K.P.SHAN, V. THE PRINCIPAL COMMISSIONER OF INCOME TAX,

WA/989/2019

AI Insights

The case involves K.P. Shan, the appellant, who sought a writ appeal against the judgment of a Single Judge concerning the pre-condition of depositing 10% of the tax demand for the stay of recovery pending the disposal of income tax appeals. The appellant argued that the condition was unreasonable and usurped the discretionary powers of the appellate authority. The respondents, including various income tax officers and commissioners, contended that the appellants had not complied with the stipulated conditions for considering their stay petitions. The High Court found that imposing such a pre-condition was not just and proper, as the statute does not require any pre-condition for considering stay petitions.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 754780 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 03-04-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: GEORGE SEBASTIAN; ARUN ABRAHAM
• Keywords: Income Tax; Statutory Appeals; Stay of recovery; Pre-condition for Stay
• Section: 246; 220(6)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI WEDNESDAY,THE 03RD DAY OF APRIL 2019 / 13TH CHAITHRA, 1941 WA.No. 989 of 2019 AGAINST THE JUDGMENT DATED 26-03-2019 IN WP(C) 9106/2019 of HIGHCOURT APPELLANT/PETITIONER: K.P.SHAN, AGED 36 YEARS, S/O.PUSHPAN, KILIYANPARAMBIL HOUSE, VELIYANNUR, THRISSUR-680021. BY ADVS. SRI.GEORGE SEBASTIAN SRI.ARUN LUCKOSE ABRAHAM RESPONDENTS/RESPONDENTS: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AYAKAR BHAVAN, THRISSUR-680001. 2 THE JOINT COMMISSIONER OF INCOME TAX, RANGE-2, AYAKAR BHAVAN, THRISSUR-680001. 3 THE COMMISSIONER OF INCOME TAX (APPEAL), THRISSUR-680001. 4 THE INCOME TAX OFFICER (TRO AND TECH), OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, SHAKTHAN NAGAR, THRISSUR-680001. 5 THE INCOME TAX OFFICER, WARD 2 (4), THRISSUR-680001. OTHER PRESENT: SC(GOI), TAXES-SRI JOSE JOSEPH THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.04.2019, ALONG WITH WA Nos. 994 & 998/2019 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: WA Nos.989, 994 & 998/2019 -2- C.K. ABDUL REHIM, J. & R. NARAYANA PISHARADI, J. ------------------------------------------------- W .A. Nos. 989, 994 & 998 OF 2019 ------------------------------------------------- DATED THIS THE 3rd DAY OF APRIL, 2019 J U D G M E N T Abdul Rehim, J: The above writ appeals arise out of a common judgment passed by the learned Single Judge in W .P (C) Nos.9106/2019, 9141/2019 & 9123/2019, dated 26th March 2019. The appellants are the petitioners and the respondents are the respondents in the writ petition. 2. The writ petitions were filed seeking direction to the Commissioner of Income Tax (Appeals), Thrissur to dispose of the statutory appeals and stay petitions filed by the appellants and till then to keep in abeyance the steps initiated for recovery of the income tax assessed. In all these cases, after filing of the statutory appeals under Section 246 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short) the appellants approached the Assessing Officer himself seeking stay of the recovery, pending disposal of the appeals. The Assessing Officer had passed orders in all these cases directing for remittance of 20% of the demand, as a pre-condition for consideration of such WA Nos.989, 994 & 998/2019 -3- applications, relying on a Memorandum issued by the Board (F .No.404/72/93-ITCC dated 31-07-2017). The appellants have not complied with the condition stipulated. Instead, they moved before the appellate authority under interim applications seeking stay of enforcement of the demand until disposal of the appeals. Since those applications were not considered, the appellants have approached this court invoking the jurisdiction vested under Article 226 of the Constitution of India. 3. The learned Single Judge while dealing with the writ petitions found that, the prayers in the writ petition are substantially against the inaction of the appellate authority in disposing the stay petitions and the appeals. But on taking note of the orders passed by the Assessing Authority insisting upon payment of 20% of the amount as a pre-condition, it was directed that the appellants should deposit 10% of the amount under demand, within 4 weeks from the date of the judgment and shall produce proof before the appellate authority, for consideration of the stay petitions. On such deposit the stay petitions were directed to be considered and disposed of expeditiously, preferably within 2 months from the date of receipt of a copy of the judgment. Further, direction was issued to the appellate authority to consider the appeals also WA Nos.989, 994 & 998/2019 -4- expeditiously, if the appellants had complied with the conditions stipulated. The appellants are assailing the conditions stipulated as above. 4. Heard; counsel for the appellants and Standing Counsel appearing for the respondents. It is contended on behalf of the appellants that the insistence for deposit of 10% of the demand as a pre-condition for consideration of the application for interim stay, is quite unreasonable and unwarranted. It is argued that, such a direction will amount to usurping into the discretionary powers vested on the appellate authority. It is pointed out that, power to grant stay is a discretionary power vested on the appellate authority, which has to be exercised by that authority independently. Whether a condition need to be imposed for granting stay pending disposal of the appeals, is a matter which is coming within the discretionary powers of the Appellate Authority. Since the statute does not insist on any such pre-condition for the purpose of consideration of the stay petition, the insistence made by the learned Judge is quite unreasonable and unsustainable, is the contention. Question whether any condition need to be imposed for granting stay, is a matter which need to be decided based on the prima facie remit of the appeal, which has to be appreciated by the Appellate WA Nos.989, 994 & 998/2019 -5- Authority, is the argument. 5. On the other hand, learned Standing Counsel contended that, the appeals were filed as early as on 02-01-2019 and on the same day itself the appellants have moved before the Assessing Officer seeking stay of the demand by invoking Section 220 (6) of the Act. Eventhough the assessing authority had insisted upon deposit of 20% for consideration of the stay petition, the appellants have failed to comply with such a stipulation. On the other hand, after lapse of more than 1 ½ months the appellants have approached the Appellate Authority under the stay petitions. Therefore it is contended that the learned Judge was perfectly justified in insisting upon payment of 10% as a pre-condition, for directing consideration of the stay petitions, is the contention. 6. We take note of the fact that the power to grant stay of recovery pending disposal of the appeal is a power vested on the appellate authority, which is discretionary in nature and which need to be exercised based on prima facie satisfaction about the merits of the appeal. Since the statute does not stipulate any pre-condition for deposit of any portion of the demand for consideration of the stay petition, it is not just and proper for this court to insist upon any such pre-condition for consideration WA Nos.989, 994 & 998/2019 -6- of the stay petitions. We also found that the non-compliance of the conditions stipulated by the Assessing Authority will not in any manner preclude the appellants from approaching the Appellate Authority seeking stay of the demand, pending disposal of the appeal. 7. Therefore we are inclined to allow the writ appeal and to modify the impugned judgments to the following terms; (i) There will be a direction to the 3rd respondent (Commissioner of Income Tax (Appeals) to consider and pass appropriate orders on Ext.P7 stay petitions filed by the appellants seeking stay of the recovery, pending disposal of the statutory appeals, at the earliest, after affording an opportunity of personal hearing to the appellants. At any rate, the stay petitions shall be disposed of within one month from the date of receipt of this judgment. (ii) Till the disposal of the stay petitions as directed above, the demands impugned in the statutory appeals shall be kept in abeyance. Sd/- C.K.ABDUL REHIM, JUDGE. Sd/- R. NARAYANA PISHARADI, JUDGE. JUDGE AMG "