Dr.akilan Ramanathan v. The Commissioner Of Income Tax(Appeals)-V, Aayakar Bhavan

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 10.07.2014Coram: THE HONOURABLE MR.JUSTICE M.SATHYANARAYANAN W.P.Nos.673 to 678 of 2014702 to 707 of 2014andM.P.Nos.1 & 2 of 2014 W.P.No.673 of 2014 Dr.Akilan Ramanathan.. Petitioner in WP.No.673 to 678/2014Anandhi Akilan..Petitioner in WP 702 to 707/2014vs.1.The Joint Commissioner of Income Tax, Business Range-III, Aayakar Bhavan, 121, Nungambakkam High Road, Nungambakkam, Chennai-600 0342.The Commissioner of Income Tax, Chennai-X, 6th Floor, Annexe Building, Aayakar Bhavan, No.121, Nungambakkam High Road, Nungambakkam, Chennai-600 034 3.The Commissioner of Income Tax(Appeals)-V, Aayakar Bhavan, No.121, Nungambakkam High Road, Nungambakkam, Chennai-600 034... Respondents in All WPS Petition filed under Article 226 of the Constitution of Indiapraying for the issuance of a writ of certiorarified mandamus to callfor records of the second respondent in C.No.10601(12)/2013-14/X and10601(11)/2013-14/X and to quash the order dated 04.09.2013 and3/9/2013 for the Assessment Year 2006-2007 2008-2009,2010-2011,2011-2012,and 2005-2006,2006-2007,2007-2008, 2008-2009,2010-2011,2011-2012respectively and direct the second respondent to grant stay of https://hcservices.ecourts.gov.in/hcservices/ collection of outstanding tax demand pending disposal of the appealbefore the third respondent. COMMON ORDER The petitioners are individual assessees. The grievanceexpressed by the petitioner in W.P.No.673 to 678 is that theassessing officer has completed high pitched assessment hastily,without due and proper application of mind. He would contend that theAssessing Officer added the amount transferred from his own bankaccount from Delhi to Chennai, under Section 68 of the Income TaxAct, as 'unexplained credit'. The petitioner in W.P.No.702 to 707 of2014, who is the wife of the petitioner in W.P.Nos.673 to 678 of2014, also took a similar stand. According to the petitioners, inthese writ petitions, by no stretch of imagination, the transfer offund from their own bank accounts cannot be termed as 'unexplainedcredit' and high pitched assessments were made ranging from 2.76times to 11.24 times, which resulted in the huge tax demand ofRs.1,71,92,770/- for the assessment years 2006-07 to 2011-12 and asum of Rs.91,07,655/- for the assessment years 2005-06 to 2011-12.The petitioners challenging the legality of the assessment orders,filed appeals before the third respondent. They also movedapplications for stay before the first respondent/assessing officer,who found that the respective assessees have not furnishedsubstantial explanation for the liquidity crunch/financial hardshipand have not made out a case for stay and therefore, rejected thepetitions for stay and aggrieved by the same, the petitioners hereininvoked the jurisdiction of the second respondent, by placingreliance upon the Circular (instruction No.96) dated 21.08.1969. Thesecond respondent found that the above said Circular, which washeavily relied on by the assessees, has been superseded byinstruction No.1914, which came into operation on 2.12.1993 and inthe light of the parameters laid down in the latest instructions, nocase has been made out for consideration of the stay petitions andtherefore dismissed the same. Aggrieved by the same, the presentwrit petitions have been filed. 2. The learned counsel appearing for the petitioners wouldvehemently contend that even as per instruction No.1914, dated2.12.1993, guidelines have been given for staying the demand at onceand as per the said guidelines he or she requires to execute an https://hcservices.ecourts.gov.in/hcservices/ 2. The learned counsel appearing for the petitioners wouldvehemently contend that even as per instruction No.1914, dated2.12.1993, guidelines have been given for staying the demand at onceand as per the said guidelines he or she requires to execute an https://hcservices.ecourts.gov.in/hcservices/ undertaking that he or she will cooperate in the early disposal ofthe appeal, failing which the order of stay will be vacated.Therefore, by placing reliance upon the said guidelines, it is thesubmission of the learned counsel for the petitioners that since itis admittedly a case of high pitched assessment, the writpetitioners are entitled to blanket order of demand of stay. 3. Per contra, the learned Standing counsel appearing for theRevenue has drawn the attention of this Court to the counteraffidavit filed by the first respondent and would submit that theassessment orders came to be passed after giving due and fullopportunity to the respective assessees and they failed to provevarious sources of income, loans taken from the third parties andcash flow statement, which resulted in the additions being made andif the authorities have to exercise the discretionary power of stay,the petitioners have to deposit at least 25% of the demanded taxamount. 