKW/2015 ASSESSMENT YEAR:2011-12 UTTAR PRADESH SHRAM EVAM NIRMAN SAHKARI SANGH LTD. 29, KABIR MARG LUCKNOW V. DY. CIT RANGE II LUCKNOW TAN/PAN:AAAAU1496M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. K. R. RASTOGI, C.A. RESPONDENT BY: SHRI. A. K. SINGH, CIT (DR) DATE OF HEARING: 05 11 2015 DATE OF PRONOUNCEMENT: 18 11 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) REJECTING THE APPLICATION FOR STAY MOVED BY THE ASSESSEE BEFORE HIM DURING THE PENDENCY OF THE APPEAL, INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. THE LD. C.IT. (A)-I, LUCKNOW ERRED ON FACTS AND IN LAW IN REJECTING THE STAY PETITION VIDE ORDER DATED 30.07.2015 WITHOUT APPRECIATING THAT THE APPELLANT IS A STATE GOVERNMENT ORGANIZATION AND PRESENTLY HAD NO LIQUID FUNDS IN HAND. LD. A. O. HAD ALREADY RECOVERED RS. 15,22,00,000.00 FROM BANK ACCOUNTS AND REFUNDS AGAINST THE OUTSTANDING DEMAND. :- 2 -: 2. THE LD. C.I.T. (A)-I, LKO. WHILE PASSING THE ORDER ON STAY PETITION DID NOT APPRECIATED THE BOARD CIRCULARS AND JUDICIAL PRONOUNCEMENT W. R. T. STAY OF DEMAND AS SUBMITTED BEFORE HIM. 3. THE LD. C.I.T. (A) DID NOT APPRECIATED THAT THE REQUIRED DETAILS AS ASKED BY LD. C.I.T. (A) WERE PRODUCED AND COPY OF AVAILABLE RECORDS WERE SUBMITTED. REST DETAILS ARE IN THE POSSESSION OF C.B.I, AND S.I.B. UNDER THE CRIMINAL PROCEEDING W. R. T. MISAPPROPRIATION / FRAUD. 4. THE LD. C.I.T. (A), FAILS TO APPRECIATE THAT THE ACCOUNTS OF THE APPELLANT SOCIETY I HAD ALREADY SEIZED BY THE LD. ASSESSING OFFICER AND THROUGH ATTACHMENT RECOVERED RS.15,22,00,000.00 FROM THE BANK ACCOUNTS AND REFUNDS. 2. DURING THE COURSE OF HEARING OF THIS APPEAL, THE LD. CIT (DR), SHRI. A. K. SINGH HAS RAISED A PRELIMINARY OBJECTION WITH RESPECT TO THE MAINTAINABILITY OF THE APPEAL AGAINST THE ORDER OF THE LD. CIT(A) REJECTING THE STAY APPLICATION OF THE ASSESSEE DURING THE PENDENCY OF APPEAL ON THE GROUND THAT THE REQUEST OF STAY CAN ONLY BE ENTERTAINED DURING THE PENDENCY OF APPEAL BEFORE THE APPELLATE FORUM, AS THE STAY OF DEMAND IS AN ANCILLARY PROCEEDINGS TO THE MAIN APPEAL. SINCE NO APPEAL HAS BEEN FILED BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A) IN QUANTUM, THE REQUEST FOR STAY OF THE DEMAND CANNOT BE ENTERTAINED. IN SUPPORT OF HIS CONTENTION, THE LD. CIT (DR) HAS INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 254(2)(A) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') WHEREIN DURING THE PENDENCY OF THE APPEAL THE TRIBUNAL CAN GRANT STAY OF RECOVERY OF DEMAND. 3. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS STRONGLY CONTENDED THAT AS PER SECTION 254 OF THE ACT, STAY OF RECOVERY OF DEMAND CAN BE MADE AT THE REQUEST OF THE ASSESSEE DURING THE :- 3 -: PENDENCY OF THE APPEAL FILED BEFORE THE TRIBUNAL. BUT HERE IS THE CASE WHERE THE ORDER OF THE LD. CIT(A) DISPOSING OF THE STAY APPLICATION IS CHALLENGED BY FILING AN INDEPENDENT APPEAL. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 250 OF THE ACT, WHICH CONFERS POWER TO THE LD. CIT(A) TO PASS AN ORDER WHILE DISPOSING OF THE APPEAL. THE ORDER PASSED UNDER SECTION 250 OF THE ACT IS APPEALABLE BEFORE THE TRIBUNAL AS PER PROVISIONS OF SECTION 253 OF THE ACT. THEREFORE, WHEN THE ORDER OF THE LD. CIT(A) DISPOSING OF THE STAY APPLICATION WAS PASSED UNDER SECTION 250 OF THE ACT, THE SAME ORDER IS APPEALABLE BEFORE THE TRIBUNAL BY FILING AN INDEPENDENT APPEAL. THEREFORE, IN SUCH CIRCUMSTANCES, THE RECOURSE TO PROVISIONS OF SECTION 254(2)(A) OF THE ACT CANNOT BE INVOKED. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE ORDER OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF EMPLOYEES PROVIDENT FUND ORGANIZATION, NOIDA VS. ACIT (TDS), GHAZSIABAD REPORTED IN 122 DTR 476, IN WHICH IDENTICAL ISSUE WAS EXAMINED BY THE TRIBUNAL AND THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE ORDER OF THE LD. CIT(A) DISPOSING OF THE STAY APPLICATION IS APPEALABLE BEFORE THE TRIBUNAL. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES AND THE RELEVANT PROVISIONS OF THE ACT IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE LD. CIT(A) DISPOSED OF THE STAY APPLICATION FILED BEFORE HIM BY PASSING AN ORDER UNDER SECTION 250 OF THE ACT. NOT ONLY A FINAL ORDER, AN INTERIM ORDER IS ALSO TO BE PASSED UNDER SECTION 250 OF THE ACT. THERE IS NO OTHER PROVISION IN THE ACT WHICH CONFERS POWERS TO THE LD. CIT(A) FOR PASSING INTERIM ORDER UNDER DIFFERENT SECTIONS OTHER THAN SECTION 250 OF THE ACT. SECTION 250 OF THE ACT CONFERS POWERS UPON THE LD. CIT(A) ONLY. THEREFORE, THE ORDER DISPOSING OF THE STAY APPLICATION WAS PASSED BY THE LD. CIT(A) UNDER SECTION 250 OF THE ACT AND AS PER PROVISIONS OF SECTION 253 OF THE ACT, THE ORDER PASSED BY THE LD. CIT(A) :- 4 -: UNDER SECTION 250 OF THE ACT IS APPEALABLE BEFORE THE TRIBUNAL. IN THE LIGHT OF THESE PROVISIONS, THE ORDER OF THE LD. CIT(A) DISPOSING OF THE STAY APPLICATION CAN BE CHALLENGED BEFORE THE TRIBUNAL BY FILING AN APPEAL UNDER SECTION 253 OF THE ACT. 5. AN IDENTICAL ISSUE WAS ALSO EXAMINED BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF EMPLOYEES PROVIDENT FUND ORGANIZATION, NOIDA VS. ACIT (TDS), GHAZSIABAD (SUPRA). THE TRIBUNAL HAS TAKEN A VIEW THAT THE ORDER DISPOSING OF THE STAY APPLICATION BY THE LD. CIT(A) IS APPEALABLE BEFORE THE TRIBUNAL UNDER SECTION 253 OF THE ACT. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL AS UNDER:- 5. IT IS TRITE LAW THAT NO APPEAL IS MAINTAINABLE BEFORE THE APPELLATE FORUM UNLESS THE STATUTE SPECIFICALLY PROVIDES FOR IT. SECTION 253 OF THE ACT PROVIDES THAT FOR THE KINDS OF ORDER APPEALABLE BEFORE THIS INCOME TAX APPELLATE TRIBUNAL. THE PROVISIONS OF SECTION 253 READS AS UNDER: SECTION 253:- (1) ANY ASSESSEE AGGRIEVED BY ANY OF THE FOLLOWING ORDERS MAY APPEAL TO THE APPELLATE TRIBUNAL AGAINST SUCH ORDER (A) AN ORDER PASSED BY A DEPUTY COMMISSIONER (APPEALS)] [BEFORE THE 1ST DAY OF OCTOBER, 1998] OR, AS THE CASE MAY BE, A COMMISSIONER (APPEALS)] UNDER SECTION 154, SECTION 250, SECTION 271, SECTION 271A OR SECTION 272A ; OR (B) AN ORDER PASSED BY AN ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC, IN RESPECT OF SEARCH INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED UNDER SECTION 132A, AFTER THE 30TH DAY OF JUNE, 1995, BUT BEFORE THE 1ST DAY OF JANUARY, 1997 ; OR [(BA) AN ORDER PASSED BY AN ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 