SHRI S. KATHIRVAN V. JOINT COMMISSIONER OF INCOME

WP(MD)/15439/2014

AI Insights

The case involves S. Kathiravan, the petitioner, who challenged a notice from the Income Tax Department treating him as a defaulter for not paying a tax demand of Rs.3,24,29,780 based on an assessment order dated 31.03.2013. The petitioner had filed an appeal against this assessment and a stay petition with the Assessing Officer, which remained unresolved. The court considered the financial difficulties of the petitioner and the fact that the appeal was still pending, leading to the decision to keep the demand in abeyance until the appeal was decided.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 727792 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 17-09-2014
• Assessment Year: misc
• Other Referred Cases: W.A.No.648 of 2011
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R KRISHNAMOORTHY
• Assessee Lawyers: ANITHA SUMANTH
• Keywords: Appeal Pending; Assessment Year 2010-11; Financial hardship; Income tax demand; Stay Petition; Writ of Certiorarified Mandamus
• Section: 143(3); 263; 246A

Judgement Text

"1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 17.09.2014 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P(MD)No. 15439 of 2014 S.Kathiravan ... Petitioner Vs. 1.Joint Commissioner of Income Tax, Range I No.44 Williams Road, Cantonment, Tiruchirappalli. 2.The Commissioner of Income Tax (Appeals) No.44 Williams Road, Cantonment Tiruchirappalli 3.Tax Recovery Officer, Range II No.44 Williams Road, Cantonment, Tiruchirappalli. ... Respondents Prayer:- Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus to call for the records in communication in C.No.TRC01/TRO-I/Range- II/RY/2014-15 dated 21.08.2014 relating to Assessment year 2010-11 on the file of the 3rd respondent and quash the same and further restraining the 3rd respondent from initiating or continuing with any proceedings for recovery of the disputed demand pursuant to order of assessment passed by the 1st respondent dated 31.03.2013 in PAN/GIR No.AJSPK6687Q in respect of Assessment Year 2010-11. For Petitioner : Mrs.Anitha Sumanth For respondents : Mr.R.Krishnamoorthy Standing counsel ORDER The petitioner is an individual assessee and has approached this Court challenging the notice issued by the respondent treating the assessee as an assessee in default and directing the assessee to pay a sum of Rs.3,38,79,949/-. In the order of assessment under Section 143(3) of the Income Tax Act, dated 31.03.2013 a demand was raised against the petitioner. Aggrieved by the order of assessment, the petitioner preferred an appeal before the Commissioner of Income Tax (Appeals) on 19.04.2013 and a stay petition was filed before the Assessing Officer not to effect recovery till disposal of the appeal. In the stay petition, it was averred that the assessee filed his return of income for the assessment year 2010-11 on 15.10.2010 admitting a total income of Rs.84,61,704/- and agricultural income of Rs.4,25,000/- and paid tax of Rs.26,89,834/-, the assessment was completed under Section 143(3) of the Act and an addition of Rs.7,56,74,000/- was made on 31.03.2013 and a sum of Rs.3,24,29,780/- was demanded. Aggrieved by the addition made and the demand claimed, the assessee has filed an appeal under Section 246A of https://hcservices.ecourts.gov.in/hcservices/ 2 the Act before the Commissioner of Income Tax (Appeals), Trichy on 25.04.2013 that the appeal is pending and the date of hearing was fixed on 22.08.2014 and it is submitted by the learned counsel for the petitioner that the hearing has been adjourned at the instance of the petitioner to 06.10.2014. 2. The assessee in his stay petition before the Assessing Officer has stated that they are running a petrol bunk under the name and style of M/s.Dhanalakshmi Agencies and the turn over of the business is Rs.12.16 crores and the assessee is also running a mini bus and the gross income of the business is Rs.25 lakhs only and therefore, the assessee does not have financial capacity to pay the demand of Rs.3,24,29,780/-. Further, it is submitted that the Commissioner of Income Tax has initiated proceedings under Section 263 of the Act against the assessment order for the year 2010-11 and the assessee has submitted reply dated 10.06.2013, which is pending consideration before the Commissioner of Income Tax (Appeals). Based on the above facts, the assessee requested the assessing officer to keep in abeyance the collection of tax till the appeal is disposed of. It is to be noted that the assessee did not file any stay petition before the CIT (Appeals) 3. It is not in dispute that the assessing officer has not passed any order on the said stay petition and the same is still pending. In the interregnum, the appeal itself was taken up for hearing and posted on 22.08.2014 and now adjourned to 06.10.2014. In the meantime, the impugned proceedings has been issued treating the petitioner as a defaulter. 