4. In response to the said statement, the learned counsel forthe petitioners would draw the attention of this Court to thejudgement of the Rajasthan High Court reported in Virender SinghSekhawat vs. Income Tax Officer reported in (2013) 216 Taxman 236 andthe Division Bench judgement of the Delhi High Court in Soul vs.DCIT, reported in (2010)323 ITR 305 and submit that in the saiddecisions, the Rajasthan and Delhi High Courts had granted blanketstay in respect of high pitched assessment and therefore, similarorder may be passed in these writ petitions also. 5. This Court has carefully considered the rival submissions andalso perused the materials available on record. 6.Admittedly the petitioners are individual assessees and sincethere was an escapement of income, for reasons recorded as providedunder Section 147 of the Income Tax Act, notice was caused to themunder Section 148 of the said Act and after affording them anopportunity, the assessment was finalised and those assessment orderswere put to challenge by filing appeals before the third respondent.During pendency of the appeals, the petitioners invoked thejurisdiction of the first respondent praying for stay of theoperation of the assessment orders, who has taken into considerationthe latest Circular, negatived the relief. Since the assessees arenot running commercial business and that they are only individualassessees and also taking into consideration the fact that thedifference between the income shown in the returns and assessmentorders was very high i.e. ranging between 2.76 times to 11.24 times,this Court is of the view that interim relief can be granted to thepetitioners subject certain conditions. 7. In the result, the writ petitions are allowed and theimpugned orders dated 04.09.2013 and 03.09.2013 are set aside andthe assessment orders are stayed on the following conditions: (i) The petitioner in W.P.Nos.673 to 678 of 2014shall deposit 15% of the tax demand ofRs.1,71,93,770/- and the petitioner in W.P.Nos.702 to707 of 2014 shall deposit 25% of the tax demand ofRs.91,07,655/- in five equated monthly instalments tothe credit of the first respondent. (ii) The first instalment shall be paid on orbefore 15.8.2014 and the subsequent instalments shallbe paid on or before 15th of every month. (iii) It is made clear that if the petitionerscommit default in even one instalment, the originalassessment orders shall stand restored to file and itis open to the first respondent to proceed further inaccordance with law. (i) The petitioner in W.P.Nos.673 to 678 of 2014shall deposit 15% of the tax demand ofRs.1,71,93,770/- and the petitioner in W.P.Nos.702 to707 of 2014 shall deposit 25% of the tax demand ofRs.91,07,655/- in five equated monthly instalments tothe credit of the first respondent. (ii) The first instalment shall be paid on orbefore 15.8.2014 and the subsequent instalments shallbe paid on or before 15th of every month. (iii) It is made clear that if the petitionerscommit default in even one instalment, the originalassessment orders shall stand restored to file and itis open to the first respondent to proceed further inaccordance with law. (iv) This order will enure to the benefit of thepetitioners during the subsistence of the appeals andthe same is also subject to the above said defaultclause. (v) The third respondent is directed to givepreference for early disposal of the appeals filed bythe petitioners and is directed to dispose of theappeals filed by the petitioners as expeditiously aspossible. No costs. Consequently, connected miscellaneous petitions are closed.-s/d- Assistant Registrar(CS-II) Dated:23/7/2014 True Copy Sub-Assistant Registrar msk To 1.The Joint Commissioner of Income Tax, Business Range-III, Aayakar Bhavan, 121, Nungambakkam High Road, Nungambakkam, Chennai-600 034 2.The Commissioner of Income Tax, Chennai-X, 6th Floor, Annexe Building, Aayakar Bhavan, No.121, Nungambakkam High Road, Nungambakkam, Chennai-600 034 3.The Commissioner of Income Tax(Appeals)-V, Aayakar Bhavan, No.121, Nungambakkam High Road, Nungambakkam, Chennai-600 034 +1 cc to Mr.Philip george Advocate sr.30211+2 cc to Mr.T.PramodKumar Chopda, Advocate sr.nos.30326 &30327 W.P.Nos.673 to 678 of 2014702 to 707 of 2014 ev(co)aa23/7/2014