115VZC.] (C) [AN ORDER PASSED BY A COMMISSIONER [UNDER SECTION 12AA OR UNDER CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G] OR UNDER SECTION :- 5 -: 263 [OR UNDER SECTION 271]] OR UNDER SECTION 272A OR AN ORDER PASSED BY HIM UNDER SECTION 154 AMENDING HIS ORDER UNDER SECTION 263 OR AN ORDER PASSED BY A CHIEF COMMISSIONER OR A DIRECTOR GENERAL OR A [DIRECTOR UNDER SECTION 272A; OR] [(D) AN ORDER PASSED BY AN ASSESSING OFFICER UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 [OR SECTION 153A OR SECTION 153C] IN PURSUANCE OF THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL OR AN ORDER PASSED UNDER SECTION 154 IN RESPECT OF SUCH ORDER;] (E) AN ORDER PASSED BY AN ASSESSING OFFICER UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 OR SECTION 153A OR SECTION 153C WITH THE APPROVAL OF THE COMMISSIONER AS REFERRED TO IN SUB-SECTION (12) OF THE SECTION 144BA OR AN ORDER PASSED UNDER SECTION 154 OR SECTION 155 IN RESPECT OF SUCH ORDER. 6. CLAUSE (A) OF SUB-SECTION (1) OF SECTION 253 PROVIDES THAT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS) UNDER SECTION 250 OF THE ACT IS APPEALABLE BEFORE THE INCOME TAX APPELLATE TRIBUNAL. THEREFORE, WE ARE NOW REQUIRED TO EXAMINE WHETHER THE IMPUGNED ORDER IS PASSED UNDER SECTION 250 OF THE ACT OR NOT. THE PROVISIONS OF INCOME TAX ACT DO NOT EXPRESSLY PROVIDE THE POWER OF STAY WITH THE COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, THE SEVERAL HONBLE HIGH COURTS FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF ITO VS. M.K. MOHAMMAD KUNHI, 71 ITR 815 (SC) HAS HELD THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS INHERENT POWER TO STAY THE DEMAND WHEN THE APPEAL IS PENDING FOR DISPOSAL BEFORE HIM. REGARDING THIS, FEW OTHER DECISIONS ARE AS FOLLOWS: 1. DEBASISH MOULIK VS. DCIT, (1998) 231 ITR 737 (CAL.); 2. MAHESHWARI AGRO INDUSTRIES VS. UNION OF INDIA & ORS, (2012) 246 CTR 113 (RAJ.) 3. PREM PRAKASH TRIPATHI VS. COMMISSIONER OF INCOME TAX & ORS, (1994) 208 ITR 461 (ALL) : (1994) 121 CTR (ALL) 77; :- 6 -: 4. SMITA AGRAWAL (HUF) VS. COMMISSIONER OF INCOME-TAX , (2009) 26 DTR (ALL) 333: (2010) 230 CTR (ALL) 173: (2010) 321 ITR 491 (ALL); 5. VALVOLINE CUMMINS LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX & ORS., (2008) 217 CTR (DEL) 292: (2008) 8 DTR (DEL) 145: (2008) 307 ITR 103 (DELHI); 6. MAHARANA SHRI BHAGWAT SINGHJI OF MEWAR (LATE HIS HIGHNESS) VS. INCOME-TAX APPELLATE TRIBUNAL, JAIPUR BENCH, JAIPUR , (1996) 133 CTR (RAJ.) 97: (1997) 223 ITR 192 (RAJ.). 7. THEREFORE, NOW THE LAW IS WELL SETTLED THAT THE FIRST APPELLATE AUTHORITY I.E. COMMISSIONER OF INCOME TAX (APPEALS) HAS POWER TO GRANT STAY. IN EXERCISE OF THIS POWER, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS PASSED THE IMPUGNED ORDER OBVIOUSLY, UNDER THE PROVISIONS OF SECTION 250 OF THE ACT SINCE THERE IS NO OTHER PROVISION OF THE ACT UNDER WHICH COMMISSIONER OF INCOME TAX (APPEALS) CAN PASS THE ORDER. IT IS WELL SETTLED THAT THE ORDER NEED NOT BE AN ORDER OF CIVIL COURT ALONE, IT CAN BE OF ANY OTHER STATUTORY AUTHORITY [C.G. GHANSHAMDAS V. COLLECTOR OF MADRAS, AIR 1987 SC 180, (1986) 4 SCC 305, (1986) 2 APLJ (SC) 