Rep. By Its Director Shri Kingston Victor v. Deputy Commissioner Of Income Tax, Company Circle Iii(4), Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE V.DHANAPALANW.P.No.4107 of 2013 & M.P.No.1 of 2013 M/s.Venture Metal Products Private Limited, Rep. by its Director Shri Kingston Victor,173/3, karapakkam Village,Old Mahabalipuram Road,Sholinganallur, Chennai-600 119... Petitioner Vs. 1. Deputy Commissioner of Income Tax, Company Circle III(4), Room No.411, New Block, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034. 2. Commissioner of Income-tax (Appeals)III, 121, Nungambakkam High Road, Chennai-600 034. 3. Tax Recovery Officer-III, IV Floor, Wanaparthy Block, Room No.404, 121, Nungambakkam High Road, Chennai-600 034... Respondents Writ Petition filed under Article 226 of the Constitution ofIndia, praying for issuance of a Writ of Certiorarified Mandamus tocall for the records in communication T.R.No.161-V/2012-13/TRO-III,dated 7.2.2013 relating to Assessment Year 2008-2009 on the file ofthe third respondent and quash the same and further direct the thirdrespondent from initiating or continuing with any proceedings forrecovery of the disputed demand pursuant to order of assessment passedby the first respondent, dated 27.12.2010 in GIR.No./PAN 835-V/ in respect of assessment year 2008-09. For petitioner : Mr.N.Muthukumar for Dr.Anitha Sumanth For respondents: Mr.T.Pramodkumar Chopda, SCGSC ORDER The petitioner calls in question the communication of the thirdrespondent in T.R.No.161-V/2012-13/TRO-III, dated 7.2.2013 relating toassessment year 2008-2009, seeking to quash the same and to forbearthe third respondent from initiating or continuing with anyproceedings for recovery of the disputed demand, pursuant to the orderof assessment passed by the first respondent in GIR.No./PAN 835-V/ in respect of assessment year 2008-2009. 2. Short facts leading to the filing of the Writ Petition are asfollows: (a) The petitioner is a Company incorporated in terms of theCompanies Act, 1956, maintains regular books of accounts and is anassessee under the provisions of the Income Tax Act, 1961 (for short,'the I.T. Act'). They have filed the Returns of income regularlywithin the statutory period set out and the assessments are beingcompleted by the Income Tax Department. The petitioner-Company isengaged in the manufacture and export of coffee, pots, jugs andkitchen/household items made of stainless steel. The petitioner set upa 100% export oriented unit under the EXIM Policy in force byobtaining necessary permission from the Development Commissioner,MEPZ-SEZ, Chennai on 20.5.2004. The Unit was fully functional from1.6.2004 onwards after completion of construction, necessary customsbonding and installation and commissioning of machinery. The Unit wasentitled to relief under Section 10-B of the I.T. Act that providedfor a deduction of 100% of the profits earned from the activity ofmanufacture and export. (b) The petitioner filed Return in respect of the assessment year2008-2009 declaring the income. The assessment proceedings were takenup for hearing and by order dated 27.12.2010, the first respondent-assessing officer disallowed the claim of relief under Section 10-B ofthe I.T. Act, also disallowed the amount in respect of sale of scrapsfor the reason that the TDS was not collected at source under Section206 of the I.T. Act and further, an amount was added on the groundthat charges towards job work and clearing agents were not subjectedto tax deduction at source. Accordingly, the tax was demanded withinterest. (b) The petitioner filed Return in respect of the assessment year2008-2009 declaring the income. The assessment proceedings were takenup for hearing and by order dated 27.12.2010, the first respondent-assessing officer disallowed the claim of relief under Section 10-B ofthe I.T. Act, also disallowed the amount in respect of sale of scrapsfor the reason that the TDS was not collected at source under Section206 of the I.T. Act and further, an amount was added on the groundthat charges towards job work and clearing agents were not subjectedto tax deduction at source. Accordingly, the tax was demanded withinterest. (c) Aggrieved by the said assessment order, dated 27.12.2010,passed by the first respondent, the petitioner filed an appeal beforethe second respondent, along with a stay petition, which are pendingfor disposal. While the appeal and stay petition are pending, thethird respondent issued the impugned notice of demand, dated 7.2.2013,calling upon the petitioner to pay the demanded amount within 15 daysfrom the date of receipt of the notice, failing which, recovery actionwould be initiated. Hence, the petitioner has filed this Writ Petitionfor the above relief. 