Srinagar Development Authority, Srinagar V. The Income Tax Officer, Srinagar

SA 1/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3286 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 30-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: UPENDER BHAT LD
• Keywords: Recovery proceedings; Application of stay
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S.KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER S.A. NO.01 (ASR)/2017 (ARISING OUT OF ITA NO.77 (ASR)/2016) ASSESSMENT YEAR: 2011-12 SRINAGAR DEVELOPMENT AUTHORITY, PAN: AAALS 2033H VS. INCOME TAX OFFICER, WARD-3(3), SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. UPENDER BHAT (LD. CA) RESPONDENT BY:SH. RAHUL DHAWAN (LD.DR) DATE OF HEARING : 03/03/2017 DATE OF PRONOUNCEMENT : 0 3/03/2017 ORDER PER N.K.CHOUDHRY, JM: BY THIS ORDER, WE SHALL DISPOSE OF THE AFOREMENTION ED STAY APPLICATION, BY WHICH THE ASSESSEE HAD PRAYED FOR STAY OF RECOVE RY PROCEEDINGS INITIATED AGAINST THE PETITIONER/ASSESSEE AS WELL AS RESTRAIN ING THE ASSISTANT COMMISSIONER OF INCOME TAX OR CIT(A) OR THEIR SUBOR DINATE FROM TAKING ANY COERCIVE ACTION QUA RECOVERY OF TAX, INTEREST AND P ENALTY LEVIED OR LEVIABLE FOR THE RELEVANT ASSESSMENT YEAR. 2. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE PETITIONER ENGAGED IN THE DEVELOPMENT OF SRINAGAR CITY, BUILDING ACTIVITI ES FOR & ON BEHALF OF GOVT. OF J&K ETC. THE ASSESSEE AUTHORITY FILED RETURN OF INCOME ON 28.09.2011 SHOWING THE LOSS OF RS.2,74,23,704/- FOR THE SAID F INANCIAL YEAR AND THE PETITIONER FURTHER SUBMITTED THAT THE ASSESSING OFF ICER MADE VARIOUS ADDITIONS AND ASSESSED THE INCOME OF PETITIONER TO THE TUNE OF S.A NO.01(ASR)/2017 ARISING OUT OF ITA NO.77(ASR)/2016 ASST. YEAR:2011-12 2 RS.1,37,17,5,365/-. WHILE REJECTING THE VARIOUS CON TENTIONS OF THE ASSESSEE, AND COMMISSIONER OF INCOME TAX (APPEALS) ALSO DISMI SSED THE APPEAL FILED BY THE ASSESSEE ON BEING AGGRIEVED BY THE ASSESSMENT O RDER AND UPHELD THE ADDITIONS. 3. THEREAFTER, FEELING AGGRIEVED BY THE SAID ORDER PASSED BY THE LD. CIT(APPEALS), THE ASSESSEE FILED CAPTIONED APPEAL WHICH IS PENDING FOR ADJUDICATION. 4. THE LD. ADVOCATE FURTHER SUBMITTED THAT THE BOTH THE AUTHORITIES BELOW HAVE WRONGLY MADE/UPHELD THE ADDITIONS AND ASSESSED THE INCOME WHICH IS NOT EVEN OTHERWISE LOGICAL BECAUSE THE NAZOOL LAND GIVEN BY THE STATE GOVT. FREE OF COSTS TO THE ASSESSEE AUTHORITY FOR DEVELOP MENT AND AFTER DEVELOPING INTO BUILT UP PROPERTY, SELLING THE SAID UNITS TO T HE PUBLIC AT LARGE AND IN DIRECTLY