25]. THE TERM ORDER HAS NOT BEEN DEFINED UNDER THE PROVISIONS OF INCOME-TAX ACT, 1961. IT IS JUDICIALLY UNDERSTOOD THAT THE WORD ORDER AS A NOUN, HAS BEEN HELD EQUIVALENT TO OR SYNONYMOUS WITH DECISION. THEREFORE, HAVING HELD THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS PASSED THE ORDER UNDER SECTION 250 OF THE ACT, IN OUR CONSIDERED OPINION, THE APPEAL IS CLEARLY MAINTAINABLE UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 253 OF THE ACT. 6. SO FAR AS PROVISIONS OF SECTION 254(2)(A) OF THE ACT ARE CONCERNED, THAT PROVISION SIMPLY CONFERS THE POWERS UPON THE TRIBUNAL TO GRANT STAY DURING THE COURSE OF HEARING OF THE APPEAL FILED BEFORE IT AGAINST THE ORDER OF THE LD. CIT(A). THEREFORE, IT HAS NO RELEVANCE TO THE FILING OF THE APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DISPOSING OF THE :- 7 -: APPLICATION FOR STAY OF DEMAND. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DISPOSING OF THE APPLICATION FOR STAY IS MAINTAINABLE BEFORE THE TRIBUNAL. WE, THEREFORE, HOLD THAT THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) DISPOSING OF THE SAID APPLICATION IS MAINTAINABLE AND HAVING HELD SO, NOW WE PROCEED TO DEAL WITH THE APPEAL ON MERIT. 7. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE I.E. UTTAR PRADESH SHRAM EVAM NIRMAN SAHKARI SANGH LTD. IS A U.P. STATE GOVERNMENT CO-OPERATIVE SOCIETY CONSTITUTED UNDER THE U.P. CO- OPERATIVE SOCIETIES ACT, 1965 BY THE STATE GOVERNMENT. THE ASSESSEE- SOCIETY IS EXECUTING THE PROJECT GIVEN BY THE STATE AND CENTRAL GOVERNMENT FOR CONSTRUCTION OF GOVERNMENT BUILDING, ROADS, ETC. THE STATE GOVERNMENT ALLOCATES FUNDS FOR EACH PROJECT WHICH WERE KEPT IN A SEPARATE BANK ACCOUNTS TO BE UTILIZED ONLY FOR THAT PROJECT. THUS, THE FUNDS THOUGH IN THE NAME OF THE ASSESSEE-SOCIETY, BUT IT SOLELY BELONGS TO THE STATE GOVERNMENT AND CAN BE USED ONLY FOR THE PURPOSE FOR WHICH THE FUNDS WERE RELEASED, ACCORDING TO THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT AS PER WORKING MANUAL & FORM 1984, THE ASSESSEE WAS ALLOWED TO EXECUTE WORK OF GOVERNMENT DEPARTMENT ON COST PLUS CENTAGE WORK. ACCORDINGLY, AS PER THE GOVERNMENT MANUAL, THE ASSESSEE-SOCIETY HAS TO PREPARE CONTRACT ACCOUNT, IN WHICH ALL DIRECT COST ARE TO BE BORNE BY THE CLIENT I.E. THE STATE GOVERNMENT OR THE CENTRAL GOVERNMENT AND VALUE OF WORK DONE IS REIMBURSED BY ADDING PERCENTAGE TOWARDS CENTAGE CHARGES. THEREFORE, IF ANY DISALLOWANCE IS TO BE MADE IN THE COST DEBITED TO THE CONTRACT ACCOUNT, THEN CORRESPONDING REDUCTION IS REQUIRED TO BE MADE IN THE WORK DONE ALSO. THIS BEING A CASE OF CONTRA ENTRY ONLY. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAS FILED RETURN OF INCOME OF RS.4,48,87,020/- AND THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS.1,06,89,92,396/- IN THE CONTRACT ACCOUNT BY DISALLOWING THE HEAD OF :- 8 -: DIRECT EXPENSES DEBITED IN THE CONSTRUCTION OVERHEAD. THE DETAILS OF ADDITIONS MADE UNDER DIFFERENT HEADS AS NARRATED BY THE LD. CIT(A) IN HIS ORDER ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 1 1,02,57,205.00 ADDITION MADE BY DISALLOWING VARIOUS -EXPENSES PERTAINING TO PRIOR PERIOD. 