THYAPARAMBIL SKARIA JAMES V. THE INCOME TAX OFFICER

WP(C)/22924/2014

AI Insights

The case revolves around a dispute concerning the tax liability assessed against the petitioner, Thyaparambil Skaria James, by the Income Tax Officer, which was later upheld by the Commissioner of Income Tax (Appeals). The petitioner contested the assessment, which significantly increased his reported income from approximately 2,50,000 INR to 22,50,000 INR, based solely on the deposits in his bank account. The petitioner argued that these deposits were from the sale of a rubber plantation co-owned with his brother and others, intended for purchasing another property, which did not materialize. The appellate authority's condition for interim stay during the appeal, requiring the payment of 50% of the assessed tax liability in installments, was challenged in this writ petition.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 765959 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 24-09-2014
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: RAMESH JOHN
• Keywords: Appeal; Assessment; Income Tax; Interim Stay; Liability
• Section: 68

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 24TH DAY OF SEPTEMBER 2014/2ND ASWINA, 1936 WP(C).No. 22924 of 2014 (M) ---------------------------- PETITIONER(S) : --------------------- THYAPARAMBIL SKARIA JAMES, PALLATHARA HOUSE, NELLIKAMON P.O., RANNI, PATHANAMTHITTA. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT(S) : ------------------------ 1. THE INCOME TAX OFFICER WARD 2 OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX THIRUVALLA RANGE, ENNIKATTIL ESTATE NEAR KSRTC BUS STATION, THIRUVALLA-689 101. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) AYAAKER BHAVAN, KAWDIAR, THIRUVANANTHAPURAM-695001. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24-09-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AMV : 2 : WP(C).No. 22924 of 2014 (M) --------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS : ------------------------------------- EXHIBIT P1 : COPY OF THE LETTER DTD.22-2-2014. EXHIBIT P1A : COPY OF THE LETTER DTD.22-2-2014. EXHIBIT P2 : COPY OF THE ORDER OF ASSESSMENT DTD.28-3-2014. EXHIBIT P3 : COPY OF THE FORM OF APPEAL AND STATEMENT OF FACTS AND GROUNDS OF APPEAL DTD.24-4-2014. EXHIBIT P4 : COPY OF THE APPLICATION OF STAY DTD.20-5-2014. EXHIBIT P5 : COPY OF THE JUDGMENT DTD.1-7-2014 IN WPC 16615/2014. EXHIBIT P6 : COPY OF THE WRITTEN SUBMISSION DTD.31-7-2014. EXHIBIT P7 : COPY OF THE ORDER DTD.1-8-2014. EXHIBIT P8 : COPY OF THE LETTER DTD.7-8-14. EXHIBIT P9 : COPY OF THE CHALLAN RECEIPT DTD.9-8-14. RESPONDENT(S)' EXHIBITS : NIL --------------------------------------- /TRUE COPY/ P.A.TO JUDGE AMV P.R.RAMACHANDRA MENON, J. --------------------------------------- W.P.(C) No. 22924 of 2014 (M) ---------------------------------------- Dated this the 24th day of September, 2014 JUDGMENT The correctness and sustainability of the condition imposed by the appellate authority, vide Ext.P7 order dated 01.08.2014, so as to avail the benefit of interim stay during the pendency of the appeal, is the subject matter of consideration in this writ petition. 2.The case of the petitioner was sought to be finalised as per Ext.P2 order dated 28.03.2014. The petitioner preferred Ext.P3 appeal along with Ext.P4 petition for stay. In view of the apprehending coercive steps, the petitioner approached this Court by filing W.P.(C) No.16615 of 2014, which was disposed of directing the Interlocutory application to be considered within the specified time. It was accordingly that the matter was considered and Ext.P7 order came to be passed on 01.08.2014 directing the petitioner to satisfy 50% of the liability by way of 'six' W.P.(C) No. 22924 of 2014 (M) 2 equal monthly installments, which made the petitioner to approach this Court by filing this writ petition. 3.The learned counsel for the petitioner submits that, exorbitant addition has been made to the income of the petitioner merely with reference to the amount deposited in the Bank account of the petitioner. The amount returned by the petitioner was nearly `2,50,000/- whereas the amount reckoned for the purpose of tax liability is nearly `22,50,000/- which is virtually 795% of the returned income. It is stated that the source of income was sought to be explained by producing copy of the relevant deed before the assessing authority with reference to the sale of a rubber plantation which belonged to the petitioner, brother and other co-owners and entire deposit was made in to the account of the petitioner so as to purchase some other property. Due to some or other reasons, it is stated that the property could not be purchased and hence the deposit was being renewed W.P.