Sir Jamsetjee Jejeebhoy Charity Fund v. The Assistant Director Of Income Tax (E) Ii(1)And Ors

srk IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION LODGING NO.576 OF 2012 Sir Jamsetjee Jejeebhoy Charity Fund ...Petitioner Versus The Assistant Director of Income Tax (E) II(1)and ors....Respondents Mr.F.V.Irani i/b. M/s Wadia Ghandy & Co. for petitioner.Mr.Suresh Kumar for respondents. CORAM: DR.D.Y. CHANDRACHUD & M.S.SANKLECHA, JJ. March 14, 2012. P.C. 1.Rule, returnable forthwith. Counsel appearing for the respondents waives service. By consent the petition is taken up for final hearing. wpl-576-2012 2.In these proceedings the petitioner has challenged an order dated 1 March 2012 passed by the First Respondent under Section 226(3) of the Income Tax Act, 1961 and has sought an order restraining the First Respondent from taking coercive steps for the recovery of an amount of Rs.2.04 crores till the disposal of the appeal for Assessment Year 2009-10. 3.Sir Jamsetjee Jejeebhoy Charity Fund was set up under a Deed of Trust in 1838. The Trust has been registered under the Bombay Public Trusts Act, 1950 on 6 September 1952. On 7 November 1975 a certificate of registration was issued by the Commissioner of Income Tax, Bombay City IV under Section 12A of the Income Tax Act, 1961. The petitioner filed a return of income for AY 2009-10 disclosing a nil taxable income after claiming exemption under Section 11. The Assessing Officer made an order of assessment on 8 November 2011 by which the net receipts of the petitioner in the amount of Rs.4.60 crores have been charged to tax as the income of the petitioner. On 8 November 2011 a notice of demand was issued to the petitioner under Section 156 raising a demand in the amount of Rs.2.04 crores. The petitioner has filed an appeal against the order of assessment. The main grievance of the wpl-576-2012 petitioner in the appeal is that the order of assessment was passed ex parte. The grievance of the petitioner is that both the notice under Section 142(1) as well as the notice under Section 143(2) were received after the hearing which was fixed before the Assessing Officer. Moreover, it has been submitted that on 2 November 2011, the petitioner was called for a hearing on 11 November 2011 but on that date the petitioner was informed that an ex parte assessment order had already been passed. On 3 March 2012 the petitioners’ bankers informed the petitioner of the receipt of a notice under Section 226(3) from the Assessing Officer consequent upon which the bank account has been attached. The grievance of the petitioner is that though on 14 December 2011 an application was made before the Assessing Officer under Section 220(6) for a stay pending appeal, till date that application has not been disposed of. On these counts it has been urged that the Assessing Officer has passed an ex parte assessment order without hearing the petitioner and denying to the petitioner the benefit of the provisions of Section 11 for the first time. 4.Having heard the counsel appearing on behalf of the petitioner and the counsel appearing on behalf of the Revenue, we find 4 wpl-576-2012 4.Having heard the counsel appearing on behalf of the petitioner and the counsel appearing on behalf of the Revenue, we find 4 wpl-576-2012 that there was no justification for the Assessing Officer to keep the application for stay under Section 220(6) pending since 14 December 2011. The petitioner has addressed a covering letter dated 13 March 2012 to the Director of Income Tax (Exemption) that when a hearing took place on 12 March 2012 to discuss the matter of attachment, the petitioner was called upon to deposit an amount of Rs.50 lakhs before 31 March 2012 and Rs.50 lakhs before 30 June 2012. The parameters which must be followed by the Revenue in disposing of stay applications have been laid down by a Division Bench of this Court in KEC International Ltd. Vs. B.R. Balakrishnan[1]. The directions which have been issued by this Court have evidently not been followed. Having perused the record and after hearing the counsel, we are of the view that the ends of justice would require that pending the disposal of the appeal before the Commissioner of Income Tax (Appeals), there should be an order restraining the respondents from adopting coercive steps against the petitioner for the recovery of the demand for the Assessment Year 2009-2010. There shall be accordingly an order in these terms. The protection granted by the present order shall continue to remain in force for a period of six weeks after the disposal of the appeal by the Commissioner (Appeals). 1. (2001) 251 ITR 158 5.Counsel appearing on behalf of the petitioner has submitted that unless the attachment on the bank account is lifted, the petitioner would be unable to pursue its activities by applying the receipts for charitable purposes. We accordingly direct that the attachments which have been levied in pursuance of the communication dated 1 March 2012 of the Assessing Officer shall stand lifted. Rule is made absolute accordingly. There shall be no order as to costs. (DR.D.Y. CHANDRACHUD,J.) (M.S.SANKLECHA, J.)