2 46,04,412.00 ADDITION MADE BY DISALLOWING EXPENSES ON ACCOUNT OF NON DEDUCTION OF T.D.S. GIVEN IN SPECIAL AUDITOR'S REPLY VIDE LETTER DATED 18.07.2014 'AS THE SAME WAS ALREADY INCLUDED IN THE LIST OF PAYMENTS MADE IN CASH IN EXCESS OF RS. 20,000.00 IN A SINGLE DAY'. THUS, THESE EXPENSES IN EFFECT, HAVE BEEN ADDED TWICE. 3 86,83,91,263.00 ADDITION MADE BY, DISALLOWING EXPENSES ON ALLEGATION THAT THEY ARE IN VIOLATION OF SECTION 40A(3) OF I. T. ACT, 1961. 4 12,75,28,717.00 ADDITION MADE BY DISALLOWING EXPENSES ON ALLEGATION THAT THESE TRANSACTIONS ARE SUSPICIOUS ON THE BASIS OF NOTICES SENT TO PARTIES U/S 133(6) OF I. T. ACT, 1961, WITHOUT CONSIDERING THAT SUSPICION HOWEVER STRONG IT MAY BE, CANNOT TAKE PLACE OF CREDIBLE EVIDENCE. MOREOVER, HE FAILED TO CONSIDER THE FACT AND LEGAL POSITION GIVEN IN SPECIAL AUDITOR'S REPLY, VIDE LETTER DATED 18.07,2014 '-AS THE SAME WAS ALREADY INCLUDED IN THE LIST OF PAYMENTS MADE IN CASH IN EXCESS OF RS. 20,000.00 IN A SINGLE DAY'. THUS, THESE EXPENSES IN EFFECT, HAVE BEEN ADDED TWICE. :- 9 -: 5 1,71,92,392.00 ADDITION MADE BY DISALLOWING, PAYMENTS TO LABOURS ON ALLEGATION THAT LABOUR PAYMENTS ARE NOT OPEN TO VERIFICATION, WITHOUT ACKNOWLEDGING BOOKS OF ACCOUNTS AND VOUCHERS WHICH WERE PRODUCED FOR VERIFICATION AND GOT VERIFIED. 6 1,11,850.00 THAT S. B. ACCOUNT INTEREST DETAILS WERE FURNISHED BEFORE THE LD. ASSESSING AUTHORITY, THERE WAS NO LACK OF BONAFIDES. 7 56,60,796.00 THAT F.D.R INTEREST DETAILS WERE FURNISHED BEFORE THE LD. ASSESSING AUTHORITY, THERE WAS NO LACK OF BONAFIDES. 8 2,33,34,101.00 ADDITION MADE-BY ADDING INCOME UNDER THE HEAD 'CENTAGE'; AS STATED AT THE TOP, CENTAGE IN OUR GROSS PROFIT. HERE THE ASSESSING AUTHORITY HAS APPLIED A FLAT RATE OF 10% TO ARRIVE AT THE GROSS PROFIT / CENTAGE WHILE ASSESSING THE TOTAL INCOME AND AT THE SAME TIME DISALLOWED-THE-EXPENSES UNDER VARIOUS HEADS IN RECEIPT AND EXPENDITURE / PROFIT AND LOSS ACCOUNT WHICH IS BAD IN LAW AS HAS BEEN HELD TIME AND AGAIN BY THE HON'BLE COURTS. 9 41,04,501.00 ADDITION MADE ON THE INCORRECT ALLEGATION THAT F.D.R. INTEREST WAS NOT BEEN DISCLOSED IN RETURN OF INCOME IN AS MUCH AS INTEREST OF RS.13,36,481.00 REFERRED IN ASSESSMENT ORDER PERTAINS TO F.D.R.'S. 10 1,90,468.00 ADDITION MADE DISALLOWING C.P.F. WITHOUT GIVING DUE CONSIDERATION TO ASSESSEE'S SUBMISSION THAT :- 10 -: THE WHOLE CONTRIBUTION TOWARDS C.P.F. WAS DISALLOWED BY THE APPELLANT ITSELF IN RETURN OF INCOME. COPY OF LEDGER ACCOUNT OF C.P.F. WAS FILED BEFORE THE LD. ASSESSING AUTHORITY AND IS ON RECORD. 11 35,62,954.00 ADDITION MADE BY. DISALLOWING. VAT. DEBITED IN PROFIT AND LOSS ACCOUNT BY MAKING MERE ALLEGATION THAT PROVISIONS OF SECTION 43B OF THE I. T. ACT ARE NOT APPLICABLE IN THIS CASE, MERELY RELYING AGAIN ON AUDITOR'S REPORT WITHOUT APPLYING HIS OWN MIND AND CONSIDERING, THE DEDUCTION CERTIFICATES FILED BEFORE THE HIM. THE CERTIFICATES CLEARLY REVEAL THAT THE DEDUCTIONS PERTAIN TO THE RELEVANT FINANCIAL YEAR. 12 6,276.00 ADDITION MADE BY DISALLOWING TRADE TAX ON ALLEGATION THAT THE SAME WAS NOT PAID TILL THE DUE DATE OF FILING OF RETURN. 8. THE ASSESSING OFFICER ACCORDINGLY RAISED HUGE DEMAND OF RS.48,27,78,561/-. 9. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) ON 20.8.2014. THE ASSESSING OFFICER VIDE NOTICE UNDER SECTION 221 OF THE ACT RAISED A DEMAND ON 19.11.2014 FOR MAKING COMPLIANCE ON 27.11.2014 AND IN RESPONSE THERETO, IT WAS CONTENDED THAT THE ASSESSEE HAS FILED AN APPEAL BEFORE THE LD. CIT(A), LUCKNOW AND IT IS A GOVERNMENT OF U.P. ENTERPRISES AND NOT IN A POSITION TO MAKE PAYMENT OF EVEN A SMALL FRACTION OF HUGE DISPUTED DEMAND. THE SUBMISSION OF THE ASSESSEE WAS REJECTED BY PASSING AN ORDER UNDER SECTION 220(6) OF THE ACT ON 29.12.2014 AND TREATED THE ASSESSEE TO BE IN DEFAULT IN RESPECT OF THE ENTIRE OUTSTANDING DEMAND FOR ASSESSMENT YEAR 2011-12. THE ASSESSING OFFICER THEREAFTER ATTACHED VARIOUS BANK ACCOUNTS OF THE :- 11 -: ASSESSEE AND RECOVERED THE AMOUNT AND ADJUSTED THE REFUND, THE DETAILS OF WHICH ARE AS UNDER:- (I) RS.12,21,25,000.00 HAS BEEN RECOVERED FROM BANK OF INDIA, HAZRATGANJ, LUCKNOW ACCOUNT NO. 680010110003477.- COPY OF BANK CERTIFICATE IS AT PAGE 80. (II) RS. 75,64,122.00 FROM H.D.F.C, BANK LIMITED, GOVIND NAGAR, KANPUR, ACCOUNT NO. 02981450000417. COPY OF BANK STATEMENT IS AT PAGE 81. (III) RS. 72,59,083,00 FROM CENTRAL BANK OF INDIA, KUSHI NAGAR BRANCH, ACCOUNT NO. 2367449091. 82-83. (IV) RS.11,08,000.00 FROM STATE BANK OF INDIA, GORAKHPUR, ACCOUNT NO.30294381508./- (V) RS. 1,54,12,200.00 AGAINST THE REFUND OF EARLIER YEAR AND COPY OF CHALLAN DETAIL OF INCOME TAX DEPARTMENT IS AT PAGE RS.15,34,68,405.00 10. AGGRIEVED BY THE ABOVE ATTACHMENTS, THE ASSESSEE FILED A WRIT PETITION BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD. IT WAS ALSO BROUGHT TO THE NOTICE OF THE HON'BLE HIGH COURT THAT APPLICATION FOR STAY OF DEMAND FILED BEFORE THE LD. CIT(A) ON 8.1.2015 WAS ALSO PENDING FOR DISPOSAL AND THE HON'BLE HIGH COURT ACCORDINGLY DISPOSED OF THE WRIT PETITION DIRECTING THE LD. CIT(A) TO DISPOSE OF THE STAY APPLICATION EXPEDITIOUSLY, PREFERABLY WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF RECEIPT OF CERTIFIED COPY OF ITS ORDER IN ACCORDANCE WITH LAW, VIDE ITS ORDER DATED 18.5.2015. CONSEQUENTLY, THE LD. CIT(A) HAS DISPOSED OF THE APPLICATION OF STAY VIDE HIS ORDER DATED 30.7.2015 REJECTING THE REQUEST FOR STAY OF THE ASSESSEE AND NOW THE ASSESSEE IS BEFORE US AGAINST THAT ORDER. 11. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE FACT THAT OUT OF TOTAL DEMAND OF RS.48,27,78,561/-, THE REVENUE HAS ALREADY RECOVERED A SUM OF RS.15,34,68,405/- WHICH IS ALMOST 30% OF THE TOTAL DEMAND. BESIDES RECOVERY OF THE AFORESAID AMOUNT, THE :- 12 -: ASSESSING OFFICER HAS ALSO ATTACHED THE FOLLOWING BANK ACCOUNTS OF THE ASSESSEE:- 1. BANK OF INDIA, HAZRATGANJ, LUCKNOW ACCOUNT NO. 680010110003477. COPY OF BANK CERTIFICATE IS AT PAGE 80. 2. H.D.F.C. BANK LIMITED, GOVIND NAGAR, KANPUR, ACCOUNT NO. 02981450000417. COPY OF BANK STATEMENT IS AT PAGE 81. 3. CENTRAL BANK OF INDIA, KUSHI NAGAR BRANCH, ACCOUNT NO. 2367449091. 82-83. 4. STATE BANK OF INDIA, GORAKHPUR, ACCOUNT NO. 30294381508. 5. PUNJAB NATIONAL BANK, LALBAGH, LUCKNOW, ACCOUNT NO. 2408002190025779 AND ACCOUNT NO. 2408001800000061. COPY OF NOTICE U/S 226(3) OF I. T. ACT IS AT PAGE 86-87. 6. ALLAHABAD U.P. GRAMIN BANK, BANDA, ACCOUNT NO. COPY OF NOTICE U/S 226(3) OF I. T. ACT IS AT PAGE 88-89. 12. ON ACCOUNT OF ATTACHMENT OF ALL ACCOUNTS OF THE ASSESSEE, THE ASSESSEE IS NOT ABLE TO CARRY ON ITS BUSINESS SINCE JANUARY, 2015. EVEN THE PAYMENT OF ITS POOR EMPLOYEES COULD NOT BE DISBURSED. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER PLACED RELIANCE UPON THE GUIDELINES FOR STAY OF DEMAND ISSUED BY THE C.B.D.T. AND VARIOUS JUDICIAL PRONOUNCEMENTS, IN WHICH IT HAS BEEN HELD THAT WHERE INCOME DETERMINED IS SUBSTANTIALLY HIGHER THAN THE RETURNED INCOME, THEN COLLECTION OF TAX IN DISPUTE SHOULD BE KEPT IN ABEYANCE TILL THE DECISION ON THE APPEAL IS TAKEN. BUT THE LD. CIT(A) WITHOUT LOOKING TO THE INSTRUCTIONS OF THE BOARD HAS REJECTED THE REQUEST FOR STAY OF DEMAND AND LIFTING OF ATTACHMENT OF BANK ACCOUNTS. IT WAS FURTHER CONTENDED THAT SO LONG AS ATTACHMENT OF BANK ACCOUNT CONTINUES, THE GOVERNMENT WILL NOT DISBURSE ANY FUND TO THE ASSESSEE FOR EXECUTION OF PENDING CONTRACT AND ASSESSEE WOULD NOT BE ABLE TO UNDERTAKE ANY BUSINESS OF :- 13 -: CONSTRUCTION AND IN THAT CASE NO FRUITFUL PURPOSE WOULD BE SERVED BY ATTACHING THE BANK ACCOUNTS. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT ATTACHMENT OF ITS BANK ACCOUNTS MAY KINDLY BE LIFTED SO THAT ASSESSEE CAN UNDERTAKE ITS BUSINESS ACTIVITY AND SALARY OF POOR EMPLOYEES CAN BE DISBURSED. BESIDES, DIRECTION MAY KINDLY BE ISSUED TO THE LD. CIT(A) TO DISPOSE OF THE APPEAL WITHIN ONE MONTH SO THAT FINALITY WOULD ATTAIN TO THE ADDITIONS MADE BY THE ASSESSING OFFICER. 13. THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT IT IS A CASE WHERE FUND WAS SIPHONED IN THE POCKETS OF DIFFERENT OFFICERS/EMPLOYEES OF THE ASSESSEE-SOCIETY AND CBI(ED)/SIB ARE MAKING ENQUIRIES THEREIN. THE LD. CIT(A) HAS TAKEN INTO ACCOUNT ALL THESE ASPECTS WHILE DISPOSING OF THE STAY APPLICATION. 14. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY ADDITIONS OF SUBSTANTIAL AMOUNT WAS MADE UNDER DIFFERENT HEADS, FOR WHICH DEMAND OF RS.48,27,78,560/- WAS RAISED BY THE ASSESSING OFFICER. IT IS ALSO ON RECORD THAT AGAINST THIS DEMAND, THE ASSESSING OFFICER HAS RECOVERED A SUM OF RS.15,34,68,405/-. IT IS ALSO AN UNDISPUTED FACT THAT ALL ACCOUNTS OF THE ASSESSEE HAVE BEEN ATTACHED BY THE DEPARTMENT/REVENUE AND NO BANKING TRANSACTION IS UNDERTAKEN THEREIN. ON ACCOUNT OF ATTACHMENT OF BANK ACCOUNTS, THERE WAS NO MOVEMENT OF FUND IN THESE ACCOUNTS AND THE REVENUE IS NOT ABLE TO RECOVER ANY AMOUNT FROM THESE BANK ACCOUNTS. WHATEVER AMOUNT WAS RECOVERED ON ACCOUNT OF SEIZURE, IT WAS ONLY IN JANUARY, 2015, THEREFORE, AFTER JANUARY, 2015 THE REVENUE COULD NOT RECOVER EVEN A SINGLE PENNY FROM THE ASSESSEE EVEN AFTER ATTACHMENT OF THESE BANK ACCOUNTS. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ON ACCOUNT OF ATTACHMENT OF THE BANK ACCOUNTS, THERE IS NO MOVEMENT OF FUND FROM THE STATEMENT GOVERNMENT TO THE ASSESSEE FOR EXECUTION OF CONTRACT AND ALSO ON ACCOUNT OF THE PAUCITY OF FUNDS, ASSESSEE COULD NOT DISBURSE SALARIES OF ITS POOR EMPLOYEES, :- 14 -: CANNOT BE IGNORED. IT IS ALSO AN UNDISPUTED FACT THAT THERE WAS ALSO MISUSE OF FUNDS BY THE SENIOR OFFICIALS OF THE ASSESSEE, A PUBLIC SECTOR OF THE STATE GOVERNMENT AND FOR WHICH ENQUIRY IS BEING MADE BY THE CBI(ED) AND SIB, BUT OVERALL WE HAVE TO SEE AS TO WHAT FRUITFUL PURPOSE WOULD BE SERVED BY ALLOWING THE ATTACHMENT OF THE BANK ACCOUNTS OF THE ASSESSEE BY THE REVENUE, AS THE REVENUE COULD NOT RECOVER ANYTHING FROM THE ASSESSEE SINCE JANUARY, 2015. MOREOVER, ALMOST 30% DEMAND HAS ALSO BEEN RECOVERED BY THE REVENUE FROM THE BANK ACCOUNTS OF THE ASSESSEE AND BY MAKING ADJUSTMENT OF THE REFUND. 15. SO FAR AS PRESENT FINANCIAL POSITION OF THE ASSESSEE IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS RECORDED IN HIS ORDER THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT TO VERIFY THE FINANCIAL STATUS BUT THE REASONS FOR NOT PRODUCING THE BOOKS OF ACCOUNT WAS NOT LOOKED INTO BY THE LD. CIT(A), AS THE ASSESSEE HAS STATED THAT CURRENT BOOKS OF ACCOUNT WERE TAKEN BY THE CBI FOR MAKING ENQUIRIES. WE HAVE ALSO CAREFULLY EXAMINED THE INSTRUCTION ISSUED BY THE CBDT IN THIS REGARD AND VARIOUS JUDICIAL PRONOUNCEMENTS AND WE FIND THAT IT HAS BEEN HELD THAT ATLEAST DURING THE PENDENCY OF THE FIRST APPEAL BEFORE THE LD. CIT(A), THE OUTSTANDING DEMAND SHOULD NOT BE ENFORCED. 16. KEEPING IN VIEW ALL THESE FACTS INTO ACCOUNT, WE ARE OF THE VIEW THAT NO FRUITFUL PURPOSE WOULD BE SERVED BY ALLOWING THE ATTACHMENT OF THE BANK ACCOUNTS FOR A LONGER PERIOD. THEREFORE, WE ARE OF THE VIEW THAT LET THE ATTACHMENT OF THE BANK ACCOUNTS BE LIFTED AND ASSESSEE BE ALLOWED TO UNDERTAKE ITS BUSINESS AND TO EARN PROFIT, OUT OF WHICH SOME CONTRIBUTION CAN BE MADE TOWARDS TAX DEMAND. 17. THE FACTOR OF PENDENCY OF APPEAL CANNOT BE IGNORED. THE ASSESSEE HAS FILED ITS APPEAL IN 2014 AND ALSO FILED STAY APPLICATION FOR STAYING THE DEMAND IN JANUARY, 2015, BUT THE SAME WAS NOT DISPOSED OF. THE STAY APPLICATION WAS DISPOSED OF CONSEQUENT TO THE ORDER OF THE :- 15 -: HON'BLE HIGH COURT PASSED IN THE WRIT PETITION. WHEREAS IN JUDICIAL PROCEEDINGS, THE STAY APPLICATION SHOULD BE DISPOSED OF AT THE EARLIEST WHENEVER IT IS FILED BEFORE THE AUTHORITIES CONCERNED. IF THE AUTHORITY CONCERNED DOES NOT DISPOSE OF THE STAY APPLICATION IN TIME, THE PURPOSE OF FILING THE STAY APPLICATION IS FRUSTRATED. WHEN THE ISSUE INVOLVES WITH RESPECT TO THE HIGH DEMAND, THE APPEAL SHOULD HAVE BEEN DISPOSED OF AT THE EARLIEST POSSIBLE, BUT IT HAS NOT BEEN DISPOSED OF SO FAR. 18. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT ATTACHMENT OF THE BANK ACCOUNTS BE LIFTED AND THE LD. CIT(A) BE DIRECTED TO DISPOSE OF THE APPEAL WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF RECEIPT OF THIS ORDER. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO LIFT THE ATTACHMENT OF ALL THE BANK ACCOUNTS OF THE ASSESSEE AND THE ASSESSEE BE ALLOWED TO CARRY ON ITS BUSINESS. THE RECOVERY SHALL NOT BE ENFORCED ATLEAST FOR ONE MONTH AND THE LD. CIT(A) IS DIRECTED TO DISPOSE OF THE APPEAL WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF RECEIPT OF THIS ORDER OF THE TRIBUNAL. ACCORDINGLY THIS APPEAL IS DISPOSED OF. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:18 TH NOVEMBER, 2015 JJ:0611 :- 16 -: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR