Tca/440/2019 Of Neeta Sunnel Shah v. Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Smt.Neetaa Suneel Shah,No.178, Old No.88, NSC Bose Road,Sowcarpet, Chennai-600 079. .. Appellant/Petitioner The Income Tax Officer,Non Corporate Ward 5(2),II Floor, Room No.220,No.16, BSNL Building, Tower I,Greams Road, Chennai-600 006... Respondent/Respondent Appeal under Section 260A of the Income-tax Act, 1961against the order dated 17.05.2019 on the file of the Income TaxAppellate Tribunal 'C' Bench, Chennai, in S.P.No.158/CHNY/2019in I.T.A.No.1524/CHNY/2019 for the assessment year 2012-13,dated 17/05/2019 against the order of the Commissioner of IncomeTax(Appelas)-5,Chennai-34dated30/04/2019madeinITA.No.128/CIT(A)-5/2017-18 against the order of the Income TaxOfficer, Non-Cororate Ward 5(2), Chennai-6 datd 12.12.2017 madein AAQPS8486E, for the Assessment year 2012-13. This appeal by the assessee, filed under Section 260A of theIncome-tax Act, 1961 (hereinafter referred to as “the Act”), isdirected against the order dated 17.05.2019, passed in a stay https://hcservices.ecourts.gov.in/hcservices/ petition filed by the assessee in S.P.No.158/Chny/2019 inI.T.A.No.1524/Chny/2019 on the file of the Income Tax AppellateTribunal 'C' Bench, Chennai (for brevity, “the Tribunal”), forthe assessment year 2012-13. 2.The Tribunal by the impugned order while considering theprayer for stay of the demand of Rs.37,40,152/-, held that theassessee could not make out any case for undue financialhardship in paying the outstanding demand and it has notestablished any prima facie case on the merits of the additionand therefore, held that it is not a fit case for grant ofabsolute stay. However, the Tribunal granted the order of staysubject to the condition that the assessee pays a sum ofRs.10,00,000/- in monthly instalments and the first instalmentwas directed to be paid on 31.05.2019, and the subsequentinstalments by 30[th] of each calender month. 3.The assessee has complied with the condition imposed bythe Tribunal, insofar as the first instalment of Rs.10,00,000/-payable on or before 31.05.2019 is concerned. 4.The question would be as to whether the assessee isentitled for an order of stay in respect of the balance amountand whether the Tribunal committed an error in directing theassessee to pay the entire demand in instalments. 5.The assessee has raised the following substantialquestions of law for consideration:-“i. Whether the Tribunal was correct indismissing the request for full stay of demandwithout considering the complete facts andcircumstances of the case of the Appellant?ii. Whether the Tribunal was correct indismissing the request for full stay of demandwhen the Appellant has strong prima facie case onmerits, the assessment order being withoutjurisdiction and in complete violation ofprinciples of natural justice?iii. Whether in the interest of justice,equity and fairness, the Appellant should begranted stay of balance tax demand when it hasmade a prima facie case on merits, the balance ofconvenience is in favour of the Appellant andundue hardship will be caused to the Appellant iffurther tax demand is to be paid?”6.We have heard Mr.R.Sandeep Bagmar, learned counsel for theappellant/assessee; and Ms.R.Hemalatha, learned Senior StandingCounsel for the respondent/Revenue. 7.The three cardinal principles, which the Court is requiredto consider while granting an interim order are whether the https://hcservices.ecourts.gov.in/hcservices/ petitioner/litigant has made out a prima facie case; whetherbalance of convenience is in his favour; and if the prayer forstay is not granted to a litigant, he will be put to irreparablehardship. 7.The three cardinal principles, which the Court is requiredto consider while granting an interim order are whether the https://hcservices.ecourts.gov.in/hcservices/ petitioner/litigant has made out a prima facie case; whetherbalance of convenience is in his favour; and if the prayer forstay is not granted to a litigant, he will be put to irreparablehardship. 8.So far as the prima facie case is concerned, the Tribunalholds that it does not find any prima facie case on the meritsof the addition. However, it is not clear as to how theTribunal came to such a conclusion, as we find that there are noreasons set out by the Tribunal as to how it came to theconclusion that the assessee has not made out a prima facie casefor consideration. 9.We refrain from going into the merits of the matter, sincethe appeal is pending before the Tribunal. However, on acursory perusal of the order passed by the Commissioner ofIncome Tax (Appeals)-5, Chennai (for brevity, “the CIT(A)”), wefind that the CIT(A) while rejecting the appeal questioning thereopening of the assessment, in paragraph 6.2 of its order dated30.04.2019, would state that the authorized representative ofthe appellant/assessee appeared and filed details as called forin response to the notice under Section 148 without making anobjection and therefore, held that the action of the AssessingOfficer in reopening the assessment is valid. There can be noestoppal on the part of the assessee in participating theproceedings before the Assessing Officer. In fact, in terms ofthe decision of the Hon'ble Supreme Court in GKN Driveshafts(India) Ltd v. ITO reported in (2003) 259 ITR 19, the assesseeis required to response to the notice issued by the AssessingOfficer furnishing reasons for reopening. 