3. Learned counsel for the petitioner contended that aggrieved bythe assessment order, the petitioner filed appeal before the secondrespondent-appellate authority along with stay petition praying tostay the collection of the disputed demand, and the said stay petitionhas not yet been disposed of and it is still pending, and hence, heprayed this Court for issuing a direction to the second respondent todispose of the stay petition and in the meantime, he prayed this Courtfor staying the recovery proceedings. 4. On the other hand, learned SCGSC appearing for the respondentssubmitted that instead of filing appeal before the second respondent,the petitioner-assessee should have filed the appeal before theconcerned administrative Commissioner of Income Tax and hence, it isnot permissible for the second respondent to dispose of the appeal andonly by the order of this Court, the second respondent-appellateauthority could take up the stay petition. 5. It is the cardinal principle that the power of stay is notordinarily to be exercised in a routine way or as a matter of course,in view of the special nature of Taxation and Revenue laws. Only whena strong prima-facie case is made out and when there is balance ofconvenience, the Tribunal/appellate authority will consider whether ornot to grant stay of the recovery proceedings and the stay will begranted only in deserving and appropriate cases, where theTribunal/appellate authority is satisfied that the entire purpose ofthe appeal will be frustrated or rendered nugatory by allowing therecovery proceedings to continue during the pendency of the appealbefore it. 6. In the present case, it is informed by the learned counselappearing for the parties that the recovery proceedings would beinitiated, as impugned notice of demand is issued and the staypetition has not yet been disposed of by the second respondent-appellate authority. 7. Considering the facts and circumstances of the case and thesubmissions made by the learned counsel appearing for the parties, theWrit Petition is disposed of, with a direction to the secondrespondent-appellate authority to dispose of the said stay petition,on merits and in accordance with law, within a period of four weeksfrom the date of receipt of a copy of this order. Till such time theorder is passed by the second respondent in the stay petition, theparties shall maintain status-quo as on today. It is needless to statethat the petitioner shall co-operate in the disposal of the staypetition before the second respondent without seeking any adjournment.No costs. The Miscellaneous Petition is closed. 7. Considering the facts and circumstances of the case and thesubmissions made by the learned counsel appearing for the parties, theWrit Petition is disposed of, with a direction to the secondrespondent-appellate authority to dispose of the said stay petition,on merits and in accordance with law, within a period of four weeksfrom the date of receipt of a copy of this order. Till such time theorder is passed by the second respondent in the stay petition, theparties shall maintain status-quo as on today. It is needless to statethat the petitioner shall co-operate in the disposal of the staypetition before the second respondent without seeking any adjournment.No costs. The Miscellaneous Petition is closed. Sd/-Asst. Registrar//true copy//Sub Asst.RegistrarcsTo1. Deputy Commissioner of Income Tax, Company Circle III(4), Room No.411, New Block, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.2. Commissioner of Income-tax (Appeals)III, 121, Nungambakkam High Road, Chennai-600 034. 3. Tax Recovery Officer-III, IV Floor, Wanaparthy Block, Room No.404, 121, Nungambakkam High Road, Chennai-600 034. +1 CC to Mr.T.Pramodkumar Chopda, SCGSC, Sr.No.14703+1 CC to M/S.Dr.Anita Sumath, Advocate, Sr.No.14690W.P.No.4107 of 2013 RV(CO)KP(26.03.2013)