Mr. Dharan v. By Filing This Petition Under Article 226 Of Theconstitution Of India, Petitioner Has Assailed The Legality

spb/ wpl-873-2020.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L.) NO. 873 OF 2020 Mansukhlal Amritlal Modi,Mumbai -400 071. … Petitioner. V/s. The Income Tax Officer Ward - 16(3) (1), Aaykar Bhavan,Mumbaiand Ors. … Respondents. --- Mr. Dharan V. Gandhi, Advocate for the Petitioner. Mr. Suresh Kumar, Advocate for the Respondents. --- CORAM : UJJAL BHUYAN AND MILIND N. JADHAV, JJ. DATE : MARCH 19, 2020. P.C. : 1Heard Mr. Dharan Gandhi, learned counsel forthe Petitioner and Mr. Suresh Kumar, learned standingcounsel, Revenue, for the Respondents. 2By filing this petition under Article 226 of theConstitution of India, Petitioner has assailed the legality 1/12 spb/ wpl-873-2020.doc and correctness of impugned order dated 31.01.2020passed by Respondent No. 1 - i.e. Income Tax Officer,Ward -16(3)(1), Mumbai, calling upon the Petitioner topay 20% of the demand as a pre-condition for stay ofthe demand; failing which it was stated that thedemand would be enforced and coercive measureswould be taken to recover the demand. 3Petitioner is an assessee under the IncomeTax Act, 1961 (briefly “the Act” hereinafter).Assessment status of the Petitioner is that of a residentindividual. Petitioner is under assessment jurisdiction ofRespondent No.1. For the assessment year 2012-2013,it was found that the Petitioner did not file return ofincome. Taking the view that income of the Petitionerhad escaped assessment, notice under section 148 ofthe Act was issued; where-after assessment order waspassed on 23.12.2019 by Respondent No. 1 undersection 143(3) read with section 147 of the Act. 2/12 spb/ wpl-873-2020.doc 4In the assessment order, Assessing Officernoted that the Petitioner had sold agricultural land inGujarat of which Petitioner was the co-owner. It wasalso noted that the amount received pursuant to thesale transaction of the said agricultural land was notdisclosed by the Petitioner. Therefore, Assessing Officertreated the sale transaction amount of Rs. 2,62,05,343as the unexplained income of the Petitioner undersection 69-A of the Act and added the same to theincome of the assessee. 5 Pursuant thereto a notice of demand under section 156 of the Act dated 23.12.2019 was issued byRespondent No.1 to the Petitioner, informing thePetitioner that an amount of Rs.1,57,19,310.00 was thedemanded due which was required to be paid by thePetitioner. 6Aggrieved by the impugned order ofassessment, Petitioner preferred an appeal before the 3/12 spb/ wpl-873-2020.doc Commissioner of Income Tax (Appeals)-7, Mumbai, alsoreferred to as the first appellate authority, on18.01.2020 for which acknowledgment number293129600180120 was given. 7In the meanwhile, Petitioner submitted anapplication dated 22.01.2020 before Respondent No. 1for stay of demand which was received in the office ofRespondent No.1 on 27.01.2020. Petitioner submittedthat for the assessment year under consideration, hehad in fact filed return of income under section 139 ofthe Act declaring total income of Rs. 3,52,945.00.Petitioner mentioned that against the decision to addthe amount of Rs. 2,62,05,343.00 to his income asunexplained income under section 69-A of the Act, hehas preferred an appeal before the first appellateauthority. On merit also Petitioner stated that he was theco-owner of the agricultural property situated atGujarat. In the course of assessment of the other twoco-owners, namely, Smt. Atitiben Patel and Shri 4/12 spb/ wpl-873-2020.doc 4/12 spb/ wpl-873-2020.doc Goswami Budhigir, the alleged sale proceeds wereadded to their income as on protective basis. In appealbefore the first appellate authority by the co-owners, thefirst appellate authority set aside the addition bytaking the view that no addition could have been madeto the income of the appellants (co-owners) and theother co-owner meaning thereby the Petitioner. The firstappellate authority, therefore, directed deletion of theaddition made in the case of the other two co-owners.In the stay application, the Petitioner further stated thathe is a senior citizen of about 87 years of age. Thoughhe is an Advocate by profession, because of old age andill health, he is no longer in legal practice. Because offrequent hospitalization and medical treatment hisfinancial condition is not sound. That apart his bankaccount in the PMC Bank could not be operated becauseof the moratorium imposed on the bank for variousreasons. In these circumstances, the Petitioner prayedfor complete stay of the demand and not to takecoercive action. 5/12 wpl-873-2020.doc 8By order dated 31.01.2020, Respondent No. 1called upon the Petitioner to pay 20% of the demand asper the instant CBDT Circular and to seek stay of theremaining demand from him on furnishing of evidencepertaining to payment of 20%. He was informed that ifthere was no compliance on or before 04.02.2020, thedemand would be enforced and coercive measureswould be taken to recover the same. 8.1According to the Petitioner, this order dated31.01.2020 was received by him on 07.02.2020. According to the Petitioner, this order dated 9Learned counsel for the Petitioner submitsthat before the impugned order dated 31.01.2020 wasreceived by the Petitioner on 07.02.2020, RespondentNo. 1 had already initiated coercive steps by attachingthe bank accounts of the Petitioner on 06.02.2020,more particularly the bank account held by thePetitioner in in HDFC Bank, Chembur, Mumbai, bearingAccount No. 4251570000839. It is submitted that the 6/12 spb/ wpl-873-2020.doc entire available balance in the said account has beenwithdrawn by Respondent No. 1. 10Mr. Gandhi submits that after the order dated31.01.2020 was passed, he had approached RespondentNo.2 i.e. Principal Commissioner of Income Tax -16,Mumbai on 07.02.2020 with an application for stay ofthe demand. However, Respondent No. 2 rejected thesaid application on 03.03.2020, by calling upon thePetitioner to pay 20% of the demand. 11Mr. Suresh Kumar, learned standing counsel,revenue, appearing for the Respondents, however,supports the stand taken by the Respondents.According to him the demand being very high,Respondents have been reasonable in insistingpayment of only 20% of the demand. He furthersubmits that regarding claim of Petitioner on merit thesame will be dealt-with by the first appellate authority inthe appeal proceeding. He, therefore, submits that Mr. Suresh Kumar, learned standing counsel, 7/12 spb/ wpl-873-2020.doc there may not be any blanket stay on the entire demandraised by the Revenue. 12We have considered the submissions made bylearned counsel for the parties and given our dueconsideration. 13This court in UTI Mutual Fund vs. Income Tax Officer, 345 ITR 71, had laid down a series ofguidelines for the revenue authorities to follow whileconsidering applications for stay of demand. This courtreferred to the earlier guidelines issued by this courtin KEC International Limited vs. BR Balakrishnan- 251 ITR 158 - and thereafter, directed that thefollowing guidelines should be borne in mind whileeffecting recovery : 1. No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; 7/12 spb/ wpl-873-2020.doc there may not be any blanket stay on the entire demandraised by the Revenue. 12We have considered the submissions made bylearned counsel for the parties and given our dueconsideration. 13This court in UTI Mutual Fund vs. Income Tax Officer, 345 ITR 71, had laid down a series ofguidelines for the revenue authorities to follow whileconsidering applications for stay of demand. This courtreferred to the earlier guidelines issued by this courtin KEC International Limited vs. BR Balakrishnan- 251 ITR 158 - and thereafter, directed that thefollowing guidelines should be borne in mind whileeffecting recovery : 1. No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; (b) Disposal of a stay application, if any, movedby the assessee and for a reasonable periodthereafter to enable the assessee to move aby the assessee and for a reasonable periodthereafter to enable the assessee to move a 8/12 wpl-873-2020.doc higher forum, if so advised. Coercive stepsmay, however, be adopted where the authorityhas reason to believe that the assessee maydefeat the demand, in which case brief reasonsmay be indicated. 2.The stay application, if any, moved by theassessee should be disposed of after hearing theassessee and bearing in mind the guidelines in KECInternational Ltd. (supra); 3.If the Assessing Officer has taken a viewcontrary to what has been held in the precedingprevious years without there being a materialchange in facts or law, that is a relevantconsideration in deciding the application for stay; 4.When a bank account has been attached,before withdrawing any amount therefrom,reasonable prior notice should be furnished to theassessee to enable the assessee to make arepresentation or seek recourse to a remedy in law; 5.In exercising the power of stay, the IncomeTax Officer should not act as a mere tax gathererbut as a quasi judicial authority vested with the 9/12 spb/ wpl-873-2020.doc public duty of protecting the interest of the Revenuewhile at the same time balancing the need tomitigate hardship of the assessee. Though theassessing officer has made an assessment, he mustobjectively decide the application for stayconsidering that an appeal lies against his order :the matter must be considered from all its facets,balancing the interest of the assessee with theprotection of the Revenue.” 14Without expressing any opinion on merit, wefind that Respondent No. 1 while passing the impugnedorder dated 31.01.2020 did not at all consider thevarious issues raised by the Petitioner in his stayapplication and merely called upon the Petitioner topay 20% of the demand. This court in UTI MutualFund (supra) has made it abundantly clear that theassessing authority while considering the stayapplication has to act as a quasi judicial authority,which means that he has to apply his mind to allrelevant factors and thereafter, take a decision which isjust, fair and reasonable. This court had highlighted 10/12 spb/ wpl-873-2020.doc that though the Assessing Officer had made theassessment, nonetheless at the time of deciding stay ofthe demand, he must objectively decide the applicationfor stay considering that an appeal lies against theorder which in fact has been filed in the present case.We find that the order dated 31.01.2020 is devoid ofany reasons which reflects non-application of mind andtherefore, cannot be sustained. Consequentially, theaction of attaching the bank account of the Petitioner inthe HDFC Bank, Chembur, Mumbai cannot also bejustified. 15Accordingly, the impugned order dated31.01.2020 is hereby set aside and quashed. Further,the attachment of the bank account of the Petitionerbeing Account No. 4251570000839 in HDFC Bank,Chembur, Mumbai, is also set aside. 11/12 spb/ that though the Assessing Officer had made theassessment, nonetheless at the time of deciding stay ofthe demand, he must objectively decide the applicationfor stay considering that an appeal lies against theorder which in fact has been filed in the present case.We find that the order dated 31.01.2020 is devoid ofany reasons which reflects non-application of mind andtherefore, cannot be sustained. Consequentially, theaction of attaching the bank account of the Petitioner inthe HDFC Bank, Chembur, Mumbai cannot also bejustified. 15Accordingly, the impugned order dated31.01.2020 is hereby set aside and quashed. Further,the attachment of the bank account of the Petitionerbeing Account No. 4251570000839 in HDFC Bank,Chembur, Mumbai, is also set aside. 11/12 spb/ wpl-873-2020.doc 16In view of the above, subsequent order dated03.03.2020 passed by Respondent No. 2 would alsostand set aside and quashed. 17 The matter is remanded back to Respondent No. 1 for a fresh consideration of the stay application ofthe Petitioner dated 22.01.2020 in accordance with law,keeping in mind the discussion made above. 18 period of six weeks from today. Let the stay application be decided within a 19 During this period, no coercive steps shall betaken against the Petitioner and as indicated above,the attached bank account shall now be de-attached toenable the Petitioner to operate the same.20Writ Petition is disposed of. During this period, no coercive steps shall be (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) ….. 12/12