Mr. Rafique Dada, Sr. Advocate With Mr v. Heard Learned Counsel For The Parties For Final Disposal Of The

S.R.JOSHI wp-14612-2018.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAYAPPELLATE SIDE CIVIL JURISDICTION WRIT PETITION NO. 14612 OF 2018 Sinhgad Technical Education Society, Pune..Petitioner.v/s.Deputy Commissioner of Income TaxCentral Circle 2(2), Pune & Another ..Respondents. Mr. Rafique Dada, Sr. Advocate with Mr. V. P. Sawant and Mr. Niraj Shethi/b. Mr. Nitin Dhumal, for the Petitioner.Mr. Sham Walve, for Respondent No.1. CORAM: AKIL KURESHI & M.S.SANKLECHA, JJ.DATE : 16[th] JANUARY, 2019. P.C:- Petition. Heard learned Counsel for the parties for final disposal of the 2This Petition has chequered history. We may record the briefback-ground. 3Petitioner is a trust, running several educational institutionsand hospitals. The Income Tax Authorities had raised sizeable tax demandagainst the Petitioner-Trust in relation to the Assessment for theAssessment Years 2009-10 to 2014-15. Petitioner-Trust has filed Appealsbefore the Income Tax Appellate Tribunal (for short “the Tribunal”), Pune S.R.JOSHI wp-14612-2018.odt against such Assessment and Appellate Orders. Pending such Appeals,Petitioner had also prayed for interim injunction against the recovery ofthe unpaid tax and interests before the Tribunal. Tribunal passed adetailed order on 10[th] November, 2017 and granted conditional stayagainst the recoveries. Operative part of the said order reads as under:- “In the totality of the above said facts and circumstances,we are of the view that the applicant has prima facie case andbalance of convenience for granting only partial stay of recoveryof outstanding demand. We therefore, grant the stay ofoutstanding tax demand subject to the following conditions:- (a)The applicant is directed to deposit Rs.18 crore in three installments i.e. Rs.6 crores by 30.11.2017, Rs.6 croes by 30.12.2017 and Rs.6 crores by 15.01.2018. (b)The applicant shall furnish the proof of payment of taxes on payment to the Registry. (c)In case he fails to deposit the taxes as stated in (a) above, then the case would come for hearing in normal course and not be considered as stay granted matter. (d)That out of turn hearing is granted on 18.01.2018 subject to payment of Rs.18 crores; no separate notice of hearing would be issued by the Registry. (e)That the applicant shall not seek frivolous adjournments. If Paper Book is desired to be filed by the applicant, then the same should be submitted well in advance as prescribed in ITAT Rules. (f)In case of breach of any of the above conditions, thestay granted shall automatically get vacated and matter would be heard in ordinary course. Subject to the fulfillment of the above conditions, thebalance outstanding demand is stayed for a period of 180 daysfrom the date of this order or till disposal of the appeal,whichever is earlier. In the result, all the stay, applications filed by theapplicant are allowed as indicated above.” S.R.JOSHI wp-14612-2018.odt (e)That the applicant shall not seek frivolous adjournments. If Paper Book is desired to be filed by the applicant, then the same should be submitted well in advance as prescribed in ITAT Rules. (f)In case of breach of any of the above conditions, thestay granted shall automatically get vacated and matter would be heard in ordinary course. Subject to the fulfillment of the above conditions, thebalance outstanding demand is stayed for a period of 180 daysfrom the date of this order or till disposal of the appeal,whichever is earlier. In the result, all the stay, applications filed by theapplicant are allowed as indicated above.” S.R.JOSHI wp-14612-2018.odt 4Petitioner-Trust challenged the said conditional order of theTribunal before the High Court, by filing Writ Petition No. 13099 of 2017.In the said Petition, this Court noticed a mis-representation of the Court'sorder by the President of the Petitioner-Trust and in connivance with theIncome Tax Officer, the Trust had withdrawn sizeable amount from itsbank accounts. The Division Bench of this Court, therefore, passed adetailed order on 5[th] January, 2018 dismissed the Petition on ground ofsuch mis-demeanor. The Court also initiated suo moto contemptproceedings against the President of the Petitioner-Trust and theconcerned employee of the Income Tax Department. This ContemptPetition later on resulted into imposition of jail term against thecontemptnors which was also confirmed by the Supreme Court. 5 Subsequent to these developments, Tribunal passed an orderon 18[th] December, 2018 in the pending Appeals of the Petitioner-Trust.The Petitioner-Trust had got no relief against conditions imposed by theTribunal under order dated 10[th] November, 2017 to enjoy protectionagainst the recoveries of the unpaid tax and interest, nor fulfilled suchconditions. The Tribunal, therefore, by its order on 18[th] December, 2018dismissed the fresh stay applications filed by the Petitioner-Trust. This,order of the Tribunal passed on 18[th] December, 2018, Petitioner-Trust haschallenged in the present Writ Petition. In the meantime, the Departmenthas attached the Petitioner's bank accounts. The Petitioner prays forremoving such attachments. 6At the out set, Mr. Dada, learned Senior Counsel for thePetitioner-Trust states that, Petitioner-Trust does not desire that thecondition of the Petitioner-Trust depositing an amount of Rs.18 Crores S.R.JOSHI wp-14612-2018.odt with the Income Tax Department, originally imposed in the order dated10[th] November, 2017 be, in any manner, modified by reducing thecondition. He, further submitted that since Petitioner-Trust failed to getany modification of this order and also did not fulfill the conditions, theDepartment now seeks recovery of the entire tax dues which is in thevicinity of Rs.142 Crores with interest. He submitted that, even theTribunal in its earlier order dated 10[th] November, 2017 recorded that,Petitioner-Trust has, prima facie, case. Counsel submitted that thePetitioner-Trust runs several educational institutions and hospitals. Onaccount of the tax dues and the coercive recovery initiated by theDepartment, the Petitioner-Trust finds it extremely difficult to run theseinstitutions. He further submitted that in the different bank accounts,which are under the attachment of the Department, a sum of Rs.18 Croresis already lying. He clarified that this includes a sum of Rs.1,11,37,877/-payable by the Government of India to the Petitioner-Trust, which also,the Income Tax Department has attached. The Department may beallowed to withdraw Rs.18 Crores from such balance and upon which,Petitioner-Trust may be granted stay against further recoveries. 7On the other hand, learned Counsel for the Departmentsubmitted that looking to the Petitioner's past conduct, Petitioner does notdeserve unconditional stay of coercive recovery. The condition of depositof Rs.18 Crores was imposed by the Tribunal way-back in the month ofNovember, 2017. Petitioner-Trust at any rate cannot now expect stayagainst recoveries on same terms. 8We have noted the facts which emerge from the record. Weare conscious of the Petitioner's earlier Petition being dismissed by this S.R.JOSHI wp-14612-2018.odt Court on the ground of conduct. However, in the present Petition, we aredealing with Petitioner's challenge to fresh order dated 18[th] December,2018 passed by the Tribunal, which can be seen as a fresh cause of actionand which may not be allowed to be mixed up with past events, at least,in so far as the maintainability of the Petition is concerned. We, have,therefore, heard learned Counsel for the parties on merits. 9What prima facie emerges is that, the Tribunal had passed anorder on 10[th] November, 2017, protecting the Petitioner-Trust against therecoveries of unpaid tax and interest on the condition that, the Petitioner-Trust deposits with the Department, a total sum of Rs.18 Crores in threeequal installments. Since Petitioner-Trust could neither have theseconditions altered, nor could the Petitioner-Trust fulfill the conditions, theTribunal later on passed the impugned order on 18[th] December, 2018,rejecting the stay applications of the Petitioner-Trust. This would give riseto recovery of entire tax of around Rs.142 Crores with interest. It wouldbe open to and in fact, department has initiated coercive recovery.Whatever be the interim events, we cannot lose sight of the fact that theTribunal in its order dated 10[th] November, 2017 had found prima faciecase in favour of the Petitioner which persuaded the Tribunal to grant stayagainst and further recoveries on the condition of depositing Rs.18 Crores.Not protecting the Petitioner-Trust at this stage, may have severe adverseeffect on running its several educational and medical institutions,rendering the staff jobless and students without college. 10We would, therefore, put the Petitioner-Trust back to thesame position as on 10[th] November, 2017. The Tribunal had grantedconditional stay to the Petitioner-Trust, which order, in any case, the S.R.JOSHI wp-14612-2018.odt Department had not challenged. However, we cannot lose sight ofpassage of time in between. We, therefore, insist that the Petitioner-Trustdeposits with the Department a total sum of Rs.20 Crores, upon which,there shall be stay against further recoveries. Petitioner-Trust would alsoco-operate for the early disposal of the Appeals before the Tribunal. 11Before closing, we notice that the Division Bench of this Courtin Writ Petition No. 408 of 2018 and other connected Petitions has passedan order on 18[th] June, 2018, recording the dispute between the Petitioner-Trust and the Income Tax Department. In such Petition, the Petitioner-Trust and the similarly situated Trusts have complained about the StateGovernment not releasing educational grants. From the said order passedby the Division Bench, we notice that under the order of the Court, theState Government has deposited sizeable amount which is payable to thePetitioner-Trust. However, Division Bench did not release said amount infavour of the Petitioner, instead made following observations:- 11Before closing, we notice that the Division Bench of this Courtin Writ Petition No. 408 of 2018 and other connected Petitions has passedan order on 18[th] June, 2018, recording the dispute between the Petitioner-Trust and the Income Tax Department. In such Petition, the Petitioner-Trust and the similarly situated Trusts have complained about the StateGovernment not releasing educational grants. From the said order passedby the Division Bench, we notice that under the order of the Court, theState Government has deposited sizeable amount which is payable to thePetitioner-Trust. However, Division Bench did not release said amount infavour of the Petitioner, instead made following observations:- “Therefore, we direct that since the amount has now beencredited to the account of the State of Maharashtra and theaccount of this Court in the RBI is now debited, as is clear fromthe certificate tendered today, let the State Government retainthat sum till 5[th] July, 2018 with it without making anyadjustment or appropriation towards its outstanding dues nor itshould remit the same to the Management. If within this timesuitable orders and directions are obtained by the petitioner-Management from the Bench, which is assigned cases under thedirect tax laws, our order would take due note of the same andthereafter, further directions would be issued. In the event noclarifications/directions are obtained within this time, on theadjourned date, the court would be free to pass such orders as arepermissible in law.” S.R.JOSHI wp-14612-2018.odt ordinate Bench in such pending Petition for appropriate order withrespect to such funds. 13In view of the above facts, Petition is disposed of with thefollowing directions:- (i)Petitioner-Trust shall deposit in its bank account such amount asmay be necessary so as to make the total balance available betweenall accounts of the Petitioner-Trust to a minimum of Rs.20 Crores.This shall be done within six weeks from today. It is clarified that this requirement of raising a total of Rs.20 Crores wouldinclude a sum of Rs.1,11,37,877/- payable by theGovernment ofIndia to the Petitioner-Trust which also Income Tax Department has attached;may be necessary so as to make the total balance available betweenall accounts of the Petitioner-Trust to a minimum of Rs.20 Crores.This shall be done within six weeks from today. It is clarified that this requirement of raising a total of Rs.20 Crores wouldinclude a sum of Rs.1,11,37,877/- payable by theGovernment ofIndia to the Petitioner-Trust which also Income Tax Department has attached; (ii)As soon as this is done, the Petitioner shall intimate it to the Department in writing.Department in writing. (iii)The Tribunal to expedite the hearing of the Petitioner's Appeals and dispose of preferably within six months from the date of receipt of this order;Appeals and dispose of preferably within six months from the date of receipt of this order; (iv)Petitioner-Trust is directed to co-operate with such early disposal of the Appeals;the Appeals; (v)Upon Petitioner-Trust fulfilling conditions of raising total sum of Rs.20 Crores in the bank accounts (inclusive of Rs.1,11,37,877/-) asmentioned above, the Department would withdraw and adjust the same against the Petitioner's outstanding dues;Rs.20 Crores in the bank accounts (inclusive of Rs.1,11,37,877/-) asmentioned above, the Department would withdraw and adjust the same against the Petitioner's outstanding dues; (vi)As soon as Petitioner-Trust fulfills the conditions contained in clause S.R.JOSHI wp-14612-2018.odt (i) above, the bank account and other attachments would standrevoked;revoked; (v)Upon Petitioner-Trust fulfilling conditions of raising total sum of Rs.20 Crores in the bank accounts (inclusive of Rs.1,11,37,877/-) asmentioned above, the Department would withdraw and adjust the same against the Petitioner's outstanding dues;Rs.20 Crores in the bank accounts (inclusive of Rs.1,11,37,877/-) asmentioned above, the Department would withdraw and adjust the same against the Petitioner's outstanding dues; (vi)As soon as Petitioner-Trust fulfills the conditions contained in clause S.R.JOSHI wp-14612-2018.odt (i) above, the bank account and other attachments would standrevoked;revoked; (vii)There shall be stay against further recoveries of the tax and interestdues arising out of the Petitioner's pending Appeals till the finaldisposal. By virtue of this order and subject to the Petitioner-Trustfulfilling conditions contained herein above, there shall be nofurther recoveries of the impugned tax dues from any source. dues arising out of the Petitioner's pending Appeals till the finaldisposal. By virtue of this order and subject to the Petitioner-Trustfulfilling conditions contained herein above, there shall be nofurther recoveries of the impugned tax dues from any source. (viii) It would be open for the Petitioner-Trust to approach the Co-ordinate Bench in pending Writ Petition No.408 of 2018 and pray for appropriate relief in such Petition after fulfilling these conditions.ordinate Bench in pending Writ Petition No.408 of 2018 and pray for appropriate relief in such Petition after fulfilling these conditions. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)