10.In the instant case, we find that on objections beingfiled by the assessee, the Assessing Officer disposed of theobjections and passed an order on 10.11.2017. Therefore, we areof the prima facie view that the CIT(A) ought to have consideredthe validity of the reopening and not rejected the appeal on theground that the authorized representative of the assesseeparticipated in response to the notice issued under Section 148of the Act. This, in our considered view, would be sufficientfor the present to hold that the assessee has made out a primafacie case. 11.Coming to the next aspect as regards the balance ofconvenience is concerned, the assessee is an individual and theassessment was reopened based upon an investigation which hadcommenced in Kolkata pertaining to certain stock brokers and theallegation being, there are criss gross deals among five stockbrokers and many of the brokers involve stocks of shellcompanies. 12.On a query raised from the Court, the learned counsel forthe assessee would submit that no statement was recorded fromthe appellant/assessee by the investigating agency, nor thereport of the investigating agency was furnished to theassessee, nor the Assessing Officer had any independent materialfor reopening the assessment. 13.Considering these facts, we are of the view that thebalance of convenience would lean in favour of the assessee.Apart from that the learned counsel for the assessee relied upona decision of the Kolkata Bench of the Tribunal in I.T.A.Nos.698and 699/Kol/2010 in respect of one Ravindra Sanghai (HUF) andsubmitted that it also pertains to dealing of shares in thecompany M/s.Multiplus Resources. It is submitted that in thesaid case, the Tribunal ruled in favour of the assessee by orderdated 22.05.2012. Thus, we find that the balance ofconvenience, at this stage, would lean in favour of theassessee. 13.Considering these facts, we are of the view that thebalance of convenience would lean in favour of the assessee.Apart from that the learned counsel for the assessee relied upona decision of the Kolkata Bench of the Tribunal in I.T.A.Nos.698and 699/Kol/2010 in respect of one Ravindra Sanghai (HUF) andsubmitted that it also pertains to dealing of shares in thecompany M/s.Multiplus Resources. It is submitted that in thesaid case, the Tribunal ruled in favour of the assessee by orderdated 22.05.2012. Thus, we find that the balance ofconvenience, at this stage, would lean in favour of theassessee. 14.So far as the hardship that may be caused to the assesseeis concerned, though the assessee has not produced substantialdocuments before the Tribunal to explain her financial status,she has stated that she is an individual assessee and disputedthe balance tax payable is Rs.37,40,152/- and the assessee haspaid Rs.10,00,000/- in terms of the direction of the Tribunal,her annual income is about Rs.7,00,000/- only and she has noliquid funds to pay the instalments and the capital gains arosesome seven years before and the assessee has no funds to pay thedisputed tax. computation formed and appended to the assessment order dated12.12.2017. 16.From the above computation, it is seen that the total taxpaid by the assessee is Rs.19,98,004/- out of the tax demand ofRs.28,20,927/- which comes to nearly 71% of the demand. Ifinterest on the tax is added, then the amount which has beenpaid by the assessee would be little more than 42%. Thus, goingby the payment effected by the assessee towards the taxcomponent, we find that the interest of the Revenue issufficiently safeguarded. That apart, the assessee hadrequested for an early hearing of the appeal raising variouscontentions including the contention that the Chennai Tribunalhas remanded similar matters for further verification. 17.In the light of the above reasons, we are of theconsidered view that the payment effected by the assessee, thusfor, that is prior to the passing of the interim order by theTribunal and upon compliance of the payment of first instalmenttotalling a sum of Rs.19,98,004/- would sufficiently safeguardthe interest of the Revenue. 18.Accordingly, the respondent need not insists upon anyfurther payment till the disposal of the appeal and the balancetax and interest payable by the assessee shall remained stayedtill the disposal of the appeal filed by the assessee before theTribunal. 19.For the above reasons, the appeal is partly allowed andthe order passed by the Tribunal is modified to the extentindicated above. Consequently, the substantial questions of laware left open. No costs. The connected miscellaneous petitionis closed. //True Copy// Sub Assistant Registrar abrTo 1.The Income Tax Officer, Non-Corprote Ward-5(2), II Floor, Roon No.220, NO.16, BSNL Building Tower-I, Greams Road, Chennai-600 006. 2.The Commissioner of Income Tax (Appeals)-5, 121, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.3.The Income Tax Appellate Tribunal 'C' Bench, Chennai.+1cc to Mr.T.Ravikumar, Advocate sr.58265+1cc to Mr.R.Sandeep Bagmar, Advocate sr.58266 T.C.A.No.440 of 2019 nmi(co)nr 28/08/2019