Housing Society Limited v. Assistant Commissioner Of Income Tax & Ors

(1 to 3)-WP-1238-20 & group.doc. IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1238 OF 2020 Salsette Catholic Cooperative Housing Society Limited Versus Assistant Commissioner of Income Tax & Ors. ..Petitioner ..Respondents WITH WRIT PETITION (L) NO.6028 OF 2020 Salsette Catholic Cooperative Housing Society Limited Versus Assistant Commissioner of Income Tax & Ors. ..Petitioner ..Respondents WITH WRIT PETITION NO.1229 OF 2020 Salsette Catholic Cooperative Housing Society Limited Versus Assistant Commissioner of Income Tax & Ors. ..Petitioner ..Respondents Mr. Devendra Jain i/by Ms. Radha Halbe, Advocate for the Petitioner.Mr. Sham Walve, Advocate for the Respondents. P.C. CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. DATE : 8[th] MARCH, 2021 This order will dispose of all the three writ petitions. 2. The three writ petitions have been filed under Article 226 of 1 of 12 the Constitution of India seeking a direction to the respondents to giveeffect to the appellate order passed by the first appellate authority i.e.Commissioner of Income Tax (Appeals). 3. Heard Mr. Devendra Jain, learned counsel for the petitionerand Mr. Sham Walve, learned standing counsel revenue for therespondents. 4. Petitioner is a co-operative housing society having its office atBandra Gymkhana, Mumbai. 5. For the assessment year 2008-09 petitioner filed return ofincome on 02.01.2009 declaring total income at Rs.21,74,000.00. Thoughintimation under section 143(1) of the Income Tax Act, 1961 was issued tothe petitioner subsequently the assessment was reopened by issuance ofnotice under section 148 whereafter assessment order dated 31.03.2016was passed by respondent No.1 under section 143(3) of the Income TaxAct, 1961 (briefly “the Act” hereinafter). By the said order of assessment,the total income of the petitioner was computed and rounded off atRs.45,29,81,970.00. 6. Aggrieved by the aforesaid order of assessment, petitionerpreferred appeal before the Commissioner of Income Tax (Appeals)-32,Mumbai [briefly “the Commissioner of Income Tax (Appeals)” hereinafter].It is stated that 20% of the outstanding demand being Rs.3,67,42,100.00was deposited by the petitioner for the purpose of seeking stay of thedemand. Ultimately, by the appellate order dated 27.03.2019,BGP.2 of 12 (1 to 3)-WP-1238-20 & group.doc. Commissioner of Income Tax (Appeals) deleted the addition ofRs.44,54,14,722.00 made by the assessing officer on account of capitalgains. Consequently assessing officer was directed to recompute theinterest under section 234B and 234C of the Act while giving effect to theappellate order. Thus, the appeal was partly allowed. 7. Petitioner thereafter made an application on 29.03.2019 torespondent No.1 requesting the said authority to give effect to the order ofthe appellate authority. This was followed by several subsequentapplications. However, instead of giving effect to the appellate orderrespondent No.1 in fact initiated recovery proceedings by issuing noticeunder section 221(1) of the Act. Though petitioner lodged grievance, norelief was granted. 8. Aggrieved, writ petition No.1238 of 2020 has been filedseeking a direction to the respondents to give effect to the appellate orderdated 27.03.2019 passed under section 250 of the Act along withapplicable interest under section 244A thereof. 9. In Writ Petition (L) No.6028 of 2020 petitioner filed returnof income for the assessment year 2013-14 on 24.09.2013 declaring totalincome of Rs.4,22,130.00. The case was selected for scrutiny whereafterassessment order dated 30.03.2016 was passed by the first respondentunder section 143(3) of the Act. By the said order of assessment, totalincome of the assessee i.e., the petitioner was computed and rounded off atRs.2,13,29,800.00. BGP. 3 of 12 (1 to 3)-WP-1238-20 & group.doc. 8. Aggrieved, writ petition No.1238 of 2020 has been filedseeking a direction to the respondents to give effect to the appellate orderdated 27.03.2019 passed under section 250 of the Act along withapplicable interest under section 244A thereof. 9. In Writ Petition (L) No.6028 of 2020 petitioner filed returnof income for the assessment year 2013-14 on 24.09.2013 declaring totalincome of Rs.4,22,130.00. The case was selected for scrutiny whereafterassessment order dated 30.03.2016 was passed by the first respondentunder section 143(3) of the Act. By the said order of assessment, totalincome of the assessee i.e., the petitioner was computed and rounded off atRs.2,13,29,800.00. BGP. 3 of 12 (1 to 3)-WP-1238-20 & group.doc. 10. Petitioner challenged this order of assessment before theCommissioner of Income Tax (Appeals). It is stated that for the purpose ofobtaining stay of the demand, petitioner deposited a sum ofRs.16,90,900.00 being 20% of the outstanding demand. However, by theappellate order dated 15.03.2019, Commissioner of Income Tax (Appeals)allowed the appeal by holding that assessing officer was not justified indenying deduction under section 80P(2)(d) of the Act amounting toRs.2,09,07,669.00. Accordingly, assessing officer was directed to allow thesaid deduction and thereafter to recompute the total income. In so far levyof interest under sections 234A and 234B of the Act is concerned, assessingofficer was directed to modify and recompute the interest while givingeffect to the appellate order. 