THE BENGAL CHAMBER OF COMMERCE AND INDUSTRY,KOLKATA V. DEPUTY DIRECTOR OF INCOME TAX (EXEMP) - 1, KOLKATA

SA 7/KOL/2025

AI Insights

The case involves The Bengal Chamber of Commerce and Industry, which filed a stay petition against the Deputy Director of Income Tax (Exemp)-I, Kolkata, concerning a disputed tax demand of \\u20b9;8,00,400/- for the assessment year 2010-11. The assessee argued that the demand was based on an unreasonably high-pitched assessment, enhancing the assessed income significantly compared to the returned income. The Tribunal considered the security provided by a bank guarantee of \\u20b9;4,00,000/- and the legal provisions under section 254(2A) of the Income Tax Act, along with the directives from the Calcutta High Court regarding non-coercive measures until the disposal of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771989 (ITAT-KOLKATA)
• Appeal Type: Stay Application
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2010-2011
• Laws Referred To: Income Tax Act, Companies Act, 1882
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Application of stay
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER S.A. No.: 7/KOL/2025 Arising out of I.T.A. No.: 758/KOL/2025 Assessment Year: 2010-11 The Bengal Chamber of Commerce and Industry Vs. Deputy Director of Income Tax (Exemp)-I, Kolkata (Appellant) (Respondent) PAN: AABCT1467A Appearances: Assessee represented by : Giridhar Dhelia, Advocate. Department represented by : S.B. Chakraborthy, Addl. CIT, Sr. DR. Date of concluding the hearing : 08-August-2025 Date of pronouncing the order : 28-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: The assessee has filed the present Stay Petition SA No. 7/KOL/2025 in ITA No. 758/KOL/2025 dated 11.04.2025 seeking stay of demand of ₹8,00,400/- outstanding. The assessee has also filed an affidavit in this regard. 2. The facts of the case are that the income tax return for AY 2010- 11 was filed on 30.09.2010 which was processed u/s 143(1) of the Act on 30.03.2012. The return was selected for scrutiny and an assessment order u/s 143(3) of the Act was passed on 15.03.2013. The assessee preferred an appeal against the assessment order before the Ld. CIT(A) Printed from counselvise.com Page | 2 S.A. No.: 7/KOL/2025 AOO I.T.A. No.: 758/KOL/2025 Assessment Year: 2010-11 The Bengal Chamber of Commerce and Industry. which was disposed of vide order dated 12.02.2025. It is alleged that the merits of the case were not decided but the appeal was dismissed as the registration was not granted to the assessee nor is there any specific provision in the Act, as has been held by the Hon'ble Supreme Court, that non-granting of registration within a period of 6 months shall be deemed registration. It was alleged that the merits of the case were not decided and order of the Ld. CIT(A) has been challenged before the Tribunal vide ITA No. 758/KOL/2025 dated 11.04.2025 and the demand of ₹8,00,400/- raised vide the assessment order in its entirety is disputed in the said pending appeal. The assessee has been advised that all the additions/disallowances made in the impugned assessment order dated 15.03.2013 would be wholly deleted when the appeal is finally heard and disposed of by the Tribunal and the balance of convenience in the instant case is in the assessee’s favour. The assessee has referred to section 26 of the Companies Act, 1882 for mutual benefit of the members and has requested that the Tribunal may be pleased to stay the operation of the said impugned assessment order including the demand raised in pursuant thereof and also keep the whole of the said disputed demand of ₹8,00,400/- in abeyance till the disposal of the said appeal by the Tribunal. A reference has also been made to the CBDT Instruction No. 1914 dated 02.12.1993; however, the instruction is for the assessing authority and not for the Tribunal. The assessee has also relied upon several judicial pronouncements in support of the claim that the recovery proceeding should be stayed till the disposal of the appeal where the assessed income is substantially more than the returned/assessable income. As in the case of the assessee, the returned income was ₹31,783/- for AY 2010-11 as per the return of Printed from counselvise.com Page | 3 S.A. No.: 7/KOL/2025 AOO I.T.A. No.: 758/KOL/2025 Assessment Year: 2010-11 The Bengal Chamber of Commerce and Industry. income, which had been enhanced to ₹26,70,949/-, therefore, according to the assessee it is clearly a case of unreasonably high- pitched assessment. It is, therefore, prayed by the assessee as under: “a) Under the circumstances, it is prayed that the demand may kindly be stayed till the appeal of the appellant is decided by the Hon'ble ITAT, Kolkata. Or b) As stated in the preceding paragraphs, the Appeal No. CIT(A), Kolkata- 25/10099/2013-14 (Manual Appeal Register Number: 144/2013-14) of the appellant was dismissed by the Ld. CIT (Appeals), ADDL/JCIT(A)-2 Ahmedabad by attaching the order for Assessment Year 2010-11, dt. 15- 03-2013. Hence, it is prayed that the order dt. 12-02-2025 may kindly be set aside and the case may kindly be restored in the file of the Ld. CIT(A) to decide the case on merit after providing the appellant sufficient opportunity of being heard in the interest of justice as best deem fit by the Hon'ble Bench. c) Such further or other order or orders be made and/or directions be given as would afford complete relief to your petitioner. For this act