THE MONEY GOES TO THE STATE GOVERNMENT. EVEN OTHERWISE THE ASSESSEE/AUTHORITY IS NOT A COM MERCIAL ORGANIZATION AND IN FACT WORKING FOR THE WELFARE OF THE STATE AND DEVELOPMENT OF THE NAZOOL LAND HAS TO BE DONE ACCOR DING TO DIRECTIONS AND NORMS OF THE STATE GOVT. THEREFORE, IT CANNOT BE SU BJECTED TO ANY TAX LIABILITY. EVEN OTHERWISE, THE LD. AO HAS ALREADY COLLECTED R S.73 LACS BY ATTACHING BANK ACCOUNTS ON 15 TH FEB.2014. AND THE PETITIONER DO NOT HAVE ENOUGH BANK BALANCE OR LIQUIDITY TO MAKE THE PAYMEN TS OF TAX IN DISPUTE AND IF THE DEPARTMENT PROCEED FURTHER TO RECOVER THE TA X IN DISPUTE THEN GREAT HARDSHIP WOULD BE CAUSED TO THE PETITIONER AND THE ASSESSEE IS A LOCAL AUTHORITY CREATED BY THE ACT OF JAMMU & KASHMIR STA TE LEGISLATURE AND THE ASSETS OF THE AUTHORITY ARE MOSTLY FIXED IN NATURE. THEREFORE, THE PETITIONER/ ASSESSEE IS ENTITLED FOR THE STAY OF THE DEMAND/REC OVERY PROCEEDINGS INITIATED BY REVENUE DEPARTMENT. 5. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSEE/AUTHORITY IS WORKING FOR COMMERCIAL BENEFITS AND CANNOT BE TE RMED AS FOR SOCIAL PURPOSES. THE CONTROVERSY EVEN OTHERWISE HAS BEEN SETTLED BY THE HONBLE S.A NO.01(ASR)/2017 ARISING OUT OF ITA NO.77(ASR)/2016 ASST. YEAR:2011-12 3 SUPREME COURT IN SLPC NO.4990/2014 WHEREBY THE APEX COURT AFFIRMED THE VIEWS OF THE HIGH COURT TO THE EFFECT THAT THE ASSE SSEE/ AUTHORITY CANNOT BE REGARDED AS AN INSTITUTION OR TRUST WHICH MAY HAVE BEEN SUBJECT TO ACHIEVE THE OBJECTS ENUMERATED U/S 2 OF THE ACT PARTICULARL Y IN VIEW OF THE ADDITIONS OF FIRST AND SECOND PROVISO MADE BY THE FINANCE ACT . 2008 W.E.F FROM 1 ST APRIL, 2009 U/S 12AA OF THE ACT. THE LD. DR ALSO DRAWN OUR ATTENTION TO THE CATEGOR ICALLY FINDING OF LD. CIT(A) WHICH IS REPRODUCED HEREIN BELOW FOR THE SAK E OF BREVITY. NOWHERE IN THE SECTION 18 OF THE J&K DEVELOPMENT A CT 1970, CABINET DECISION 38 OF 28 TH JANUARY, 1973 AND RULE 18 OF THE J&K DEVELOPMENT AUTHORITY AND RULES MENTIONS THAT THE INCOME AND RE SOURCES GENERATED FROM SUCH LAND ARE TO BE PAID TO THE GOVT. RATHER, IT ST ATES THAT IF ANY LAND IS REQUIRED BY THE GOVT. THE GOVT. HAS TO PAY THE COST OF DEVELOPMENT OF SUCH LAND TO THE AUTHORITY AND AGREED IN OTHER TERMS AND CONDITIONS OF THE AUTHORITY BEFORE SUCH LAND COULD BE TRANSFERRED TO THE GOVT. THE ASSESSEE AUTHORITY IS WORKING FOR THE COMMERCIA L BENEFITS AS IT WAS CLEARLY HELD BY THE HONBLE JURISDICTIONAL HIGH COUR T AS WELL AS AFFIRMED BY THE APEX COURT, THEREFORE, THE CLAIM OF THE ASSESSEE DO ES NOT DESERVES TO BE ALLOWED MORE