11. Petitioner made application before respondent No.1 on20.03.2019 to give effect to the appellate order dated 15.03.2019 passedunder section 250 of the Act. This was followed by subsequentapplications. However, instead of giving effect to the appellate order firstrespondent in fact initiated recovery proceedings by issuing notice to thepetitioner under section 221(1) of the Act on 09.01.2020. 12. Aggrieved, present writ petition has been filed seeking adirection to the respondents to give effect to the appellate order dated15.03.2019 along with interest under section 244A of the Act. 13. For the assessment year 2014-15 which is the subject matter ofWrit Petition No.1229 of 2020, petitioner filed its return of income on 4 of 12 (1 to 3)-WP-1238-20 & group.doc. 30.08.2014 declaring total income at Rs.1,65,16,330.00. The return of thepetitioner was selected for scrutiny whereafter assessment order was passedon 30.12.2016 under section 143(3) of the Act. By the said order ofassessment, assessing officer added income from house property andincome from capital gains to the extent of Rs.1,05,63,437.00 andRs.79,36,105.00 respectively to the income of the petitioner and thus,computed the total income which was rounded off to Rs.4,11,47,400.00. 14. Aggrieved by the aforesaid order of assessment, petitionerpreferred appeal before Commissioner of Income Tax (Appeals). It is statedthat for the purpose of stay an amount of Rs.21,35,000.00 being 20% ofthe outstanding demand was deposited by the petitioner. However, by theorder dated 20.03.2019 Commissioner of Income Tax (Appeals) allowedthe appeal by holding that petitioner would be entitled to the claim ofdeduction under section 80P(2)(d) of the Act and therefore assessingofficer was not justified in denying deduction under the said provisionamounting to Rs.2,46,31,070.00. Accordingly, assessing officer wasdirected to allow the said deduction and thereafter to recompute the totalincome. In so far levy of interest under sections 234A and 234B wasconcerned, assessing officer was directed to modify and recompute theinterest amounts while giving effect to the order passed in appeal. 15. Like in previous orders, petitioner filed application dated27.03.2019 before respondent No.1 to give effect to the appellate orderwhich was followed by subsequent applications. However, instead of givingeffect to the appellate order first respondent initiated recovery proceedings 5 of 12 by issuing notice under section 221(1) of the Act. Though petitionerlodged grievance online, no relief was granted. 16. Aggrieved, present writ petition has been filed seeking adirection to the respondents to give effect to the order dated 20.03.2019passed by the Commissioner of Income Tax (Appeals) under section 250 ofthe Act along with interest under section 244A. 17. This Court by order dated 09.12.2020 had directed learnedstanding counsel to take up the matter with the respondents and to workout the matter pertaining to refund of dues of the petitioner. When on thenext date i.e. on 12.01.2021, Mr. Sham Walve produced copies of orderspassed by respondent No.1 giving effect to the orders passed by theCommissioner of Income Tax (Appeals) with the submission that therecould be adjustment of refund against pending demand in certain cases,learned counsel for the petitioner was directed to file a compilationcontaining all relevant documents on the subject. 18. Accordingly, Mr. Devendra Jain has filed a compilation. 19. We find that in so far assessment year 2008-09 is concerned,respondent No.1 passed order dated 11.08.2020 giving effect to theappellate order. As per the said order the revised total income after givingeffect to the appellate order would be Rs.21,74,000.00 on which statutoryinterest under sections 234A, 234B and 2243C would be applicable. In sofar assessment year 2013-14 is concerned, the order giving effect to theappellate order was passed on 14.12.2020 whereafter revised total income 6 of 12 (1 to 3)-WP-1238-20 & group.doc. has been computed at Rs.4,22,130.00. As regards assessment year 2014-15is concerned, the order giving effect to the appellate order was passed on14.12.2020 by the first respondent whereby the total income was revised atRs.1,65,16,330.00. 20. Learned counsel for the petitioner submits that in all the threeassessment years, petitioner had deposited 20% of the outstanding demandbefore the Commissioner of Income Tax (Appeals) while preferring appealfor seeking stay. These amounts have not been taken into consideration bythe first respondent while giving effect to the orders of the Commissionerof Income Tax (Appeals). He has also referred to provisions of section153(5) of the Act to contend that an order passed by the appellate authorityunder section 250 of the Act is required to be given effect to within threemonths, but in exceptional cases the said period can be extended upto sixmonths upon approval of the Principal Commissioner or Commissioner asthe case may be. In all the three cases, the orders giving effect to theappellate orders were passed much beyond the statutory period of threemonths or even the extended period of six months. Whether approval ofthe Commissioner or the Principal Commissioner was obtained or not isnot discernible. That apart, petitioner is entitled to interest under section244A. Learned counsel for the petitioner has also referred to CircularNo.19 of 2019 dated 14.08.2019 of the Central Board of Direct Taxes(CBDT) to contend that all notices and orders of the Income TaxDepartment are required to be generated electronically on the Income TaxBusiness Application platform. Despite that there are instances wherenotices, orders, summons, letters or correspondences etc. were found to 7 of 12 (1 to 3)-WP-1238-20 & group.doc. 7 of 12 (1 to 3)-WP-1238-20 & group.doc. have been issued manually without maintaining a proper audit trail.Consequently, the circular mandates that no such communication shall beissued by any income tax authority on or after 01.10.2019 unless acomputer generated Document Identification Number is allotted and isduly quoted on the body of such communication. Referring to the ordersgiving effect to the appellate orders, he submits that these orders have beenissued manually without quoting the Document Identification Number.Relying upon the said circular, he submits that in the absence thereof theorders giving effect to the appellate orders would be treated as invalid andno-nest. 21. Mr. Sham Walve, learned standing counsel revenue submitsthat grievance of the petitioner as could be seen from the prayer portionwas against not giving effect to the appellate orders. Now that the appellateorders have been given effect to, if the petitioner still remains aggrieved itmay take recourse to its remedy as provided under the law to assail suchorder. He therefore submits that considering the fact that orders have beenpassed giving effect to the orders of the Commissioner of Income Tax(Appeals), the present writ petitions do not survive for further adjudication.In addition, he submits that there are demands pending for assessmentyears under consideration which have been adjusted or may still have to beadjusted against the orders passed by the respondent No.1 giving effect tothe orders passed by the Commissioner of Income Tax (Appeals). 22. Submissions made by learned counsel for the parties have beenduly considered. Also perused the materials on record. 8 of 12 (1 to 3)-WP-1238-20 & group.doc. 23. As would be evident from the above, principal grievance of thepetitioner was that respondents had not given effect to the orders passed bythe Commissioner of Income Tax (Appeals) under section 250 of the Act.From the documents placed on record, we find that the said grievance hasbeen redressed. Petitioner may still have its grievance in so far the orderspassed by respondent No.1 giving effect to the appellate orders but beforedilating further, we may refer to two of the relevant provisions of the Act.Section 153 deals with time limit for completion of assessment,reassessment and recomputation. Sub section (5) thereof says that where anassessing officer is required to give effect to an order passed under section250 or such other provisions as mentioned therein, otherwise than bymaking a fresh assessment or reassessment the same shall be done within aperiod of three months from the end of the month in which the orderunder section 250 was received by the Principal Chief Commissioner orChief Commissioner or Principal Commissioner or Commissioner as thecase may be. The first proviso is relevant. It says that where it is notpossible for the assessing officer to give effect to such order within theaforesaid period for reasons beyond his control, the PrincipalCommissioner or Commissioner on receipt of such request in writing fromthe assessing officer may allow an additional period of six months to giveeffect to the order if the said authority is satisfied. 