Parambath Sunai, Aged 36 Years V. Union of India, represented by its Revenue Secretary, Ministry of Finance, New Delhi and The Principal Commissioner of Income Tax, Aayakar Bhavan, Kozhikode and Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-Tax Officer, National Faceless Assessment Centre, New Delhi and Income Tax Officer, Ward 1 & TPS, Aayakar Bhavan, Kannur

WP(C)/19590/2023

AI Insights

The case involves a writ petition filed by Parambath Sunai against the Union of India and other respondents, challenging the conditional stay order (Ext.P8) issued by the second respondent, which required the petitioner to deposit 15% of the assessed tax demand to stay recovery proceedings. The petitioner had previously contested an assessment order (Ext.P1) and sought a stay (Ext.P4) which was partially granted (Ext.P5). Dissatisfied with the conditions, the petitioner sought a review (Ext.P6) leading to the issuance of Ext.P8. The petitioner argued that the second respondent's order was arbitrary and failed to consider the fulfillment of the 'trinity parameters' for granting an unconditional stay, as per the directives of the CBDT and supported by a precedent from the Madras High Court. The respondents defended the order as a well-reasoned exercise of discretion. The court, referencing principles of judicial review, upheld the second respondent's decision, emphasizing the discretionary nature of such orders and the absence of any error warranting interference under Article 226 of the Constitution of India.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 698051 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 16-06-2023
• Assessment Year: misc
• Other Referred Cases: Kannammal vs. Income Tax Officer [2019 SCC Online Mad 19829]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S MANU
• Assessee Lawyers: RAJAKANNAN
• Keywords: Assessment Order; Conditional order of stay; Discretionary powers; Judicial review; Trinity parameters
• Section: 147; 144; 144B; 220(6)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS FRIDAY, THE 16TH DAY OF JUNE 2023 / 26TH JYAISHTA, 1945 WP(C) NO. 19590 OF 2023 PETITIONER: PARAMBATH SUNAIJ, AGED 36 YEARS 429A, ALEEMA MANZIL, P .O. PANOOR, THALASSERRY, KANNUR, PIN – 670692 BY ADVS.RAJA KANNAN M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RESPONDENTS: 1 UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN – 110004 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, NORTH BLOCK, NEW ANNEXE BUILDING, MANANCHIRA, KOZHIKODE, PIN – 673001 3 ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER, (PRESENTLY ASSESSMENT UNIT) INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, ROOM NO. 401, 2ND FLOOR, E-RAMP , JAWAHARLAL NEHRU STADIUM, NEW DELHI, PIN – 110003 4 INCOME TAX OFFICER, WARD 1 & TPS, AAYAKAR BHAVAN, KONNOTHUMCHALIL, CHOVVA P .O., KANNUR, PIN - 670006 SRI CHRISTOPHER ABRAHAM SRI.S.MANU, DSGI THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 19590 OF 2023 :: 2 :: JUDGMENT Dated this the 16th day of June 2023 The writ petition is filed, inter alia, to quash Ext.P8 order passed by the third respondent passing a conditional order of stay of Ext.P1 assessment order. 2. Aggrieved by Ext.P1 assessment order passed by the third respondent, the petitioner has preferred Ext.P2 appeal before the Commissioner of Income Tax (Appeals). Out of abundant caution, the petitioner moved Ext.P4 stay application before the 4th respondent – the Assessing Authority - under Section 220(6) of the Income Tax Act, 1961 (in short ‘Act)’. The fourth respondent passed Ext.P5 conditional order of stay directing the petitioner to deposit 20% of the demand amount. Dissatisfied with Ext.P5 order, the petitioner preferred Ext.P6 application before the second respondent, for review of Ext.P4 order. The petitioner also filed Ext.P7 detailed submissions before the second respondent. However, the second respondent, after finding that the assessment made by the fourth respondent WP(C) NO. 19590 OF 2023 :: 3 :: was high pitched, passed Ext.P8 conditional order of stay by directing the petitioner to deposit 15% of the demand to stay further recovery proceedings. The findings in Ext.P8 are self-contradictory and erroneous. The second respondent has failed to consider that the petitioner had fulfilled the trinity parameters laid down under the law. Therefore, Ext.P8 is arbitrary and illegal, warrants interference by this Court. Hence, the writ petition. 3. Heard Sri.Raja Kannan, the learned Counsel appearing for the petitioner and Sri.Christopher Abraham, the learned Standing Counsel appearing for the respondents. 4. Sri.Raja Kannan reiterated the contentions in the writ petition and placed reliance on the office memorandum dated 29.2.2016 promulgated by the Central Board of Direct Taxes (CBDT) to canvas the point that the second respondent has failed to follow the directions issued by the CBDT, while considering an application for stay. He also placed reliance on the decision of the Madras High Court in WP(C) NO. 19590 OF 2023 :: 4 :: Kannammal vs. Income Tax Officer [2019 SCC Online Mad 19829] [Ext.P9] to fortify his contentions. He further contended that as the petitioner had satisfactorily established the trinity parameters, the second respondent ought to have unconditionally stayed the demand. He prayed that the Ext.P8 order be quashed and the second respondent may be directed to reconsider the entire issue. 