PARTICULARLY THE ASSESSEE FAILED TO SH OW ANY HARDSHIP AND IN FACT, IS IN CAPACITY TO PAY THE DEMAND UNDER CONTRO VERSY BECAUSE TWO AUTHORITIES HAVE ALREADY BEEN PASSED AN ORDER AGAIN ST THE ASSESSEE/AUTHORITY, THEREFORE, THE BALANCE OF CONVE NIENCE IS ALSO NOT IN FAVOUR OF THE ASSESSEE AND PRIMA FACIE THE ASSESSEE CASE IS ALSO DOES NOT SOUND TO BE GOOD ENOUGH TO GET SUCCEED AND THE DEPO SIT OF RS.73 LACS DOES NOT PERTAINS TO THE INSTANT ASSESSMENT YEAR, THEREF ORE, THE SAID AMOUNT CANNOT BE TAKEN CARE OF WHILE DECIDING THE INSTANT PETITION. 6. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CAREFULLY ANALYZED THE DOCUMENTS AND ARGUMENT ADVANCED BY THE PARTIES. IN OUR CONSIDERED VIEW, IT IS UTMOST DUTY OF THE COURT/TRIBUNAL WHILE DECIDING THE STAY APPLICATION TO FOLLOW THE SETTLED LAW VIS A VIS PRIMA FACIE CASE, BALANCE OF CONVENIENCE AND UNDUE HARDSHIP TO THE PARTIES/ IRREPARABLE LOSS OR INJURY. S.A NO.01(ASR)/2017 ARISING OUT OF ITA NO.77(ASR)/2016 ASST. YEAR:2011-12 4 IT IS ADMITTED FACT THAT THE ASSESSEE/SOCIETY HAD BEEN DECLINED REGISTRATION U/S 12AA OF THE ACT OF THE I.T. ACT BY THE JURISDICTIONAL HIGH COURT AS WELL AS APEX COURT AND AT THIS JUNCTURE TH E ASSESSEE CANNOT BE TREATED AS NON-COMMERCIAL ORGANIZATION. EVEN OTHERW ISE TWO AUTHORITIES BELOW HAVE CATEGORICALLY GIVEN A FINDING THAT THE A SSESSEE IS DEVELOPING THE NAZOOL LAND WHICH IS GIVEN BY STATE GOVT. FREE OF COSTS TO THE ASSESSING AUTHORITY AND THE CONTENTION OF THE LD. ADVOCATE TH AT AFTER DEVELOPMENT THE ENTIRE MONEY GOES TO THE GOVT. DOES NOT SOUND TO B E GOOD BECAUSE FINDING OF THE LD. CIT(A) AS EMPHASIZED BY THE LD. DR THAT EVEN IF THE LAND IS ACQUIRED BY THE GOVT. THEN ALSO THE GOVT. HAS TO PA Y THE COSTS OF DEVELOPMENT OF SUCH LAND TO THE AUTHORITY AND TO FO LLOW OTHER TERMS AND CONDITIONS OF THE AUTHORITY BEFORE SUCH LAND COULD BE TRANSFERRED TO THE GOVT., MEANING THEREBY AFTER THE TRANSFER OF THE LAND TO T HE AUTHORITY, THE ASSESSEE AUTHORITY IS AT THE DOMAIN QUA PARTICULAR LAND. THE LD. AR ALSO FAILED TO DEMONSTRATE THAT HOW THE MONEY AFTER DEVELOPMENT AND SALE OF THE DEVELOPED UNITS BY THE AUTHORITY GOES TO THE STATE GOVT. AND THE ARGUMENTS OF THE LD. ADVOCATE T O THE EFFECT THAT COSTS OF THE LAND HAS TO BE DETERMINED AND IS LIABLE TO THE EXEMPTED ALSO DOES NOT SOUND BECAUSE IN THE BALANCE SHEET NO PROVISIONS HA S BEEN MENTIONED OR MAINTAINED WITH REGARD TO THE COSTS OF THE LAND AND THIS IS NOT AN UNDISPUTED FACT THAT THE LAND TRANSFER TO THE AUTHORITY FREE O F COSTS. ON THE AFORESAID