(C) No. 22924 of 2014 (M) 3 from time to time. The version put forward by the petitioner was totally rejected by the assessing officer and this in turn is under challenge before the appellate authority. The only reason stated by the appellate authority for passing Ext.P7 order directing the condition to be satisfied to an extent of 50% is that, if the appeal is ultimately dismissed, the petitioner cannot have any benefit of stay. 4.Heard the learned Standing counsel appearing for the department as well, who submits that the assessing authority has properly discussed the facts and figures particularly with regard to the extent of share the petitioner is having, which is around Rs.11,00,000/- and that alone. In spite of the attempt made to explain the source with reference to the funds stated as provided by the other co-owners, the fact remains that the sale was effected years back and the amount was put into the account of the petitioner and the same was being renewed from time to time. It is also stated that the W.P.(C) No. 22924 of 2014 (M) 4 proceedings finalised by the assessing authority are perfectly within the four walls of the law and not assailable. It was after considering the said factual position that, the appellate authority sought to impose a condition and that sufficient time has been given to the petitioner, by granting six months' time by way of instalments to meet the liability. The relevant portion of the order particularly paragraph 3 of Ext.P7 reads as follows: “3. I have carefully considered the request of the representative bearing in mind the Hon'ble Courts decisions, the CBDT's Instructions including the Instruction No.1914 of 1993 on stay for the collection of demand and also the basis on which additions were made but considering the second part of the Hon'ble Supreme Court's decision which the representative has quoted, I am of the view that the addition made under section 68 still should go through the test of appeal and in the event of confirming the addition the Assessing Officer had made, then the assessee cannot have justifiable case for the stay to be granted. However, considering the Hon'ble Kerala High Court's decision mentioned supra and also the CBDT's Instruction No.1914, it is ordered that the appellant shall pay 50% of the demand raised in six equal monthly installments starting from 11.8.2014 and this would be worked out by the Assessing Officer.” W.P.(C) No. 22924 of 2014 (M) 5 5.After hearing both the sides, this Court finds that the reasoning given by the appellate authority with regard to the fate of the probable appeal and eligibility of the petitioner for stay, does not appear to be correct or logical. The purpose of granting an interim order is to subserve the main relief. It is not to be confused with reference to the further cause of action, once the appeal is finalised; unless the merit of the case is discussed and the eligibility is held otherwise. Since no such merit discussion is there in Ext.P7, this Court finds that the imposition of liability to an extent of 50% for the time being, is rather onerous. 6.During the course of hearing, the learned counsel for the petitioner submits that the petitioner has already satisfied the first two instalments. In the said circumstance, this Court finds it fit and proper to have the extent of liability to be satisfied as a condition to avail the benefit of interim stay, as 25%, instead of 50%. This being the position, the petitioner has to satisfy the W.P.(C) No. 22924 of 2014 (M) 6 third instalment as well, upon which, he will continue to enjoy the benefit of interim stay till finalisation of the appeal. The petitioner shall produce a copy of this judgment along with a copy of this writ petition before the respondents for further steps. The Writ Petition is disposed of as above. Sd/- P.R.RAMACHANDRA MENON, JUDGE AMV/29/09/ "