24. Thus from the above, we find that after an order is passed bythe Commissioner of Income Tax (Appeals) under section 250, the samehas to be given effect to within a period of three months from the end ofthe month in which the order under section 250 is passed. The period of BGP. 9 of 12 (1 to 3)-WP-1238-20 & group.doc. 24. Thus from the above, we find that after an order is passed bythe Commissioner of Income Tax (Appeals) under section 250, the samehas to be given effect to within a period of three months from the end ofthe month in which the order under section 250 is passed. The period of BGP. 9 of 12 (1 to 3)-WP-1238-20 & group.doc. three months as above would be computed from the date of receipt by thePrincipal Chief Commissioner or Chief Commissioner or PrincipalCommissioner or Commissioner as the case may be. If however, it is notpossible for the assessing officer to give effect to the appellate order withinthe aforesaid period of three months which has to be for reasons beyond hiscontrol, he has to make a request to the Principal Commissioner or theCommissioner seeking extension of time. Upon receipt of such request inwriting, the Principal Commissioner or Commissioner as the case may bemay allow an additional period of six months to give effect to the appellateorder, if he is satisfied that such a request is required to be granted. 25. In so far the present group of cases is concerned, we find thatfor the assessment year 2008-09 the appeal was allowed on 20.03.2019 andthis was brought to the notice of respondent No.1 on 29.03.2019. For theassessment year 2013-14 the appeal was allowed on 15.03.2019 which wasbrought to the notice of respondent No.1 on 20.03.2019. Likewise for theassessment year 2014-15 the appeal was allowed by the Commissioner ofIncome Tax (Appeals) on 20.03.2019 which was brought to the notice ofrespondent No.1 on 27.03.2019. Looking at the requirement of section153(5) of the Act, the orders giving effect to the appellate orders were to bepassed by 30[th] June 2019. If the extended period of six months is added tothis, then the orders ought to have been passed by 30[th] December 2019.However, nothing has been placed before us as to whether respondent No.1made written request before respondent No.2 for extension of time andwhether respondent No.2 had granted such extension of time on beingsatisfied. Thus, there is clear delay in passing the orders by respondent 10 of 12 (1 to 3)-WP-1238-20 & group.doc. 26. Section 244A deals with interest on refunds. As per subsection (1) simple interest has to be paid to an assessee where refund of anyamount becomes due to be calculated in the manner provided thereunder.Sub section (1A) says that in a case where a refund arises as a result ofgiving effect to an order under sections 250 etc. the assessee shall beentitled to receive in addition to the interest payable under sub section (1),an additional interest on such amount of refund calculated at the rate ofthree percent per annum for the period beginning from the date followingthe date of expiry of the time allowed under sub section (5) of section 153to the date on which refund is granted. 27. We find from a perusal of the orders dated 11.08.2020,14.12.2020 and 14.12.2020 that the provisions contained in section 153(5)of the Act have not been taken into consideration. We also find that therequirement of paying interest under section 244A is also missing from theabove orders. The above orders are also silent on the adjustment of the 20%of the initial outstanding dues paid by the petitioner before theCommissioner of Income Tax (Appeals) while filing appeals for the purposeof stay. Lastly, the impact of CBDT Circular No.19 of 2019 dated14.08.2019 on the orders dated 11.08.2020, 14.12.2020 and 14.12.2020 isalso required to be assessed because we find that these orders have beenmanually issued without quoting any Document Identification Number. 28. At this stage, Mr. Sham Walve points out that there are 11 of 12 Digitallysigned byBalajiBalaji G.PanchalG.Date:Panchal2021.03.1510:53:01+0530 outstanding demands against the petitioner starting from the assessmentyear 2008-09 upto the assessment year 2017-18 which are required to beadjusted against any refund that may be made to the petitioner. 28. At this stage, Mr. Sham Walve points out that there are 11 of 12 Digitallysigned byBalajiBalaji G.PanchalG.Date:Panchal2021.03.1510:53:01+0530 outstanding demands against the petitioner starting from the assessmentyear 2008-09 upto the assessment year 2017-18 which are required to beadjusted against any refund that may be made to the petitioner. 29. In such a situation, we are of the view that it would be in theinterest of justice if the Principal Commissioner of Income Tax-19 i.e.respondent No.2 himself looks into the above aspects including impact ofCircular No.19 of 2019 and thereafter decide afresh the issue relating togiving effect to the orders of the Commissioner of Income Tax (Appeals)passed under section 250 of the Act for the three assessment years 2008-09, 2013-14 and 2014-15. Respondent No.2 shall consider all aspectsincluding payment of interest etc. and adjustment, if any, thereafter shalltake an appropriate decision after giving an opportunity of hearing to thepetitioner. 30. Let the consequential order be passed by respondent No.2within a period of eight weeks from the date of receipt of a copy of thisorder. 31. All contentions are kept open. 32. Writ petitions are accordingly disposed of. MILIND N. JADHAV, J UJJAL BHUYAN, J 12 of 12