of kindness, the appellant shall as in duty bound ever pray.” 3. We have considered the submissions made. In this case, the assessee had filed a petition before the Hon'ble High Court and the Hon'ble High Court had directed the assessee to furnish the bank guarantee of ₹4 Lakh which was submitted to the ADIT (Exemption) vide letter dated 28.01.2024 and the guarantee was valid up to the further claim period of 10.10.2025. In the earlier hearing it was noted that the bank guarantee was given as per the order in the writ petition filed before the Hon'ble High Court and the same was valid till the disposal of appeal before the Ld. CIT(A) and since the appeal has been decided by the Ld. CIT(A), therefore, unless a fresh guarantee were issued, the earlier bank guarantee may not be enforceable unless the assessee is agreeable to the continuation of the bank guarantee lying with the Ld. Assessing Officer. It was conveyed by the Ld. AR that the bank Printed from counselvise.com Page | 4 S.A. No.: 7/KOL/2025 AOO I.T.A. No.: 758/KOL/2025 Assessment Year: 2010-11 The Bengal Chamber of Commerce and Industry. guarantee continues to be with the Ld. AO and is valid up to 01.10.2025 and can be used as a security even subsequent to the order passed by the Ld. CIT(A) while the appeal is pending before the Tribunal. A written submission in this regard has also been filed on 08.08.2025, which is as under: “Respected Sir(s), Re: Undertaking for consideration of Bank Guarantee valid upto 10-Oct-2025 as Security in terms of the requirement of 1st proviso to section 254(2A) of the Income Tax Act 1. In the instant case the appellant has had submitted a Bank Guarantee before Ld. AO issued by Canara Bank, Kolkata NS Road-II Branch Kolkata for an amount of Rs. 4,00,000/- (Rupees Four Lacs Only) vide Original Bank Guarantee no. VJRGPGE243610207 dated 26-Dec-2024 which was renewed for a further claim period upto 10-Oct-2025. 2. The same Bank Guarantee was issued and submitted to the Ld. AO in terms of the Order of Hon'ble High Court, Calcutta dated 9th October, 2013 with a direction to the respondent authorizes not to take any coercive steps against the petitioner (appellant herein) till the disposal of the said appeal pending then before Ld. CIT(A) subject to filing of Bank Guarantee of a sum of Rs. 4,00,000/- (Rupees Four Lacs Only) in any Nationalized Bank. 3. That the said appeal as was pending before Ld. CIT(A) disposed by the Order of Ld. CIT(A) vide its order dated 12/02/2025. 4. It is to note here that the said Bank Guarantee is still in the possession of Ld. AO and is valid for a claim period upto 10-Oct-2025. 5. In view, of the above, we hereby say and submit that the same Bank Guarantee of a sum of Rs. 4,00,000/- valid for a claim period upto 10-Oct-2025 may be considered as security in terms of the requirement of 1st proviso to section 254(2A) of the Income Tax Act in relation to our present Stay Application before the Hon'ble ITAT. 6. We hereby undertake that since, the said Bank Guarantee of a sum of Rs. 4,00,000/- was issued in terms of the Order of Hon'ble High Court that till disposal of case by Ld. CIT(A), still we shall abide and honour the same on consideration of the same as security in terms of the requirement of 1st proviso to section 254(2A) of the Income Tax Act in relation to our present Stay Application before the Hon'ble ITAT and we shall not revoke the same and keep its valid at least till claim period mentioned there i.e. 10-Oct-2025. For this act of kindness the assessee is duty bound shall ever pray. Printed from counselvise.com Page | 5 S.A. No.: 7/KOL/2025 AOO I.T.A. No.: 758/KOL/2025 Assessment Year: 2010-11 The Bengal Chamber of Commerce and Industry. For The Bengal Chamber of Commerce and Industry. -Sd- Mr Soumya Saha Head Finance and Governance” 4. We have considered the submissions made. The demand in this case is of ₹8,00,400/- and the assessee had given a bank guarantee of ₹4 Lakh (BG Ref-VJRGPGE243610207, Amount-₹4,00,000/-, Issue Date-26.12.2024, Expiry Date-10.10.2025) which is valid up to 10.10.2025. Since the assessee is extending the bank guarantee filed as directed by the Hon'ble High Court beyond the date of order of the Ld. CIT(A) till the expiry date of the bank guarantee i.e. 10.10.2025 and the assessee has given security of more than 20% of the demand, the rest of the demand of ₹4 Lakh is stayed till the subsistence of the bank guarantee i.e. 10.10.2025, subject to the following conditions: (i) The rest of the demand for the A.Y. 2010-11 shall be stayed till 10.10.2025 or till the disposal of the appeal, whichever is earlier. (ii) No adjournment shall be sought by the assessee in the appeal before the Tribunal unless it is absolutely necessary on account of any exigency or unavoidable circumstances. 5. In the result, the Stay Application filed by the assessee is allowed subject to the conditions mentioned above. Order pronounced in the open Court on 28th August, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 28.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 6 S.A. No.: 7/KOL/2025 AOO I.T.A. No.: 758/KOL/2025 Assessment Year: 2010-11 The Bengal Chamber of Commerce and Industry. Copy of the order forwarded to: 1. The Bengal Chamber of Commerce and Industry, 2nd Floor, 6, Royal Exchange Building, Kolkata, West Bengal, 700001. 2. Deputy Director of Income Tax (Exemp)-I, Kolkata. 3. Addl/JCIT(A)-2, Ahmedabad. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "