M/S.SUNNY & SUNNY'S BUSINESS VENTURES PVT. LTD. V. THE JOINT COMMISSIONER OF INCOME TAX, RANGE-4

WP(C)/13583/2012

AI Insights

The case involves M/S. Sunny & Sunny's Business Ventures Pvt. Ltd., which contested an increased tax assessment for the year 2009-10. Initially, the petitioner reported an income of Rs.3,42,42,790, but the assessing authority reassessed it to Rs.7,98,33,274, leading to a higher tax liability. The petitioner challenged this reassessment through various appeals and petitions, seeking a stay on the tax payment pending the appeal's outcome. The court examined the applicability of a 1982 CBDT Circular regarding interim stays in tax disputes and considered the financial burden imposed by the reassessment.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 764812 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 18-06-2012
• Assessment Year: misc
• Other Referred Cases: Mrs. Mani Goyal vs. CIT, 217 ITR 641 (ALL)
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: G SHRIKUMAR; SREEJITH NAIR; K G JAGANNATH
• Keywords: Appeal; Income tax assessment; Interim Stay; Stay Petition; Tax liability
• Section: 220(6)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 18TH DAY OF JUNE 2012/28ND JYAISHTA 1934 WP(C).No. 13583 of 2012 (W) ---------------------------------------- PETITIONER(S): --------------------- M/S.SUNNY & SUNNY'S BUSINESS VENTURES PVT. LTD. 40/8060, RAGDEEP, MULLASSERY CANAL ROAD, COCHIN-682 305, REPRESENTED BY ITS MANAGING DIRECTOR. BY ADVS.SRI.G.SHRIKUMAR (SR.) SRI.SREEJITH S.NAIR SRI.K.G.JITHU JAGANNATH RESPONDENT(S): ------------------------- 1. THE JOINT COMMISSIONER OF INCOME TAX, RANGE-4 I.S. PRESS ROAD, COCHIN-682 018. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) II I.S. PRESS ROAD, COCHIN-682 018. 3. THE COMMISSIONER OF INCOME TAX-I, I.S. PRESS ROAD, COCHIN-682 018. BY ADV.SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18-06-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: MJL WPC.NO:13853/2012 APPENDIX PETITIONER(S) EXHIBITS EXT.P1 : THE TRUE COPY OF THE ASSESSMENT ORDER AND DEMAND NOTICE DATED 30-12-2011 ALONG WITH THE CORRIGENDUM DATED 31-12-2011. EXT.P2 : THE TRUE COPY OF THE APPEAL DATED 28-1-2012 FILED BEFORE THE 2ND RESPONDENT COMMISSIONER OF INCOME TAX (APPEALS) II. EXT.P3 : THE TRUE COPY OF THE PETITION ADDRESSED TO THE 3RD RESPONDENT. EXT.P4 : THE TRUE COPY OF THE ORDER OF THE 3RD RESPONDENT. EXT.P5 : THE TRUE COPY OF THE CHALAN SHOWING THE PAYMENT OF RS. 30 LAKHS. EXT.P6 : THE TRUE COPY OF THE PETITION DATED 27-2-2012 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXT.P7 : THE TRUE COPY OF THE DECISION OF HIGH COURT OF ALLAHABAD REPORTED IN MRS. MANI GOYAL VS. CIT, 217 ITR 641 (ALL) EXT.P8 : THE TRUE COPY OF THE JUDGMENT DATED 12-3-2012 IN WPC NO. 8956/2012 OF THIS HON'BLE COURT. EXT.P9 : THE TRUE COPY OF THE APPLICATION DATED 16-4-2012 FILED BY THE PETITIONER. EXT.P10 : THE TRUE COPY OF THE ORDER DATED 3-5-2012 OF 2ND RESPONDENT. EXT.P11 : THE TRUE COPY OF THE PETITION DATED 23-5-2012 FILED BY THE PETITIONER. RESPONDENTS' EXHIBITS : NIL /TRUE COPY/ P A TO JUDGE MJL P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.(C). 13583 of 2012 ---------------------------------------- Dated this the 18th day of June, 2012 JUDGMENT In respect of the assessment year 2009-10, the petitioner filed return showing an annual income of Rs.3,42,42,790/- (Rupees three crores forty two lakhs forty two thousand seven ninety) attracting a tax liability of Rs.1,18,78,606/-(Rupees one crore eighteen lakhs seventy eight thousand six hundred and six), which is stated as satisfied. However, the assessing authority, being dissatisfied, proceeded with further steps and passed Ext.P1 order re-fixing the annual income as Rs.7,98,33,274/-(Rupees seven crores ninety eight lakhs thirty three thousand two hundred and seventy four), casting a much higher burden of tax which made the petitioner to challenge the same by filing Ext.P2 appeal along with Ext.P3 petition for stay before the appellate authority. 2. Though the petitioner approached the concerned authority by filing a petition under Section 220(6) of the Income Tax Act, the petitioner was directed to satisfy 50% of the balance W.P.C. No. 13583 of 2012 -2- amount, for a declaration that the petitioner will not be treated as a defaulter in respect of the balance as borne by Ext.P4. This made the petitioner to approach this Court by filing W.P.(C). No.8956/2012, which was disposed as per Ext.P8 dated 12.3.2012, directing the petitioner to file an I.A. for stay and to have it considered accordingly. The petitioner filed Ext.P9 application for stay before the appellate authority, wherein Ext.P10 order was passed on 3.5.2012, whereby the petitioner has been directed to satisfy 50% of the liability by way of '5' equated monthly installments (after giving credit to the amount already satisfied) which made the petitioner to approach this Court by filing the present writ petition. 3. Sri. G. Shrikumar, the learned Sr. Counsel appearing for the petitioner submits that the petitioner is entitled to have the benefit of absolute stay in view of the Circular bearing No.334 (F.No.400/3/81-ITCO) dated 3.4.1982 issued by the Central Board of Direct Taxes, wherein it has been stipulated that, where the income determined on assessment is substantially higher than the returned income, say, twice the latter amount or more, the collection of tax in dispute should be held in abeyance till the decision on that case, provided there is no lapse on the part of W.P.C. No. 13583 of 2012 -3- the assessee. Reliance is also placed on the decision rendered by the Allahabad High Court as borne by Ext.P7 in this regard. 4. The learned Standing Counsel appearing for the respondents submits on instructions that the idea and understanding of the petitioner as to the applicability of the Circular issued in 1982 is quite wrong and misconceived. The learned Standing Counsel submits that the Circular sought to be relied on by the petitioner is an obsolete one, which is no more in existence. It is stated that the actual Circular that governs the field as on date, is Circular No.1914 dated 2.12.1993, a copy of which is placed for consideration before this Court. The learned counsel also submits that the applicability of the Circular and the “guidelines for granting interim stay” mentioned therein have already been highlighted by the respondents in a similar case (W.P.(C).No.13738/2012) which has been dealt with by this Court, by pronouncing the judgment today. 5. On going through the materials on record, it is seen that, the issue is more with regard to the quantum and the so called materials sought to be relied on by the department to arrive at the figures in Ext.P1, which is more than double the amount returned by the petitioner. On going through the W.P.C. No. 13583 of 2012 -4- grounds of appeal and the nature of challenge projected before the appellate authority, it is seen from Ext.P10 interim order passed by the appellate authority granting the stay, that nothing is discussed with regard to the merits of the case, in view of the observation in paragraph '5' of the order in the following terms: “I have carefully considered the arguments put forth on behalf of the appellant and also other relevant factors. As regards the merits of the case, nothing can be said at this juncture without hearing the grounds of appeal and examining the issues thoroughly.” The only ground for passing the direction making the petitioner to satisfy 50% of the amount is only that, the appellant's financial position is not so bad as it is made out to be. 6. Taking note of the nature of the contentions raised by the petitioner, more so in view of the settled position of law on the point in approaching the issue with proper application of mind, this Court finds that the condition imposed by the appellate authority upon the petitioner requires modification. 7. The learned counsel for the petitioner submits that the petitioner has already satisfied an additional sum of Rs.30,00,000/-(Rupees thirty lakhs) towards the disputed tax W.P.C. No. 13583 of 2012 -5- liability. In addition to the said amount, proving the bonafides on the part of the petitioner and giving effect to Ext.P10 order passed by the appellate authority, the petitioner has satisfied the first instalment of Rs.15,00,000/-(Rupees fifteen lakhs) as well on 23.05.2012 and a copy of the challan has been produced before the appellate authority along with Ext.P11 covering letter dated 23.05.2011. 8. After hearing both the sides, this Court finds that it will be fit and proper to permit the petitioner to avail the benefit of the interim stay during the pendency of the appeal on effecting a further deposit by way of the 'second instalment' to the tune of Rs.15,00,000/-(Rupees fifteen lakhs) as ordered in Ext.P10, which shall be effected within 'two weeks' from the date of receipt of a copy of this judgment. It is ordered accordingly. Writ petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE. Kp/- "