Punjab Urban Planning And Development Authority (Pda), Patiala v. Chief Commissioner Of Income Tax, Chandigarh And Ors

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Date of decision: 12.3.2013 CWP No.1816 of 2013 (O&M) Punjab Urban Planning and Development Authority (PDA), Patiala ......Petitioner vs. Chief Commissioner of Income Tax, Chandigarh and ors .....Respondents CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTAHON'BLE MS. JUSTICE RITU BAHRI Present: - Mr. Akshay Bhan, Advocate for the petitioner. Ms. Savita Saxena, Advocate for respondents. ....... CM No. 4126 of 2013 Application is allowed. Annexures R-1 to R-4 arepermitted to be taken on record. CWP No. 1816 of 2013 Challenge in the present petition is to a communicationdated 24.1.2013 (Annexure P-7) whereby the request of thepetitioner for stay of demand till the expiry of the time limit forfiling an appeal was declined. The Assessing Officer framed the assessment in respectof the assessment year 2009-2010 on 30.12.2011. The appeal filedby the assessee was dismissed by the Commissioner of Income Tax(Appeals) on 16.1.2013. The order of the same was received by theassessee on 22.1.2013. On 24.1.2013, the petitioner made a requestfor stay of demand vide Annexure P-6 dated 24.1.2013. It is averred -2- that the assessee is in the process of filing of the appeal before the IncomeTax Appellate Tribunal, Chandigarh and that the time limit for whichexpires on 23.1.2013, therefore, the impugned demand be stayed till theexpiry of the time limit of the expiry of the appeal. Petitioner also refered toan order passed by the Bombay High Court reported asUTI Mutual Fundvs. Income Tax Officer, (2012) 5 ITR 71 (Bom), wherein the followingguidelines were issued: - 1.No recovery of tax should made pending.(a)Expiry of the time limit for filing an appeal;(b)Disposal of a stay application, if any, moved by the assesseeand for a reasonable period thereafter to enable the assessee tomove a higher forum, if so advised. Coercive steps may, however,be adopted where the authority has reason to believe that theassessee may defeat the demand, in which case brief reasons maybe indicated.(a)Expiry of the time limit for filing an appeal;(b)Disposal of a stay application, if any, moved by the assesseeand for a reasonable period thereafter to enable the assessee tomove a higher forum, if so advised. Coercive steps may, however,be adopted where the authority has reason to believe that theassessee may defeat the demand, in which case brief reasons maybe indicated. 2.The stay application, if any, moved by the assessee should bedisposed of after hearing the assessee and bearing in mind the guidelines inKEC International;disposed of after hearing the assessee and bearing in mind the guidelines inKEC International; 3.If the Assessing Officer has taken a view contrary to what has beenheld in the preceding previous years without there being a material changein facts or law, that is a relevant consideration in deciding the applicationfor stay; 4.When a bank account has been attached, before withdrawing theamount, reasonable prior notice should be furnished to the assessee toenable the assessee to make a representation or seek recourse to a remedyin law; 5.In exercising the powers of stay, the Income Tax Officer should notact as a mere tax gatherer but as a quasi judicial authority vested with thepublic duty of protecting the interest of the Revenue while at the same timebalancing the need to mitigate hardship to the assessee. Though theassessing officer has made an assessment, he must objectively decide theapplication for stay considering that an appeal lies against his order; thematter must be considered from all its facts, balancing the interest of theassessee with the protection of the Revenue. -3- 4.When a bank account has been attached, before withdrawing theamount, reasonable prior notice should be furnished to the assessee toenable the assessee to make a representation or seek recourse to a remedyin law; 5.In exercising the powers of stay, the Income Tax Officer should notact as a mere tax gatherer but as a quasi judicial authority vested with thepublic duty of protecting the interest of the Revenue while at the same timebalancing the need to mitigate hardship to the assessee. Though theassessing officer has made an assessment, he must objectively decide theapplication for stay considering that an appeal lies against his order; thematter must be considered from all its facts, balancing the interest of theassessee with the protection of the Revenue. -3- Earlier, the petitioner invoked the writ jurisdiction of this Courtafter the Assessing Officer framed the assessment and raised demand ofrecovery vide a notice dated 13.3.2012. This Court directed the revenue notto withdraw or encash the fixed deposits of the petitioner till the decision ofappeal by respondent No.2. The operative part of the order reads as under: - Mr. Alok Mittal, counsel for the petitioner-Authority points out that FDRsamount to over Rs. 90 crores whereas the demand raised against thepetitioner is about Rs. 20 crores only. He further submits that some of theFDRs would be required to be encashed to discharge the due tax liabilityfor the next assessment year and to perform other statutory responsibilities.Keeping the facts and circumstances in view and in order to protect theinterest of the Revenue, we direct that the petitioner-Authority shall notwithdraw or encash its fixed deposits to the tune of Rs. 20 crores till thedecision of appeal by respondent No. 2, while it shall be at liberty toencash the rest of the FDRs. In terms of the aforesaid order passed by the Division Bench ofthis Court, the fixed deposits to the tune of Rs. 20.00 crores were notencashed during the pendency of the appeal before the Commissioner ofIncome Tax (Appeals). After the appeal was decided, the embargo on therevenue to encash the fixed deposits came to an end and consequently therevenue was within its jurisdiction to encash the guarantee of Rs. 20.00crores. We do not find that the assessee is entitled to stay of recoveryproceedings during the limitation period for the filing of the appeal. There isno deemed stay of liability after the enforceable order is passed by anauthority under the statute. Reference may be made to Collector ofCustoms, Bombay Vs. Krishna Sales (P) Ltd. AIR 1994 SC 1239, whereinthe court observed as: 6.According to the said para 4, the goods will not be released evenwhere the party succeeds in cases where the Customs authorities decide togo in appeal before the Tribunal or the Supreme Court. They will considerthe issuance of such certificate only after the decision of the Tribunal or theSupreme Court, as the case may be. The learned counsel for the respondentcharacterises the said direction as arbitrary and contrary to law. We see theforce in his submission. If the authorities are of the opinion that the goodsought not to be released pending the appeal, the straightforward course forthem is to obtain an order of stay or other appropriate direction from theTribunal or the Supreme Court, as the case may be. Without obtaining suchan order they cannot refuse to implement the order under appeal. As iswell-known, mere filing of an appeal does not operate as a stay orsuspension of the order appealed against. Moreover, such detention islikely to create several complications relating to the demurrage chargesbesides the possible deterioration of the machinery and goods. We hopeand trust that the Collector of Customs, Bombay shall appropriately revisethe said public notice in the light of the observations made herein. If hedoes not do so, there is a likelihood of the Customs authorities beingthemselves made liable for demurrage charges in appropriate cases. In an another judgment, the Court held that pending appeal, it isopen to the Decree holder to execute decree subject to the right ofrestitution in Inderchand Jain v. Motilal, (2009) 14 SCC 663.The Courtobserved as under: 29. Order 41 Rule 1 of the Code stipulates that filing of an appeal wouldnot amount to automatic stay of the execution of the decree. The lawacknowledges that during pendency of the appeal it is possible for thedecree-holder to get the decree executed. The execution of the decreeduring pendency of the appeal would, thus, be subject to the restitution ofthe property in the event the appeal is allowed and the decree is set aside.The court only at the time of passing a judgment and decree reversing thatof the appellate court should take into consideration the subsequent events,but, by no stretch of imagination, can refuse to do so despite arriving at thefindings that the plaintiff would not be entitled to grant of a decree. In view of the above, mere fact that the petitioner had time limitto file an appeal does not bar the revenue to execute the order passed. Wedo not find any merit in the present petition. Dismissed. (HEMANT GUPTA)JUDGE 12.3.2013preeti (RITU BAHRI) JUDGE