4. The learned counsel for the petitioner would submit that the petitioner cannot be treated as a defaulter, since the demand tax as demanded by the assessing officer and the order of assessment dated 31.03.2013 is pending before the first appellate authority. Further more, it is submitted that no order has been passed by the Assessing Officer on the stay petition filed on 04.07.2013, wherein the petitioner has pleaded financial difficulty and hardship to comply with the demand as per the order of assessment dated 31.03.2013. 5. The learned counsel for the petitioner referred to certain decisions of this Court, wherein the other similarly placed assessees approached this Court against such demands and this Court directed the appeal itself to be disposed of. One such order was confirmed by the Hon'ble Division Bench in W.A.No.648 of 2011 dated 19.04.2011, in which, I was a party. The learned counsel for the petitioner further submitted that in the meantime, the bank accounts of the petitioner have been attached and virtually, his transactions have come to a standstill and simultaneously forcing the petitioner to pay the amount, as per the order of assessment when the appeal is pending is arbitrary and illegal. Further the learned counsel reiterated that the petitioner cannot be treated as an assessee in default. 6. The learned Standing counsel for the respondents, on instructions, submitted that the petitioner should be put on terms to be entitled for stay of the demand, as the order of assessment has been passed validly on 31.03.2013. Further more, if the petitioner had paid 50% of the demand, the assessing officer would have definitely consider the prayer for stay. https://hcservices.ecourts.gov.in/hcservices/ 3 7. Heard the learned counsel on either side and perused the materials placed on record. 8. It is a settled legal position that the appeal is continuation of initial proceedings. In the instant case, the proceedings are initiated under the provisions of the Income Tax Act, which provides for hierarchy of remedies. Aggrieved by the order of assessment, the petitioner has filed an appeal before the Commissioner of Income Tax (Appeals) and the appeal is pending. Pending disposal of the appeal, the petitioner made a request to the assessment officer not to enforce the demand dated 31.03.2013. In the said stay petition, the petitioner pleaded financial hardship considering the nature of their business activities. The said stay petition has not been disposed of by the Assessing Officer. In the appeal, which was pending, the petitioner has not filed a stay petition stating that they have already approached the Assessing Officer by way of stay petition. The Commissioner of Income Tax (Appeals) appears to have taken up the appeal itself for final disposal and notice of hearing for 22.08.2014 was issued on 14.08.2014. The petitioner/assessee said to have appeared in the hearing and prayed time to produce certain documents and next hearing date is fixed on 06.10.2014. 9. The learned counsel for the petitioner would submit that on the next date of hearing, the petitioner will cooperate in the disposal of the appeal and they will not seek for any adjournment and produce all the documents and make their submissions. 10. In the light of the above facts and also taking into consideration that the petitioner's bank accounts have been attached, this Court is of the view that pending disposal of the appeal before the Commissioner of Income Tax (Appeals), the petitioner should not be directed to comply with the demand dated 31.03.2013, the validity of which is subject matter of appeal before the Commissioner of Income Tax (Appeals), and as the Bank accounts of the petitioner has also been attached. 11. In the light of the above, the impugned order is kept in abeyance and the second respondent is directed to hear and dispose of the appeal on 06.10.2014 or on any subsequent date as per the convenience of the Commissioner of Income Tax (Appeals) on the undertaking that the petitioner will cooperate for the early disposal on the said date without seeking for further adjournment. In the event, the petitioner seeks for any further adjournment, it is open to the Commissioner of Income Tax (Appeals) to pass appropriate orders/interim orders. The writ petition is disposed of with the above observation and direction. No costs. Consequently connected Miscellaneous petition is closed. Sd/- Assistant Registrar(CO) /True copy/ Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ 4 To 1.Joint Commissioner of Income Tax, Range I No.44 Williams Road, Cantonment, Tiruchirappalli. 2.The Commissioner of Income Tax (Appeals) No.44 Williams Road, Cantonment Tiruchirappalli 3.Tax Recovery Officer, Range II No.44 Williams Road, Cantonment, Tiruchirappalli. +1CC to M/s.A.Chandrasekaran, Advocate in SR.52467 +1CC to M/s.R.Krishnamurthy, Advocate in SR.52612 W.P(MD)No.15439 of 2014 17.09.2014 rr. PBK 08/10/2014 ::4P-6C: https://hcservices.ecourts.gov.in/hcservices/ "