Kumar Housing Corporation Limited & Another v. Additional Commissioner Of Income Tax & Others

IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO.2723 OF 2010 Kumar Housing Corporation Limited & Another..Petitioners.Versus Additional Commissioner of Income Tax & Others ..Respondents. Mr.Rafique A. Dada, Senior Advocate with Mr.Jitendra Jain and Ms.Ferzana Z. Behramkamdin and Ms.Swati Deshpande i/by FZB & Associates for the petitioners. Ms.Anamika Malhotra for the respondents. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 12[th ]April 2010. P.C. : 1.When the petition was instituted before this Court under Article 226 of the Constitution, there was a challenge to the order passed by the Additional Commissioner of Income Tax, Range 6, Pune on 8 February 2010 by which an application for stay against the demand for assessment year 2007-2008 was rejected. Consequent upon that, by a communication dated 24 February 2010, the assessee was called upon to pay the demand immediately. Simultaneously, all the bank accounts of the assessee were attached. When the petition was mentioned before the Court for urgent orders with notice to the respondents on 1 April 2010, an attachment was levied under Section 226(3). At that stage, Counsel for the Revenue placed on record the instructions received from the Additional Commissioner of Income Tax, Circle – 6, Pune on 1 April 2010 addressed to the Senior Standing Counsel stating that all the bank accounts of the petitioners which were attached stand released and that release letters have been faxed to the concerned banks. The petition was directed to be placed on board for admission on 8 April 2010. Since the Court was informed that an order had been passed by the Commissioner of Income Tax – III, Pune disposing of the stay application on 24 March 2010, the respondents were directed to make available a copy of that order to the petitioners. Until the directions as aforesaid were issued by the Court, a copy of the order of the Commissioner of Income Tax had not been made available to the petitioners. Subsequent to the order of this Court dated 1 April 2010, the order of the Commissioner of Income Tax – III, Pune dated 24 March 2010 has been placed on record and a formal challenge to the said order has been incorporated in the petition. 2.The grievance of the assessee, as placed in the submissions by the learned Senior Counsel before the Court, is that the impugned order proceeds on an erroneous premise that though the assessee had assured to make some payment by 31 March 2010, no payment had been made. Counsel on behalf of the assessee submitted, while adverting to ground (J) of the petition as amended, that an amount of Rs.50,00,000/- was paid on 12 March 2010 and on 26 March 2010, an additional amount of Rs.1.5 crores was also paid. The payment of Rs.1.5 crores was admittedly after the order of the Commissioner of Income Tax. Moreover, it is submitted that the Commissioner of Income Tax has failed to evaluate prima facie, the merits of the application for stay. In this regard, it has been submitted that for the previous year, assessment year 2006-2007, the assessee was granted the benefit of a deduction under Section 80IA(4)(iii) whereas in respect of the same project, a deduction has been declined for the present assessment year. 3.Reading the order of the Commissioner of Income Tax – III, Pune as it stands, it is evident that there is not even a prima facie evaluation of the merits of the submissions which have been urged on behalf of the assessee for grant of stay. That apart, the premise that the assessee has not deposited any amount at all towards the demand of tax does not appear to be correct. The assessee, the Court is informed, has already deposited an amount of Rs.2 crores of which an amount of Rs.50,00,000/- was paid on 12 March 2010 while the balance amount of Rs.1.5 crores was deposited on 26 March 2010. 3.Reading the order of the Commissioner of Income Tax – III, Pune as it stands, it is evident that there is not even a prima facie evaluation of the merits of the submissions which have been urged on behalf of the assessee for grant of stay. That apart, the premise that the assessee has not deposited any amount at all towards the demand of tax does not appear to be correct. The assessee, the Court is informed, has already deposited an amount of Rs.2 crores of which an amount of Rs.50,00,000/- was paid on 12 March 2010 while the balance amount of Rs.1.5 crores was deposited on 26 March 2010. 4.In these circumstances, we consider it appropriate to direct the Commissioner of Income Tax – III, Pune to reconsider the application for stay and to pass a fresh order after furnishing to the assessee an opportunity of being heard. In order to facilitate this exercise, the impugned order dated 24 March 2010 is set aside. We however clarify that we keep all the rival contentions of the parties open to be considered by the Commissioner of Income Tax. Until the disposal of the application for stay, the respondents shall not adopt any coercive proceedings against the petitioners in respect of the demand which forms the subject matter of the application for stay. 5.The assessee shall appear before the Commissioner of Income Tax – III, Pune on 19 April 2010. The Commissioner of Income Tax is directed to dispose of the application for stay within a period of three weeks thereafter. 6.The petition is accordingly disposed of. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)