Northern Coal Fields Limited … v. Assistant Commissioner Of Income Tax & Ors

HIGH COURT OF MADHYA PRADESH, JABALPUR W.P. No.3164 / 2017 Northern Coal Fields Limited …. Petitioner Versus Assistant Commissioner of Income Tax & Ors. .… Respondents ___________________________________________________ CORAM Hon'ble Shri Justice Hemant Gupta, Chief JusticeHon'ble Shri Justice S.K. Gangele, J. Whether approved for reporting ? Shri C.S. Agrawal, Senior Advocate and Shri AbhijeetShrivastava, Advocate for the petitioner.Shri Sanjay Lal, Advocate for the respondents. __________________________________________________ J U D G M E N T (ORAL)(23.03.2017) :Per : Hemant Gupta, Chief Justice The challenge in the present writ petition is to an action of the Revenue in adjusting the amount refundable forthe Assessment Year 2012-13 against the tax demands raised for the Assessment Years 2013-14 and 2014-15. 2. Some facts are required to be mentioned. The Income Tax Appellate Tribunal, Jabalpur Bench, Jabalpur (forshort “Tribunal”) vide order dated 03.06.2016 allowed theappeal of the assessee, the present petitioner for the AssessmentYear 2012-13. As a consequence of said order, an amount ofRs.899,83,91,210/- became refundable to the petitioner. It wason 05.01.2007, the Assessing Officer (The AssistantCommissioner of Income Tax-2 Jabalpur) served a notice onthe assessee in terms of Section 245 of the Income Tax Act (forshort “the Act”) proposing to set off the amount of refundagainst the tax demand of Rs.729.33 Crores due for theAssessment Year 2013-14 and Rs.791.25 Crores due to theAssessment Year 2014-15. 3.It may be stated that the assessment for theAssessment Year 2013-14 was finalized by the AssessingOfficer on 18.03.2016 and that of the Assessment Year 2014-15 was finalized on 28.12.2016. It is thereafter, a notice foradjustment was issued on 05.01.2017, which was received bythe assessee on 12.01.2017 and response was submitted by thepetitioner on 12.01.2017 (Annexure-P/17). After considering the reply filed, an order of adjustment was passed on16.01.2017 adjusting Rs.729,33,48,880/- as a demand raised forthe Assessment Year 2013-14 and Rs.170,50,42,330/- from thedemand of tax for the Assessment Year 2014-15. The amountof refund was thus adjusted against the tax payable amountingto Rs.899,33,91,210/-. 4.Learned counsel for the petitioner has vehementlyargued that in respect of the Assessment Year 2013-14, theAssessing Officer has passed an order of stay of the demand fora period of six months whereas the order of refund has beenpassed within the period of stay, therefore, the refund amountcould not be adjusted against demand for the Assessment Year2013-14 as such demand was stayed. The order of stay of theAssessing Officer reads as under: GOVERNMENT OF INDIA MINISTRY OF FINANCE(DEPARTMENT OF REVENUE)OFFICE OF ASSISTANT COMMISSIONER OF INCOME TAX-2(1)ANNEXE BUILDING, NAPIER TOWN, JABALPUR ----------------------------------------------------------------------------------------- F.No.ACTT/C-2(1)/JBP/Stay of Demand /2016-17 / Dated 12.09.2016 To,The Northern Coalfields Ltd.,Panjresh Bhawan, Singrauli Colliery,District Sidhi. Sir,Sub: Application for stay of demand of A.Y. 2013-14 regarding.Ref: Please refer to your letter regarding stay of demand for A.Y. 2013-14, dated 22.03.2016-reg. Kindly refer to the subject cited above. In this connection, it is to state that the stay petition filed by you videyour letter dated 22.03.2016 is re-considered. It has been verified that thefirst appeal in this case is pending before Hon'ble CTT-(A-II), Jabalpur.Demand raised u/s 143(3) for the year under consideration isRs.873,41,98,340/- and out of this demand refund of A.Y. ForRs.144,08,49,460/- has been adjusted by the CPC. Your stay applicationis considered in light of CBDT memorandum dated-29.02.2016 andbalance demand is stayed for a period of 6 months or upto the decision of1[st] appeal whichever is earlier. Kindly refer to the subject cited above. In this connection, it is to state that the stay petition filed by you videyour letter dated 22.03.2016 is re-considered. It has been verified that thefirst appeal in this case is pending before Hon'ble CTT-(A-II), Jabalpur.Demand raised u/s 143(3) for the year under consideration isRs.873,41,98,340/- and out of this demand refund of A.Y. ForRs.144,08,49,460/- has been adjusted by the CPC. Your stay applicationis considered in light of CBDT memorandum dated-29.02.2016 andbalance demand is stayed for a period of 6 months or upto the decision of1[st] appeal whichever is earlier. Yours faithfully ( -sd- ) Assistant Commissioner of Income-tax, Circle-2(1), Jabalpur 5.Learned counsel for the petitioner relies upon anorder passed by the Delhi High Court reported as (2012) 347ITR 43 (Delhi) in Maruti Suzuki India Ltd. Vs. DeputyCommissioner of Income-Tax and that of the Bombay HighCourt reported as (2013) 354 ITR 77 (Bom) in HDFC BankLtd. Vs. Assistant Commissioner of Income-Tax andOthers. It is further argued that no notice of demand wasserved upon the assessee in respect of Assessment Year2014-15, therefore, there could not be any order of adjustment.The order of assessment is said to have been passed on28.12.2016 (Page 184 of the paper book) whereas the notice ofadjustment has been issued on 05.01.2017 itself. It is contendedthat the demand becomes due after the expiry of 30 days andsince the assessee has not been given 30 days for depositing thedue amount, therefore, demand was not due and payable which could be adjusted against the refund due to the assessee for theAssessment Year 2012-13. It is also argued that the demandraised in the Assessment Years 2013-14 and 2014-15 is anidentical grounds which have been set aside by the Tribunal forthe Assessment Year 2012-13. Infact, the Tribunal hasconsistently set aside the demand raised against the petitionerfrom the Assessment Year 1998-99. 6.On behalf of the Revenue, it is pointed out that theorders passed by the Tribunal for the earlier Assessment Yearshave not attained finality and are pending consideration inappeals before this Court. The following are the appealspending in respect of earlier Assessment Years including theappeal arising out of order of the Tribunal pertaining toAssessment Year 2012-13: “MAIT 79/2004, MAIT 80/2004, ITA 71/2014, ITA72/2014, ITA 70/2015, ITA 74/2015, ITA 75/2015, ITA76/2015, ITA 77/2015, ITA 78/2015 and ITA 79/2015” 7.In view of the said fact, it cannot be said that thelegality and validity of the assessment proceedings is final. 8.We have heard learned counsel for the parties andfind no merit in the present petition. In respect of an argumentthat demand for the Assessment Year 2013-14 was stayed by “MAIT 79/2004, MAIT 80/2004, ITA 71/2014, ITA72/2014, ITA 70/2015, ITA 74/2015, ITA 75/2015, ITA76/2015, ITA 77/2015, ITA 78/2015 and ITA 79/2015” 7.In view of the said fact, it cannot be said that thelegality and validity of the assessment proceedings is final. 8.We have heard learned counsel for the parties andfind no merit in the present petition. In respect of an argumentthat demand for the Assessment Year 2013-14 was stayed by the Assessing Officer in exercise of powers conferred underSection 220(6) of the Act, we do not find any merit. A perusalof the order of stay passed by the Assessing Officer on12.09.2016 in terms of Section 220(6) of the Act shows thateven in the said order, an amount of Rs.144,08,49,460/- hasbeen adjusted. After adjustment, the balance amount wasstayed for a period of 6 months or upto the decision of the firstappeal, whichever is earlier. After passing of such order, theassessment for the Assessment Year 2014-15 was finalized on28.12.2016. The order under Section 220(6) of the Act as wellas the intimation under Section 245 of the Act was issued bythe same Assessing Officer. Therefore, the argument of thelearned counsel for the petitioner that the Assessing Officershould have modified its order of 12.09.2016 before the orderof adjustment is not tenable as the order of stay was not passedby any other superior authority but by the Assessing Officerhimself. The Hon'ble Supreme Court in M/s. Shree ChamundiMopeds Ltd. v. Church of South India Trust Association,Madras AIR 1992 SC 1439 has examined the effect of aninterim order of stay. The Supreme Court held that distinctionhas to be made between quashing of an order and stay of an order. Quashing of the order results in restoration of theposition as stood on the date of passing of the order which hasbeen quashed but the stay of operation of the order does nothowever lead to such a result. In view thereof, the order ofAssessing Officer not to recover the demand for theAssessment Year does not lead to setting aside of the demanditself. The said demand could very well be adjusted against therefund due for the previous year 2012-13. 9.Similarly, the assessment was completed for theAssessment Year 2014-15 on 28.12.2016. The demand forrecovery of the tax due was issued on 13.01.2017 giving timeto the assessee to deposit the tax due within 30 days. Suchdemand notice is for the recovery of the amount which ispayable within 30 days and after 30 days, the consequences ascontemplated under Section 156 of the Act follows butassessment having been finalized on 28.12.2016, the AssessingOfficer could adjust the amount against the refund payable as itwas amount due and payable by the assessee though it had 30days time to deposit the same. 10.The order of the Delhi High Court referred to by thelearned counsel for the petitioner infact draws a distinction between stay of coercive measures to recover the demand andstay of adjustment under Section 245 of the Act. The Court hasheld to the following effect: “......We do not think that set off or adjustment cannot beregarding as a mode of recovery or is not a recoverymechanism. The term “recovery” is comprehensive andincludes adjustment thereby reducing the demand. 10.The order of the Delhi High Court referred to by thelearned counsel for the petitioner infact draws a distinction between stay of coercive measures to recover the demand andstay of adjustment under Section 245 of the Act. The Court hasheld to the following effect: “......We do not think that set off or adjustment cannot beregarding as a mode of recovery or is not a recoverymechanism. The term “recovery” is comprehensive andincludes adjustment thereby reducing the demand. At the same time, different parameters andrequisites may apply when the appellate authorityconsiders the request for stay against coercive measures torecover the demand and when stay of adjustment underSection 145 of the Act is prayed for. In the first case,coercive steps are taken with the idea to compel theassessee to pay up or by issue of gamishee notice torecover the amount. In the second case, money is with theRevenue and is refundable but adjusted towards thedemand. Thus, while granting stay, the appellate authorityor the Income-tax Appellate Tribunal (for that matter, evenunder section 220(6)), the authority can direct stay ofrecovery by coercive methods but may not grant stay ofadjustment of refund. However, when an order of stay ofrecovery is simplistic and absolute terms is passed, itwould be improper and inappropriate on the part of theRevenue to recover the demand by way of adjustment. Incase of doubt or ambiguity, an application for clarificationor vacation/modification of stay to allow adjustment canbe, and should be filed. But no attempt should be madeand it should not appear that the Revenue has tried to over-reach and circumvent the stay order . Obedience andcompliance with the stay order in letter and spirit ismandatory. A stay order passed by an appellate/higherauthority must be respected. No deviancy or breach should be made. We do not, in the present case, intend to laydown propositions or broad principles when and in whatcase there should be total stay of demand, or stay ofrecovery through coercive steps but no stay of adjustmentunder section 245 of the Act. We would like to restrictourselves to the facts of the present case and thecontentions raised by the petitioner that when an issue orcontention has been decided in favour of the assessee inearlier years whether adjustment under section 245 of theAct is permissible in respect of arrears pertaining to thesame issue or subject-matter.” 11.The Delhi Court has categorically held that it didnot intend to lay down propositions or broad principles whenand in what case there should be total stay of demand or stay ofrecovery but no stay under Section 245 of the Act can be made.Section 245 of the Act infact permits the Revenue to set off anydemand from the amount to be refunded but the only conditionis of intimation in writing to such person against whom actionis proposed to be taken. We find that demand having beenraised against the petitioner for the Assessment Years 2013-14and 2014-15 and intimation having been sent to the petitioneron 05.01.2017, the mandate of Section 245 of the Act wassatisfied by the Revenue before making adjustment from therefund due to the assessee from the tax due to the assessee forthe subsequent years. Shukla 12.In view thereof, we do not find any merit in the writpetition, the same is dismissed. 13. At this stage learned counsel for the petitioner has sought intervention of this Court for directing theCommissioner of Income Tax (Appeal) to decide the appealspreferred by the petitioner for the Assessment Years 2013-14and 2014-15 expeditiously as having received the tax amount,the petitioner has the apprehension that the appeals will not bedecided. 14.In view of the argument raised, we deem itappropriate to direct the jurisdictional Commissioner of IncomeTax (Appeal) to decide the appeals of the petitionerexpeditiously preferably within a period of six months from thedate of receipt of this order. Shukla 12.In view thereof, we do not find any merit in the writpetition, the same is dismissed. 13. At this stage learned counsel for the petitioner has sought intervention of this Court for directing theCommissioner of Income Tax (Appeal) to decide the appealspreferred by the petitioner for the Assessment Years 2013-14and 2014-15 expeditiously as having received the tax amount,the petitioner has the apprehension that the appeals will not bedecided. 14.In view of the argument raised, we deem itappropriate to direct the jurisdictional Commissioner of IncomeTax (Appeal) to decide the appeals of the petitionerexpeditiously preferably within a period of six months from thedate of receipt of this order. In view of the argument raised, we deem it (Hemant Gupta) Chief Justice (S.K. Gangele) Judge