J.he Would Also Place Reliance On The Judgment.rendered Dy Tne Bombay High Court In Case Ofutmutual Fund v. Income Tax Officer 19(3)(2) &Others In W.p.lodging

IN THE HIGH COURT OF KARNATAKADHARWAD BENCH DATED THIS THE 3l DAY OF MARCH, 2021 BEFORE. THE HON‘BLE MR. JUSTICE SACHIN SHANKAR MAGADUM;W.P.NO.107225/ 2019 (IT) BETWEEN SHRI RAJESH S/O BABURAJ PATIL,AGE : 45 YEARS, OCC: BUSINESS,R/O 721, RAJASHILA, ASHOK NAGAR,NIPANI, TALUKA CHIKODI,DIST: BELAGAVI-59123/. .. PETITIONER (BY SRI SANGRAM S.KULKARNI, ADV.) AND THE INCOME TAX OFFICER, WARD-1,NIPANI, 747, 1[S|]FLOOR, NEMCHAND BUILDING,ASHOK NAGAR, NIPANI, TALUKA CHIKODI,DIST: BELAGAVI-591 23/7. ... RESPONDENT (BY SRI Y.V.RAVIRAJ, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &22/7 OF THE CONSTITUTION OF INDIA, PRAYING THIS HON'BLECOURT TO ISSUE A WRIT OF CERTIORARI AND QUASH THE|IMPUGNED ORDER VIDE ANNEXURE-D DATED 12.03.7019 FOR)THE ASSESSMENT YEAR 2016-17 PASSED BY THE RESPONDENT|INCOME.TAX.OFFICERWARDNO.1,|NIPANI,BEARINGNO.F.NO.ITO.W-1/NPN/ARR.COLLN/2018-19 AND SUCH OTHER.RELIEFS. THIS PETITION COMING ON FOR ORDERS, THIS DAY, THECOURT MADE THE FOLLOWING: ORDER The captioned writ petitioner is filed seeking writof|certiorarl.CO|quasn|the|impugnedorder.dated.12.03.2019 passed by the respondent Income Tax.Officer, as per Annexure-D. 2.Facts leading to tne case are as under: Respondent-Assessing Authority having scrutinizedthe|assessment|materlialsnas|completed|tne|assessment under Section 143(3) and has determined|the total income of the assessee i.e., the present|petitioner at Rs.88,81,519/- and thereby has raised ajdemand of Rs.38,6/,834/-. Tne petitioner aggrieved by the|additions.madeIn.the|assessment orderhas|preferred an appeal before the Commissioner of Income|Tax (Appeals), Belagavi and also deposited 20% of the|demand for the assessment year 2016-17. 3.During|pendency|of.tne|appeal,|tne|respondent.assessing.authorityhas.passed|the|impugned order as per Annexure-D and in the said|endorsement, tISstatedthat,|the|Principal| Commissioner.of|Income|Tax,Belagavinas|given.permission collect 50% of the total demand raised,|which is tune of RSs.38,6/7,834/-. After passing oimpugnedqdemandnotice|aS|Def.Annexure-D,tne|present petitioner filed application seeking stay of demand under Section 220(3) and Section 220(6) of tne|Income lax Act. 4Petitioner being aggrieved by the impugneddemand notice as per Annexure-D, has filed the present|petition seeking writ of certiorari and also seeking ajmandamus to direct tne respondent to consider and|pass appropriate orders on tne stay application after|affording opportunity to the present petitioner herein. 5.|Learned counsel appearing for the petitionerto would vehemently argue and contend before this|Court|thatthe|impugneddemandnoticeaS|perAnnexure-D is passed in gross violation of principle of natural justice. The demand notice calling upon the|petitioner to deposit 50% of tne total demand raised iswithout.affordinganyopportunity COthe|present|petitioner herein. | 6.Learned counsel for the petitioner would also.submit before this Court that, the impugned order as|per Annexure-D is contrary to the Office Memorandum|dated 31.07.2017 issued by Union of India, which is|produced as per Annexure-C. Placing reliance on this|Office Memorandum, l!earned counsel! appearing for tnpetitioner submits tnat in a high pitched assessment,|the Government of India has modified and revised that,|the 20% of the disputed amount as against earlier|existing 15% of the disputed demand. Placing reliance|on this Office Memorandum, he would submit to this|Court that this Office Memorandum is binding of allOfficers of Income Tax. Though the said circular runs|contrary to the provisions of Section 220 of Income Tax|Act, where there is no provision to impose conditions|while granting interim orders. J.He would also place reliance on the judgment.rendered Dy tne Bombay High Court in case ofUT|Mutual Fund Vs. Income Tax Officer 19(3)(2) &others in W.P.Lodging No.606/2012, Wherein the’Division Bench having come across several cryptic and| J.He would also place reliance on the judgment.rendered Dy tne Bombay High Court in case ofUT|Mutual Fund Vs. Income Tax Officer 19(3)(2) &others in W.P.Lodging No.606/2012, Wherein the’Division Bench having come across several cryptic and| arbitrary.orderspassed|DY tne|autnoritiesWa ScompelledCOlaiddown.the|guidelines.The|Sald|guidelines are culled out as follows: | a)While considering tne stay application, the.authority concerned will at least briefly set.out the case of the assessee.authority concerned will at least briefly set.out the case of the assessee. D)In the cases where the assessed [ncome.under tne impugned order for exceeds.returnedincome, the|autnority|will.consider whether the assessee Nas made.out a case for unconditional stay. If not,wnetner looking to the questions involved|in appeal, a part of the amount should be.ordered to be deposited for wnich purpose, some snort prima facie reasons could be.given by the autnority in its order.under tne impugned order for exceeds.returnedincome, the|autnority|will.consider whether the assessee Nas made.out a case for unconditional stay. If not,wnetner looking to the questions involved|in appeal, a part of the amount should be.ordered to be deposited for wnich purpose, some