Karmayogi Ankushrao Tope Samarth Ssk Ltd v. The Principal Commissioner Of Income-Tax And Others

{1} IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD WRIT PETITION NO. 2289 OF 2022 KARMAYOGI ANKUSHRAO TOPE SAMARTH SSK LTD.VERSUS THE PRINCIPAL COMMISSIONER OF INCOME-TAX AND OTHERS. … Mr. S.V. Adwant, Advocate for petitioner.Mr. Alok Sharma, Advocate for respondent Nos.1 and 2. CORAM : MANGESH S. PATIL AND S.G. CHAPALGAONKAR, JJ. DATE : 1st MARCH 2023 P.C.:- The petitioner, a cooperative society, approached this courtunder Article 226 of the Constitution of India with the following prayers:- “b)Rule may kindly be made absolute by declaringthat the order passed by the respondent No.2 on 29[th]December, 2019, is beyond limitation, illegal andarbitrary, thus be quashed and set aside. c) By issuing appropriate writ, the order passed by therespondent No.1 on 28[th] January, 2022, on the staypetition in the pending appeal, be quashed and setaside.” 2.The petitioner contends that it is engaged in the business ofmanufacture and sale of sugar. The petitioner filed Income-tax return on28.9.2022 for the financial year 2011-12 for assessment year 2012-13 {2} 2289.22 WP.docx under Section 139 of the Income-Tax Act, 1961. The petitioner declaredits income to the tune of Rs.5,74,466,20/- after claiming deductions,under Sections 80(P)(2)(d), 80-IA(4) and 80G aggregating to Rs.9,48,42,039/-. The respondent No.2 issued the notices to the petitionerunder Section 142(1) of the Income-Tax Act. The petitioner replied tothose notices giving detailed explanation. After subjectively convincedwith the explanation tendered by the petitioner, the respondent No.2passed Assessment Order under Section 143(3) of the Income-Tax Act,thereby accepting returns. 3.After scrutiny of assessment, petitioner was served withnotice under Section 154 for rectification of completed assessment,desiring to reduce the deduction allowed under Section 80-IA (4). Thepetitioner submitted detailed objection dated 25.1.2019 and assailed themethod of computation adopted by the respondents. The respondentsthereafter issued notice dated 15.3.2019 under Section 148 of theIncome-Tax Act. The petitioner replied notice and also requested forgiving reasons for issuance of notice under Section 148 of the Income-taxAct, 1961.It is the contention of the petitioner that the respondentNo.2 was under statutory obligation to furnish the reasons for issuingnotices. The petitioner was entitled to raise its objections to the noticebased on reasons supplied. The respondent No.2 was under statutoryobligation to pass speaking order, however, such statutory requirementswere ignored. 4.According to the petitioner, the assessment order dated29.12.2019 passed by respondent under Section 143(3) r/w. Section 147of the income Tax Act, 1961 for assessment year 2012-13 is unusual. The {3} income of the petitioner is erroneously re-assessed to Rs.12,04,98,975/-,followed by the demand notice in Form No.7 under section 156 of theIncome Tax Act. Petitioner is called upon to pay a sum of Rs.3,56,82,330/- within a period of 30 days. 5.The petitioner contends that it approached the appellateauthority i.e. Commissioner of Income-Tax (Appeals) Aurangabad-1challenging assessment order dated 29.12.2019 under Section 246A ofthe Income-tax Act. On 13.10.2020, the petitioner preferred applicationfor grant of stay. However, the respondent No.1 without considering thenature of the objections raised by the petitioner in the stay petition,passed an order dated 28.1.2022 directing the petitioner to deposit 20%of the amount under demand notice. According to the petitioner, theorder is unsustainable in law and contrary to the settled position of lawunder governing procedure under section 148 of the Income Tax Act. 5.The petitioner contends that it approached the appellateauthority i.e. Commissioner of Income-Tax (Appeals) Aurangabad-1challenging assessment order dated 29.12.2019 under Section 246A ofthe Income-tax Act. On 13.10.2020, the petitioner preferred applicationfor grant of stay. However, the respondent No.1 without considering thenature of the objections raised by the petitioner in the stay petition,passed an order dated 28.1.2022 directing the petitioner to deposit 20%of the amount under demand notice. According to the petitioner, theorder is unsustainable in law and contrary to the settled position of lawunder governing procedure under section 148 of the Income Tax Act. 4.The respondent Nos. 1 to 3, by filing their reply opposed theprayers in the writ petition. It is the contention of the respondents thatnotice under Section 148 had been issued on 15.3.2019. The assessmentorder under Section 143(3) r/w. Section 147 of the Act had been passedon 29.12.2019. The petitioner has preferred an appeal before theCommissioner of Income-Tax (Appeal), which is pending consideration.The petitioner had applied before the Principal CIT-1, Nasik for keepingits demand in abeyance vide letter dated 13.10.2020. The petitioner wasgiven opportunity of hearing. The authorized representative of thepetitioner i.e. M/s. Shubhda Koppa, Chartered Accountant and ChiefEngineer R.D. Pagar attended the hearing and also given writtensubmission. After such hearing, the order impugned in this writ petitionhas been passed. The application has been partly allowed subject to {4} 2289.22 WP.docx deposit of 20% amount under demand notice. Further it has beendirected to pay 10% of the demand by 10.2.2022 and rest 10% amountof demand in 4 monthly installments starting from 10.3.2022. Therespondents further contend that they have followed the procedure laiddown under the Income-Tax Act. No infirmity can be found in theimpugned order. As such, they prayed for dismissal of the petition. 