ANLIZATION, PRIMA FACIE AT THIS STAGE, WE ARE NOT I NFLUENCED BY THE ARGUMENTS OF THE LD. ADVOCATE OF THE ASSESSEE THAT PRIMA FACI E, THE ASSESSEE HAS SOUND AND GOOD CASE WHICH IS LIKELY TO BE SUCCEED. IN THE INSTANT CASE, TWO BELOW AUTHORITIES HAVE AL READY MADE/CONFIRMED THE LIABILITY OF TAX AND EVEN OTHERW ISE TAX COLLECTED FROM THE TAX PAYER, WHETHER IT IS A GOVT. OR PRIVATE TAX PAY ER, CERTAINLY GOES TO THE DEVELOPMENT OF THE NATION AND AT THIS STAGE THE REV ENUE AUTHORITY IS AT HIGHER PEDESTAL, THEREFORE, WE ARE OF THE CONSIDERE D OPINION THAT BALANCE OF CONVENIENCE ALSO LIES IN FAVOUR OF THE REVENUE DEPA RTMENT. S.A NO.01(ASR)/2017 ARISING OUT OF ITA NO.77(ASR)/2016 ASST. YEAR:2011-12 5 WITH REGARD TO THE UNDUE HARDSHIP, BECAUSE THE ASS ESSEE AUTHORITY IS WORKING FOR THE PROFIT BASIS AND NO CONTRARY MATERI AL HAS BEEN SHOWN BY THE LD. ADVOCATE TO THE EFFECT THAT THE AUTHORITY HAVIN G NO INCOME OR BANK BALANCE OR LIQUIDITY TO MAKE THE PAYMENT OF TAX IN DISPUTE. AS THE MONEY RECOVERED HAS TO BE USED FOR THE DEVELOPMENT OF THE NATION, THEREFORE, WE ARE NOT HESITANT TO CONCLUDE THAT NO HARDSHIP WOULD CAUSED TO THE ASSESSEE AUTHORITY. HOWEVER, CONSIDERING THE PECULIAR FACTS AND CIRCUMST ANCES OF THE CASE AND ALSO KEEPING IN MIND VARIOUS DECISIONS OF THE A PEX COURT AS WELL AS JURISDICTIONAL HIGH COURT, IN ORDER TO GIVE PROPER AND FARE OPPORTUNITIES OF FAIR PLAY AND BECAUSE THE ADJUDICATION OF APPEAL OF ASSE SSEE SHALL TAKE REASONABLE TIME, THEREFORE, IN OUR CONSIDERED VIEW FOR THE ENDS OF JUSTICE, THE ASSESSEE IS DIRECTED TO DEPOSIT 50% OF THE DEMAND A MOUNT OF THE RELEVANT YEAR BEFORE THE CONCERNED AUTHORITY WITHIN A PERIOD OF 15 DAYS FROM THE DATE OF THE ORDER, FAILING WHICH THE INTERIM DIRECTIONS AUTOMATICALLY STANDS VACATED. FOR CLARIFICATION, WE INTENDED TO ADJUST THE ALREAD Y DEPOSITED AMOUNT OF RS.73.LAKHS BY THE ASSESSEE, HOWEVER AFTER COMIN G TO KNOW THE REAL FACT THAT THE SAID AMOUNT WAS DEPOSITED QUA DIFFERENT AS SESSMENT YEAR AS SUBMITTED BY THE LD. D.R. WHICH IS NOT CONTROVERTE D BY THE LD. A R , HENCE WE ARE NOT INCLINED TO ADJUST THE SAME IN DEPOSIT O F 50% OF THE DEMAND AMOUNT. ANY OF THE OBSERVATIONS IN THE INSTANT ORDER SHALL NOT TENTAMOUNT TO THE MERIT OF THE CASE. 7. IN THE RESULT, STAY APPLICATION IS ALLOWED SUBJE CT TO AFORESAID DIRECTIONS/CONDITIONS. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 03.03.2017. /PK/ PS. S.A NO.01(ASR)/2017 ARISING OUT OF ITA NO.77(ASR)/2016 ASST. YEAR:2011-12 6 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER