M/S.gmv Projects And Systems v. Assistant Commissioner Of Income Tax Non Corporate Circle 15 (1) Chennai 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE Mr. JUSTICE T.S.SIVAGNANAM M/s.GMV Projects and Systems,7/C4, Twin Rose Apartmensts,68, East Coast Road,Thiruvanmiyoor,Chennai 600 041Represented by its Partner.. Petitioner ..Vs.. 1. Assistant Commissioner of Income Tax Non Corporate Circle 15 (1) Chennai 600 034. 2. The Branch Manager, Citi Bank, 2, Club House Road, Chennai. .. Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India, praying to issue a Writ of CertiorarifiedMandamus to call for the records of the first respondent in hisproceedings leading to the issuance of Order under section 226(3) vide PAN: dated 28.02.2017, quash the same anddirect the Respondent not to take coercive action until thedisposal of Appeal. For Petitioner: Mr.S.Sathyanarayanan For Respondents: Mr.A.P.Srinivas, Senior Panel Counsel. Heard Mr.S.Sathyanarayanan, learned counsel appearingfor the petitioner and Mr.A.P.Srinivas, learned Senior PanelCounsel accepting notice on behalf of the respondents. With theconsent on either side, the writ petition itself is taken up fordisposal. 2.The petitioner has filed this Writ Petition challengingthe order passed by the first respondent dated 28.02.2017received by the petitioner on 03.03.2017 in a stay applicationfiled by the petitioner praying for stay of collection of demandin respect of the assessment for the year 2014-15. The firstrespondent has stated that mere pendency of an appeal before theCommissioner of Income Tax (Appeals) against the assessmentorder is not a valid ground for stay of collection demand asper CBDT directives and circular. Further it has been statedthat as per the recent CBDT circular, the petitioner is directedto pay 15% of the demand raised in assessment before thepetitioner wishes to request for the stay of demand till thedisposal of the appeal before the Commissioner of Income Tax(Appeals). 3.In my considered view, the impugned order is aclassical case of non-application of mind and abdication of thepowers of the Assessing Officer. Admittedly, the petitioner hasa right to approach the Assessing Officer praying for stay ofthe demand pending disposal of the appeal by the Commissioner ofIncome Tax (Appeals). Therefore, when the Assessing Officerconsiders the Stay Petition, he has to consider whether thepetitioner/Assessee has made out a prima facie case for grant ofstay. It may be true that CBDT has issued certain instructionson 02.02.1993 in instruction No.1914 and in office memorandumdated 29.02.2016. In my view these instructions and directivescan be a guideline for the Assessing Officer while consideringthe Stay Petition. The instructions cannot take away thediscretionary power of the Assessing Officer and the purport ofissuing such instruction is to ensure that the Assessing Officeradopt an uniform approach rather than act in a whimsical andarbitrary manner. Thus the foremost point that the AssessingOfficer has to consider is whether the assesse has made out aprima facie case for grant of an interim order. Thepetitioner/assessee filed the stay petition dated 20.02.2017stating that the notice dated 05.12.2016 calling for theproduction of vouchers and bills pertaining to the businesspromotion expenses and overseas transport expenses and to appearfor personal hearing on 09.12.2016 was received only on 23.12.2016 due to natural calamity, viz., Vardha Cyclone.Further it was stated that the notice was sent to a wrongaddress and the first respondent was constrained to pass theassessment order disallowing the expenses as the assessment waslikely to become time barred and no opportunity was given to thepetitioner to submit the information called for. Further it wasstated they through their authorised representatives hadearlier furnished all the ledger accounts and details asrequired by the Assessing Officer from time to time. Further itwas stated that aggrieved by the assessment order, they havepreferred an appeal before the Commissioner of Income Tax(Appeals)-Range 15 on 18.01.2017. 4.With these averments, the petitioner has sought for acomplete stay of the demand till the disposal of the appeal andprayed for giving an opportunity of personal hearing beforepassing an order and also requested to send all notices andcommunications to the address given in the said stay petition.Unfortunately, the first respondent did not take note of any ofthe submission made by the petitioner including the request fora personal hearing. The first respondent has not denied ordisputed the averments made by the petitioner that the noticedated 05.12.2016 was received by them only on 23.12.2016 and itwas sent to wrong address. If this averment was wrong, then thefirst respondent should have dealt with the same and should nothave mechanically passed the impugned order by observing that amere pendency of an appeal is not a valid ground for stay as perthe directives of the CBDT. On perusal of the order ofassessment, it is seen that the respondent accepted the factthat the authorised representative of the petitioner appearedbefore him on various dates and filed the details called for.However, in the assessment order the first respondent has notstated as to when the notice issued by him dated 05.12.2016 wasreceived by the assessee/petitioner. Therefore, the assessmentorder being an exparte order, the correctness of which will bedecided by Commissioner of Income Tax (Appeals). Thus, takingnote of all the above facts, this is a fit case where theentire demand should remain stays till the appeal is disposed ofby the Commissioner of Income Tax (Appeals)-Range 15. 5.In the light of the above discussion, the writ petitionis allowed, the impugned order is quashed and there will be anorder of stay of collection of demand pursuant to the order ofassessment dated 20.12.2016 for the assessment year 2014-15 tillthe disposal of the appeal filed by the petitioner before theCommissioner of Income Tax (Appeals)-Range 15. No costs. Consequently, connected miscellaneous petition is closed. Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant RegistrarrkpTo1. Assistant Commissioner of Income Tax Non Corporate Circle 15 (1) Chennai 600 034. 2. The Branch Manager, Citi Bank, 2, Club House Road, Chennai.+1cc to M/s/S.Sathiyanarayan,Advocate,S.R.No.49191W.P.No.17886 of 2017andW.M.P.No.19416 of 2017GJCU(27/07/2017)