Sarang v. Kotwal, Jj.date: 05[Th] April, 2019

1 / 6 02-WP-969-19.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.969 OF 2019 Universal Exports.... Petitioner versusIncome Tax OfficerWard – 21(3)(4)... Respondent ….... Mr.Harsh Kapadia, Advocate for Petitioner.Mr.Harsh Kapadia, Advocate for Petitioner. Mr.Suresh Kumar, Advocate for Respondent.Mr.Suresh Kumar, Advocate for Respondent. CORAM : AKIL KURESHI & SARANG V. KOTWAL, JJ.DATE: 05[th] APRIL, 2019. P.C. : 1. Heard learned Counsel for the parties for final disposalof the Petition. 2. The Petitioner has challenged the orders passed by the Assessing Officer and Principal Commissioner of Income Tax,insisting that the Petitioner must deposit 20% of the disputedtax demand pending the Appeal against the order of assessmentbefore the Commissioner (Appeals). 3. The Petitioner is a partnership firm. The Petitioner hadfiled the return of income for the assessment year 2016-17. Thisreturn was taken in scrutiny by the Assessing Officer. TheAssessing Officer noticed major discrepancies in the Petitioner’sbooks of accounts and the auditor’s report furnished by thePetitioner. After putting the Petitioner to notice, the AssessingOfficer rejected the Petitioner’s books of accounts and proceededto make additions to returned income. He passed the order ofassessment accordingly under section 143(3) of the Income TaxAct, 1961 (for short ‘the Act’) on 29/12/2018. Against suchorder of assessment, the Petitioner has filed Appeal before theCommissioner (Appeals) which is pending. Pending suchAppeal, the Petitioner requested the Assessing Officer to stay thedemand unconditionally. The Assessing Officer rejected such arequest by the order dated 13/02/2019. The Petitionerthereaupon approached the Principal Commissioner whoinsisted that the Petitioner must deposit 20% of the disputed taxto enable the Petitioner to enjoy the stay against the recoveries. 3 / 6 02-WP-969-19.odt Since the Petitioner had not fulfilled such condition,departmental authorities have attached the Petitioner’sfollowing two bank accounts. (1)Union Bank of India, Opera House Branch, O/D A/C No.318801010036729 (2)State Bank of India, Mahim Branch, O/D A/C No.30395061753 4. The Petitioner's challenge therefore is two fold, firstly the Petitioner seeks stay against further recoveries. In themeantime, the Petitioner has already deposited a sum of Rs.4.5lakhs by now. The Petitioner’s second challenge is to theattachment of the bank accounts contending that such accountswere overdraft accounts and therefore in any case could nothave been attached by the department. 5. Learned Counsel for the Petitioner submitted that the Assessing Officer has made substantial additions without 4 / 6 02-WP-969-19.odtsufficient evidence on record. In any case, the Assessing Officerhaving made additions, on the basis of gross profit rate takingaverage of last few years of Petitioner’s business, could not havethereafter made further additions under section 68 of the Act.The Petitioner thus has strong prima facie grounds to urgebefore the Appellate authority. He submitted that in any case,the department cannot attached the Petitioner’s overdraftaccounts. 6. Learned Counsel Mr.Suresh Kumar appearing for thedepartment opposed the Petition contending that the AssessingOfficer has passed a detailed order of assessment, giving reasonsfor the additions made. There is no case for reducing thecondition of deposit 20% imposed by the Respondents. 7. Having thus heard learned Counsel for the parties, wefind that the Petitioner has some prima facie grounds against theorder of assessment. The question would be, once the AssessingOfficer makes additions to the income of the Petitioner by 6. Learned Counsel Mr.Suresh Kumar appearing for thedepartment opposed the Petition contending that the AssessingOfficer has passed a detailed order of assessment, giving reasonsfor the additions made. There is no case for reducing thecondition of deposit 20% imposed by the Respondents. 7. Having thus heard learned Counsel for the parties, wefind that the Petitioner has some prima facie grounds against theorder of assessment. The question would be, once the AssessingOfficer makes additions to the income of the Petitioner by 5 / 6 02-WP-969-19.odtapplying formula of gross profit rate shown by the Petitioner inlast few years, could the Assessing Officer thereafter makefurther additions on individual grounds? Would such additionsnot to be telescoped in the gross profit rate adopted by theAssessing Officer? 8. These are the grounds, which we are sure, thePetitioner would raise about before the Commissioner (Appeals)and the Commissioner (Appeals) would take a view inaccordance with the law. However, taking into account totalityof the facts and circumstances of the case, in our opinion, askingthe Petitioner to deposit 10% of the disputed tax pending theAppeal, would serve the purpose of justice. Subject to Petitionerfulfilling such condition, further recoveries be stayed till theAppeal is disposed of by the Appellate authority. 9. In the result, the Petition is disposed of with followingdirections; 6 / 6 02-WP-969-19.odt (i) The Petitioner shall deposit further amountbefore the Income Tax authorities latest by15/04/2019, so as to make the total deposit withthe department (inclusive of 4.5 lakhs alreadydeposited) of 10% of the disputed tax demand.before the Income Tax authorities latest by15/04/2019, so as to make the total deposit withthe department (inclusive of 4.5 lakhs alreadydeposited) of 10% of the disputed tax demand. (ii)Upon the Petitioner fulfilling such condition, thefurther recoveries would be stayed.further recoveries would be stayed. (iii)Counsel for the Petitioner stated that thePetitioner’s Union Bank O/D AccountNo.318801010036729 Opera House Branch, hassufficient funds to fulfill said condition ofdeposit. We permit the department to withdrawsuch amount from the account that would meetwith the above condition of deposit of 10% withintimation to the Petitioner and thereafterforthwith release both the bank accounts fromthe attachment.Petitioner’s Union Bank O/D AccountNo.318801010036729 Opera House Branch, hassufficient funds to fulfill said condition ofdeposit. We permit the department to withdrawsuch amount from the account that would meetwith the above condition of deposit of 10% withintimation to the Petitioner and thereafterforthwith release both the bank accounts fromthe attachment. (SARANG V. KOTWAL, J.) (AKIL KURESHI, J.)