Jik Industries Ltd v. The Deputy Commissioner Of Income-Tax – 2(2)(1)& Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 59 OF 2019 JIK Industries Ltd. vs The Deputy Commissioner of Income-tax – 2(2)(1)& Ors. …Petitioner ...Respondents Mr.Nitesh Joshi I/b. Atul Jasani for Petitioner. Mr.P.C. Chhotaray for Respondents. CORAM : AKIL KURESHI & S.C.GUPTE, JJ. DATE : 8 FEBRUARY 2019 P.C.: This petition is filed challenging orders dated 22 February2018, 6 March 2018 and 30 November 2018 passed by the revenueauthorities refusing to grant unconditional stay against recoveries in favourof the Petitioner arising out of assessments of the earlier years. 2Brief facts are as under : The Petitioner is a company registered under the CompaniesAct and is engaged in the manufacture of crystal and artistic glass. TheAssessing Officer has passed scrutiny assessment orders for the AssessmentYears 2001-02, 2002-03 and Assessment Years 2009-10, 2010-11 and2011-12. Against the assessment orders for the Assessment Years 2001-02and 2002-03, the Petitioner has filed the revision petitions under Section264 of the Income-tax Act, 1961 ('Act' for short) before the Commissionerof Income-Tax. This was done in the year 2007. Against the orders of sat assessment for Assessment Years 2009-10, 2010-11 and 2011-12, thePetitioner has filed appeals before the Commissioner (Appeals). The taxdemand arising out of these assessment years would be close to Rs.94crores. All this while, the Petitioner had not deposited any tax pursuant tothe assessment orders, primarily because the Petitioner company wasbefore BIFR and the period of protection against coercive recoveries lastedupto 31 December 2017. 3Now that, post 31 December 2017, the Petitioner does notenjoy any such stay against recoveries, the department initiated recoveryprocedure. The Petitioner first approached the Tax Recovery Officerseeking stay of the demands pending appellate and revisional proceedings.The Tax Recovery Officer insisted that the Petitioner must deposit 50% ofthe tax demand to avoid recovery of the rest. The Petitioner thereuponapplied to the Principal Commissioner of Income-tax, who passed an orderon 6 March 2018 insisting that the Petitioner must pay 20% of the taxdemand to enjoy stay against the recovery. The Petitioner thereuponapproached Chief Commissioner of Income-tax, who passed an order dated30 November 2018 reiterating the same demand as that of the PrincipalCommissioner. The Petitioner has thereupon filed this petition. 4Learned Counsel for the Petitioner contended that the revisionpetitions, which are filed in the year 2007, remained pending for yearstogether without any fault of the Petitioner. The authorities in theimpugned orders have now taken a stand that upon efflux of one year fromthe date of filing of the petitions, the same would not survive. Thereference appears to be under Sub-Section (6) of Section 264 of the Act. He sat submitted that the statute does not provide for academic dismissal orabatement of the revisional proceedings. He further stated that the appealswere filed by the Petitioner on 22 April 2013. The Commissioner (Appeals)had called for remand report on 6 November 2013 which was also made bythe Assessing Officer on 12 November 2014. Recently the Commissionerhad heard the appeals in part on 6 February 2019 and has now fixedfurther hearing on 13 February 2019. In that view of the matter, Counselsubmitted that recoveries be stayed till final disposal of the appeals by theCommissioner. Counsel submitted that for the Assessment Years 2006-07and 2008-09, the appeals of the Petitioner are already allowed by theAppellate Commissioner. Issues being similar, the Petitioner would getsimilar relief in the present appeals also. Counsel further submitted even onmerits the Petitioner has arguable case. Several addition and dis-allowances made by the Assessing Officer are highly vulnerable. 5On the other hand, learned Counsel Mr.Chhotaray opposed thepetition contending that - (i) As per the instructions of the CBDT, pending appeals,the assessee has to deposit 20% of the tax. Theauthorities have gone by such standards and therefore,made no error; (ii) The Petitioner has not paid any tax for years togetherthough the tax demand is huge; (iii) The Appellate Commissioner cannot be expected to decide the appeals within short time since the recordsare bulky; (iv) The Assessing Officer has discussed the evidence onrecord in detail and come to conclusions for makingadditions in the assessments, which are sound. 