6.Mr. S.V. Adwant, learned advocate appearing for thepetitioner would submit that the order of assessment dated 29.12.2019 isarbitrary and revolting to the judicial conscience. He would submit thatthe notice issued by the respondent No.2 under Section 148 of theIncome Tax Act dated 5.3.2019 was without providing the reasons to thepetitioners. To buttress his submissions, Mr. Adwant relied upon someorders passed by this Court in (1) W.P. No. 671 of 2022 dated 8[th]February, 2022 in the matter of Nirmal Bang Securities Pvt. Ltd. MumbaiVs. Assistant Commissioner, Income-Tax; (2)The order dated 29[th]October, 2022 in W.P. 3284 of 2019 in the matter of Asian Paints Ltd. Vs.Assistant Commissioner, Income-Tax; (3) The order dated 21.12.2021 inW.P. No. 3554 of 2019 in the matter of Svitzer Hazira Pvt. Ltd. Vs.Assistant Commissioner, Income-Tax. (4) Aroni Commercials Vs. AssistantCommissioner Income Tax reported in 2014 SCC Online Bom.4719 (5)Prashant S. Joshi vs. The Income Tax Officer reported in 2010 SCCOnline Bom.263. 8.Having considered the submissions advanced by the learnedadvocates appearing for the respective parties, this Court finds that thepetitioner has preferred a Substantive Appeal under Section 246 of theIncome Tax Act and same is pending adjudication before the appellate {5} 2289.22 WP.docx 8.Having considered the submissions advanced by the learnedadvocates appearing for the respective parties, this Court finds that thepetitioner has preferred a Substantive Appeal under Section 246 of theIncome Tax Act and same is pending adjudication before the appellate {5} 2289.22 WP.docx authority. The contentions advanced by Mr. S.V. Adwant, learnedadvocate for the petitioner, thereby assailing the legality and validity ofthe notice under Section 148 of the Act dated 15.3.2019 andconsequential order of assessment dated 29.12.2019 are subject matterof pending appeal before competent Authority. In that view of thematter, it would not be appropriate for this court to deal with thosecontentions on merit in writ jurisdiction. The petitioner can be relegatedto advance such contentions challenging assessment order or demandnotice in pending appeal based on law laid down by this court injudgments (Supra). The challenge in this writ petition can be consideredonly to the extent of order dated 28.1.2022 on stay petition passed by therespondent No.1. 9.Respondent nos. 1 to 3 have filed affidavit in reply. It hasbeen pointed out that the petitioner has presented an appeal underSection 246 of the Income Tax Act before the CIT(A). The petitioner hasalso approached the Principal CIT (1) Nasik for keeping its demand inabeyance (stay of demand) vide its application dated 13.10.2020. Thepetitioner was given notices for hearing dated 8.2.2021, 18.1.2022 aswell as 27.1.2022. The petitioner availed the opportunity of hearing ongiven dates. It has been specifically brought to our notice that on27.1.2022 the petitioner appeared through the authorized representativeM/s. Shubhada Koppa, Chartered Accountant and Mr. R.D. Pagar, ChiefAccountant. The order sheet is placed before us along with the affidavitin reply. It records that C.A. Shubhada A. Koppa and Chief AccountantShri R.D. Pagar, argued for stay of impugned notice stating that firstappeal is pending before appellate authority. It also records that theorder has been passed on consent recorded by the representatives {6} 2289.22 WP.docx assessee. The signatures of the Chartered Accountant and Chief Accountof the petitioner appear on the order sheet. 10.The petitioner has not disputed the aforesaid facts. Itappears that the petition is filed challenging the consent order by raisingvarious legal issues which are subject matter of appeal filed underSection 246A of the Income-Tax Act. The discretion exercised by theauthority while passing the impugned order thereby granting stay subjectto deposit of 20% of the amount under demand with the facility ofinstallments, cannot be said to be arbitrary, when order is invited byconsent. No interference from this court is warranted under Article 226of the Constitution of India in the facts and circumstances of this case.Resultantly, the writ petition fails and hence, dismissed. However, thepetitioner shall be at liberty to make appropriate application to therespondents for extension of time to deposit the amount, as per theimpugned orders. If such application is filed, the respondents shallconsider the same in accordance with law. [S.G. CHAPALGAONKAR] JUDGE [MANGESH S. PATIL] JUDGE grt/-