5. Sri.Christopher Abraham, on the other hand, argued that there is absolutely no error or illegality in Ext.P8 order warranting interference by this Court. The second respondent has passed a well-reasoned order following the guidelines laid down by the CBDT. He has exercised his discretionary powers and directed the petitioner to deposit 15% of the demand to stay recovery proceedings. This Court may not interfere with such discretionary powers, which can never be termed as erroneous or illegal. There are no grounds made out in the writ petition warranting interference by this Court under WP(C) NO. 19590 OF 2023 :: 5 :: Article 226 of the Constitution of India. Hence, the writ petition may be dismissed. 6. The petitioner has filed Ext.P2 appeal before the Commissioner of Income Tax (Appeals) as early as on 26.4.2022. Indisputably, the petitioner did not choose to file a stay petition along with the appeal. 7. It is later, on 22.7.2022 that the petitioner preferred Ext.P4 application, that too before the fourth respondent – the Assessing Authority. The fourth respondent, after considering the application, passed Ext.P5 order staying the demand, subject to the condition that the petitioner deposits 20% of the demand. Not happy with Ext.P5 order, the petitioner preferred a review before the second respondent. The second respondent, after analysing the pleadings and materials on record, has exercised his discretion and directed the petitioner to deposit 15% of the demand. It is this discretionary power exercised by the second respondent, that the petitioner assails in the present writ petition. WP(C) NO. 19590 OF 2023 :: 6 :: 8. The Hon’ble Supreme Court has in a catena of precedents laid down the circumstances under which, this Court can interfere with orders passed by quasi-judicial authorities under Article 226 of the Constitution of India. 9. In Sarvepalli Ramaiah v. District Collector, Chittoor and others [(2019) 4 SCC 500] has succinctly laid down the principles of judicial review of administrative decisions. It is held that this Court shall interfere with administrative decisions only on grounds of perversity, patent illegality and irrationality. That is when the error of law on the face of decision goes to the root of the decision, and this Court does not sit in appeal over such decisions. 10. A reading of Ext.P8 order demonstrates that the second respondent has very cautiously and carefully considered the matter and has passed a reasoned order, without going into the merits of the appeal. Accordingly, the second respondent has directed the petitioner to deposit 15% of the demand to stay the recovery proceedings. I do not find any manifest error or illegality in WP(C) NO. 19590 OF 2023 :: 7 :: Ext.P8 order warranting interference by this Court under Article 226 of the Constitution of India. 11. At the said point of time, Sri.Raja Kannan submitted that the petitioner may be permitted to move a stay petition before the Appellate Authority in Ext.P2 appeal and the appellate authority may be directed to consider and dispose of applications untrammelled by any observations in Ext.P8 order. I find the said submission to be reasonable and justifiable. Resultantly, the writ petition is dismissed, reserving the right of the petitioner to move an application in Ext.P2 appeal, for stay of the demand, within two weeks from the date of receipt of this judgment. If such application is filed, the appellate authority shall consider and dispose of the same in accordance with law and as expeditiously as possible. Nonetheless, this Court makes it clear that it has not expressed anything on the merits of the proposed application in Ext.P2 appeal. Needless to mention that the appellate authority shall consider and dispose of the WP(C) NO. 19590 OF 2023 :: 8 :: proposed application, if any filed, untrammelled by any observations made in Exts.P5 and P8 orders. sd/- C.S.DIAS JUDGE jes WP(C) NO. 19590 OF 2023 :: 9 :: APPENDIX OF WP(C) 19590/2023 PETITIONER’S EXHIBITS: Exhibit P1 THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30.03.20222 PASSED BY THE 3RD RESPONDENT UNDER SECTION 147 READ WITH SECTIONS 144 AND 144B OF THE ACT, FOR THE A.Y. 2017-18 Exhibit P2 THE TRUE COPY OF THE E-APPEAL MEMORANDUM (IN FORM NO. 35) DATED 26.04.2022, FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) Exhibit P3 THE TRUE COPY OF E- GENERATED ACKNOWLEDGMENT NO. 597541030260422 DATED NIL, EVIDENCING THE FILING OF EXT. P2 APPEAL Exhibit P4 THE TRUE COPY OF THE STAY APPLICATION (WITHOUT ANNEXURES) DATED 22.07.2022 FILED BY THE PETITIONER BEFORE THE 4TH RESPONDENT Exhibit P5 THE TRUE COPY OF THE LETTER DATED 18.08.2022, ISSUED BY THE 4TH RESPONDENT Exhibit P6 THE TRUE COPY OF THE APPLICATION (WITHOUT ANNEXURES) DATED 13.09.2022 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P7 THE TRUE COPY OF DETAILED SUBMISSION (WITHOUT ANNEXURES) DATED 02.03.2023 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P8 THE TRUE COPY OF THE ORDER DATED 16.03.2023 PASSED BY THE 2ND RESPONDENT Exhibit P9 THE TRUE COPY OF THE JUDGMENT DATED 13.02.2019 PASSED BY THE HIGH COURT OF MADRAS IN W .P .(C) NO. 3849/2019 "