6With respect to the stand of the authorities that the revisionpetitions stood disposed of upon efflux of time, we do not find any suchjustification flowing from the statutory provision. Section 264 of the Actpertains to the revision of the other orders. Under Sub-section (1) ofSection 264, assessee can approach the Commissioner for revision of theorders passed by the authorities subordinate to him by making anapplication within the time prescribed. Sub-section (6) of Section 264provides that on an application by an assessee for revision made on or after1 October 1998, an order shall be passed within one year from the end ofthe financial year in which such an application is made by the assessee forrevision. Explanation to Sub-section (6) of Section 264 provides themanner of computing such period of limitation of one year. Nevertheless,there is no further consequence of the Commissioner not being able to passan order on the revision petition within the time prescribed in Sub-Section(6) of Section 264. In absence of such specific statutory provision, dismissalor abatement of the revision petition cannot be inferred. Any other view,would be wholly unjust to litigant, who may file a revision petition anddoes not contribute in any manner for delay in disposal of revision petition,would be told that because the Commissioner could not dispose of therevision petition within one year, his petition stands dismissed or abated. We may recall, when the legislature had introduced time limits forcompleting settlement proceedings by the Settlement Commissioner andhad also provided for abatement of such proceedings if not completed insuch time, this court had read down the provisions as to exclude fromabatement such cases where the delay was not attributable to the assessee.Reference can be made to the judgment of Bombay High Court which wasupheld by the Supreme Court in the case of vs. Union of India vs. StarTelevision News Ltd.[1] 7We, therefore, do not accept the stand of the Respondents thatrevision petitions do not survive. These revision petitions were filed wayback in 2007. Counsel for the Petitioner had stated before us that thePetitioner had not asked for any adjournment in such revision petitions.Hearing of these revision petitions is thus not delayed due to the assessee.Several years later, we would not permit the department to recover thetaxes arising out of the orders which are subject matter of such revisionpetitions. 8Coming to the Assessment Years 2008-09, 2009-10, 2010-11and 2011-12, we notice that the appeals were filed way back in the year2013. The Commissioner had called for remand report which was alsoprovided by the Assessing Officer in November 2014. The appeals weretaken up for hearing on 6 February 2019. Further hearing is kept on 13February 2019. 9Despite such developments, we cannot foist a rigid time-frame sat on the Appellate Commissioner for disposing of such appeals. Theassessment orders are quite bulky. The Appellate Commissioner would,therefore, have to examine all aspects of facts and law arising out of suchproceedings. Without ascertaining the workload and other responsibilitieson him, we would not direct a time-frame for disposal of appeals. Thequestion for providing an interim formula pending such appeals, therefore,arises. 9Despite such developments, we cannot foist a rigid time-frame sat on the Appellate Commissioner for disposing of such appeals. Theassessment orders are quite bulky. The Appellate Commissioner would,therefore, have to examine all aspects of facts and law arising out of suchproceedings. Without ascertaining the workload and other responsibilitieson him, we would not direct a time-frame for disposal of appeals. Thequestion for providing an interim formula pending such appeals, therefore,arises. 10We will not accept the submission of Mr.Chhotaray that in faceof the instructions of the CBDT, this court cannot reduce the requirementof depositing 20% of tax pending appeals. Firstly, these instructionsthemselves recognise exceptions and areas where the demand can bereduced by the revenue authorities; secondly, the instructions of CBDT tothe revenue authorities aim to bringing about uniformity in anadministrative action and cannot govern the discretionary powers of theHigh Court in the writ jurisdiction. 11We, therefore, cursorily looked at the nature of additions,nature of materials collected by the Assessing Officer and the ground ofchallenge by the assessee. It would prima facie appear that the assesseePetitioner would have arguable points against many of the additions madeby the Assessing Officer. The nature of additions concern the finding ofbogus purchases and inflated premium and share application moneybesides others. 12In totality of facts and circumstances, therefore, the Petitionerwould deposit 5% of the principal tax demand arising out the assessment orders for the Assessment Years 2009-10, 2010-11 and 2011-12. This maybe done within a period of four weeks from today. Till four weeks fromtoday, there shall be no further coercive recovery against the Petitioner. Ifthe Petitioner deposits the amount as directed, such stay shall continue tillfinal disposal of the appeals by the Commissioner. Subject to the Petitionerco-operating, the Commissioner may attempt to dispose of the appealsexpeditiously and preferably within three months from today. (S.C. GUPTE, J.) (AKIL KURESHI, J.)