snort prima facie reasons could be.given by the autnority in its order. CcIn cases wnere tne assessee relies upon.financialdifficulties,the|autnority|considered can briefly indicate whether the.assessee is financially sound and viable to.deposit the amount if the autnority wants.tne assessee to so deposit.financialdifficulties,the|autnority|considered can briefly indicate whether the.assessee is financially sound and viable to.deposit the amount if the autnority wants.tne assessee to so deposit. adTne autnority concerned will also examine|whether the time to prefer an appeal has|expired. Generally, coercive measures may|whether the time to prefer an appeal has|expired. Generally, coercive measures may| not be adopted during the period provided|by tne statute to go in appeal. However, if the|authority concerned comes to|the|conclusion that the assessed is likely to|defeat the demand, it may take recourse to|coercive action for which brief reasons may|be indicated in the order. /'We clarify that if the authority concerned|complies with the above parameters while|passing orders on the stay application,|then the guthorities on the administrative|side of the department like respondent|No.2 hnerein need not once again givereasoned order. complies with the above parameters while|passing orders on the stay application,|then the guthorities on the administrative|side of the department like respondent|No.2 hnerein need not once again givereasoned order. 8.Learned counsel for the petitioner has alsoplaced reliance on the judgment rendered in the case ofPlipkartIndiaPrivateLimited|Vs.Assistant|Commissioner of Income Tax & others[I] QO.On these set of grounds he would request this|Court to quasn tne impugned demand notice as per|Annexure-D. 1 (2017 98 CCH 0104 KarHC 10. Per contra learned counsel appearing for therespondent-Authority supporting the impugned demand|notice as per Annexure-D would submit to this Court|that it is well within the power of the Assessing|Authority to impose suitable conditions and the same is prescribed under Sub-Section (6) of Section 220 of|Income Tax Act. In that view of the matter he would|submit to this Court that, the order under challenge|does not suffer from any illegality and thereby would|not warrant any interference by this Court. He would|also submit to this Court that the petitioner has anjefficacious|remedyDY approaching.tne|Principal|Commissioner of the Income Tax Act (Appeals), where|appeal is already pending. 11. Heardlearned|counselappearingfor tne]petitioner.andlearned|counselappearing.for.the|respondent. Perused the order under challenge. 17.Prime facie.I would find that the impugned|order passed by the respondent Assessing Autnority isin gross violation of principles of natural justice. The|provision of Section 220 also contemplates that the| 11. Heardlearned|counselappearingfor tne]petitioner.andlearned|counselappearing.for.the|respondent. Perused the order under challenge. 17.Prime facie.I would find that the impugned|order passed by the respondent Assessing Autnority isin gross violation of principles of natural justice. The|provision of Section 220 also contemplates that the| Assessing Autnority is empowered to grant Dlanket stay.If the Assessing Authority is of the view that suitable|conditions are to be imposed, then it is incumbent on|the part of Assessing Authority to afford an opportunity|of being heard in the matter. 13. In the present case on hand, the assessingauthority has violated the principles of natural justice.|The petitioner was not at all neard before passing tne|impugnedorder.It.ISalso|forthcomingthat|the|petitioner nas filed stay application as per Annexure-E|subsequentCOISSUINGof.demandnotice|a SperAnnexure-D. 14. In that view of the matter, I am of the viewtnat the order under challenge is not at all sustainable|and the same needs to be set aside. Accordingly this|Court is pass the following: ORDER a.Writ petition Is—allowed. b.Theimpugneddemandnotice|aS|perfAnnexure-D Is set aside. The matter is.remitted pack to tne Assessing Authority. ©Annexure-D Is set aside. The matter is.remitted pack to tne Assessing Authority. © EM/- C.The Assessing Authority after affording|reasonable.opportunitySnall.PDdasappropriate orders on the stay application|filed by the petitioner as per Annexure-E. reasonable.opportunitySnall.PDdasappropriate orders on the stay application|filed by the petitioner as per Annexure-E. adThis exercise snall be done within a period|of eight weeks from the date of receipt of|certified copy of this order.of eight weeks from the date of receipt of|certified copy of this order. e Till the disposal of tne application pending|before him, the respondent-authority is)directed not to take coercive steps, since)the petitioner has already deposited 20%|of tne demand pefore Commissioner of.Income Tax (Appeals).before him, the respondent-authority is)directed not to take coercive steps, since)the petitioner has already deposited 20%|of tne demand pefore Commissioner of.Income Tax (Appeals). f TheAssessingAuthority|Snall|take|cognizance of the guidelines laid down by.the Division Bench of the Bombay High.Court which are culled out for reference.cognizance of the guidelines laid down by.the Division Bench of the Bombay High.Court which are culled out for reference. Sd/-.JUDGE