By Advs.sri.harisankar v. Menon Smt.meera V.menon

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 16TH DAY OF JUNE 2017/26TH JYAISHTA, 1939 WP(C).No. 19971 of 2017 (V) ---------------------------- PETITIONER(S): ------------- THOMAS DANIEL, INDIKATTIL HOUSE, VAKAYAR, KONNI, PATHANAMTHITTA-689698. BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT(S): -------------- 1.THE INCOME TAX OFFICER, WARD 4, THIRUVALLA-689101. 2.THE COMMISSIONER OF INCOME TAX (APPEALS), KOTTAYAM-686001. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16-06-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: EL ---------------------------- APPENDIX PETITIONER(S)' EXHIBITS-----------------------EXHIBIT-P1 TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE IST RESPONDENT FOR THE YEAR 2014-15 DTD 30.12.2016EXHIBIT-P2 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DTD 31.1.2017EXHIBIT-P3 TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT DTD 06.06.2017EXHIBIT-P4 TRUE COPY OF THE JUDGMENT IN I.T.A 278/2014 OFTHIS HONOURABLE COURT DTD 30.7.2015EXHIBIT-P5 TRUE COPY OF THE OFFICE MEMORANDUM ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES DTD 29.2.2016RESPONDENT(S)' EXHIBITS----------------------- NIL TRUE COPY EL P.S. TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. - - - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) No.19971 of 2017 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16[th] day of June, 2017 JUDGMENT The petitioner has approached this Court aggrieved by Ext.P3order, passed by the 2[nd] respondent appellate authority, in a staypetition filed along with an appeal against an order of assessment,for the assessment year 2014-15, under the Income Tax Act. Thefacts in the writ petition would indicate that the assessment for theyear in question was completed against the petitioner bydisallowing amounts that had been paid by the petitioner assesseetowards interest on borrowed funds, to an extent ofRs.67,30,90,917/-. The dis-allowance of the deduction claimed wasfor the reason that, the provisions of Section 40 of the Income TaxAct contemplated a dis-allowance of any amount claimed by wayinter alia of the interest, commission, brokerage etc., that was paidto a resident, and on which tax was deductible at source, withoutdeducting the tax as contemplated under Section 201 of the IncomeTax Act. In the case of the petitioner, it was found by the assessingauthorities that the petitioner, who was required to deduct tax atsource on the amounts claimed towards deduction, had not actuallydeducted tax at source, and therefore, the deduction claim had tobe disallowed. Against the order of assessment, the petitionerpreferred an appeal along with a stay petition before the first appellate authority, the 2[nd] respondent herein. In the said staypetition, that was filed along with the appeal, the petitioner sought fora stay of the demand confirmed against him by the assessment order,pending disposal of the appeal by the 2[nd] respondent. The 2[nd]respondent considered the stay petition, and after finding that thepetitioner had defaulted on the requirement of deducting tax atsource, and was therefore an assessee in default within the meaningof the term under the said Section, granted a conditional order of stayof recovery, of the amounts confirmed against the petitioner by theassessment order, by directing the petitioner to pay 75% of theamounts confirmed against him, as a condition for stay of recovery ofthe balance 25%. It is this conditional order, that the petitioner hasimpugned in the writ petition, inter alia on the ground that the 2[nd]respondent did not consider the true purport and ambit of the 2[nd]proviso to section 201 of the Income Tax Act, while considering thestay petition preferred by the petitioner. 2. I have heard the learned counsel for the petitioner and thelearned Standing counsel for the respondents. 3. On a consideration of the facts and circumstances of the caseand the submissions made across the bar, I find from Ext.P3 order of the 2[nd] respondent, that is impugned in this writ petition, that the 2[nd]respondent relies solely on the statutory provisions to hold that thepetitioner has to be treated as an assessee in default. Although thepetitioner states that the 2[nd] proviso to the said Section will come tohis aid in contending that he cannot be treated as an assessee indefault, I am of the view that this is a matter that would have to beexamined by the 2[nd] respondent at the time of adjudication of theappeal. While the petitioner has not made out a case warranting aninterference with Ext.P3 order in these proceedings under Article 226of the Constitution of India, taking note of the plea of financialhardship, urged by the petitioner, which is one of the factors thatought to be considered by an appellate authority at the time ofconsidering stay petitions against orders of assessment, I deem it fitto reduce the amount directed to be deposited, pending disposal ofthe appeal to 50% of the demand outstanding against the petitionerpursuant to the assessment order. Save for this limited modificationto Ext.P3 order, the writ petition in its challenge against Ext.P3 orderis otherwise dismissed. The petitioner shall pay 50% of the amountconfirmed against him by the assessment order, in three equal andsuccessive monthly installments, commencing from 15.07.2017. If thepetitioner pays the said amount as directed, the 2[nd] respondent shallconsider the appeal preferred by the petitioner on merits, and pass orders thereon, and recovery proceedings for recovery of the balanceamount confirmed against the petitioner in the assessment order,shall be kept in abeyance till such time as orders are so passed by the2[nd] respondent in the appeal. sm/ Sd/-A.K.JAYASANKARAN NAMBIAR JUDGE