Urban Improvement Trust v. Assistant Commissioner Of Income-Tax And Ors

S.B.CIVIL WRIT PETITION NO. 1169/2012 Urban Improvement Trust Vs. Asstt. Commissioner of Income Tax & Ors. Date of Order :: 10.2.2012 HON'BLE MR. JUSTICE GOVIND MATHUR Mr.Suresh Ojha, for the petitioner/s.Mr. K.K. Bissa, for the respondent/s. The petitioner, Urban Improvement Trust, Sri Ganganagarpreferred an application as per Section 154 of the Income TaxAct, 1961 before the Assistant Commissioner of Income Tax,Circle, Sri Ganganagar on 12.12.2011. On 16.12.2011, theAssistant Commissioner issued a rectified demand notice for asum of Rs. 1,04,02,140/-. An application seeking stay of demand was preferred bythe petitioner before the Assessing Officer on 09.1.2012. On23.1.2012, the respondents Assistant Commissioner passed anorder on the application aforesaid, that reads as under: “I have carefully gone through the contents ofyour letter dated 09.1.2012. The issue raisedby you in the said letter have already beendealt with at length while passing the assessment order in your case for A.Y. 2008-09. It is pertinent to mention here that merelyfiling an appeal against the assessment orderbefore the appellate authority is not sufficientreason to stay the recovery of demand.Moreover, the Ld. CIT(A) has alreadyadjudicated the issues in favour of thedepartment. The UIT has sufficient funds forpayment of demand as is apparent from thenews published in dated 16.01.2012. As perthe news appearing in the said paper, the UIThas earned Rs. 2 Crore on account of auctionof plots in model town and as per newsappearing in dated 17.01.2012, the UIT hasfurther earned Rs. 4.50 Crore on account ofauction of plots in Model Town. Thus, thereare sufficient funds with UIT for payment ofoutstanding demand. In view of these facts,you are requested to make 50% payment ofoutstanding demand by 27.01.2012 positivelyand show the challan in lieu of payment on27.01.2012 so that the balance demand maybe considered to be paid installment. It mayalso be mentioned here that if 50% demand isnot paid by 27.01.2012, coercive action forrecovery of demand will be taken against you.” Being aggrieved by this order instant petition for writ ispreferred. S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. The submission of learned counsel for the petitioner is thatthe Assistant Commissioner while passing the order dated23.1.2012 has not taken into consideration the law laid down by the Hon'ble Supreme Court, this Court and also the mandatorycirculars issued by the department of Income Tax itself,reference of which is given in para 3 of the appeal memo, thatreads as under: “The Board desire that the above observationsmay be brought to the notice of all theIncome-tax Officers working under you andthe powers of stay of recovery in such casesup to the stage of first appeal may beexercised by the Inspecting AssistantCommissioner/Commissioner of Income-tax. As the Department was not following theabove mentioned instructions and so thematter was presented before the honourableRajsthan High Court in the case of His LateHighness Maharaja Shri Bhagwat Singhji ofMewar Vs. Income-tax appellate Tribunal &Ors. Reported in (1996) 133 CTR at page 97.In this matter the honourable High Court haveheld that proposition cannot be disputed thatthe circulars issued by the CBDT are bindingon the authorities exercising powers under thetaxing statute and have sufficient force of law.From the perusal of the Instruction No.96 F.No. 1/6/69-ITCC dated 21[st] August, 1969 it is S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. As the Department was not following theabove mentioned instructions and so thematter was presented before the honourableRajsthan High Court in the case of His LateHighness Maharaja Shri Bhagwat Singhji ofMewar Vs. Income-tax appellate Tribunal &Ors. Reported in (1996) 133 CTR at page 97.In this matter the honourable High Court haveheld that proposition cannot be disputed thatthe circulars issued by the CBDT are bindingon the authorities exercising powers under thetaxing statute and have sufficient force of law.From the perusal of the Instruction No.96 F.No. 1/6/69-ITCC dated 21[st] August, 1969 it is S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. clear that where the income determined onassessment was substantially higher than thereturned income, twice the latter amount ormore, the collection of the tax in disputeshould be held in abeyance till the decision ofthe appeals. It cannot be disputed in thepresent case that the income of the petitionerwhich was determined by the authority wasmuch more than the twice then the returnedincome. Here the question of CBDT InstructionNo.1914 dated 2[nd] December, 1993 mayarise which specifically states that it is insupersession of all earlier instruction. But inthe case of the assessee these instructions arenot applicable. The case of His Late HighnessMaharaja Shri Bhagwat Singh ji of Mewar(Supra) is decided in 1996 i.e. after the issueof the instruction No.1914 dated 2[nd] December1993 and so the decision of jurisdictional HighCourt is still applicable. Otherwise also theview of the assessee is supported by therecent judgment of the honourable Delhi HighCourt in the case of Soul Vs. DeputyCommissioner of Income reported in (2010)323 ITR 305 in which the honourable HighCourt in Para 9 of the order have observed asunder:- “9. Having considered the argumentsadvanced by the learned counsel for theparties, we are of the view that although S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. 5 Instruction No.1914 of 1993 specificallystates that it is in supersession of allearlier instructions, the position obtainedafter the decision of this Court inValvoline Cummins Ltd. Vs. Dy. CIT &Ors. (2008) 271 CTR (Del) 292 is notaltered at all. This is so because paraNo.2(a) which speaks of responsibilityspecifically indicates that it shall be theresponsibility of the AO and the TRO tocollect every demand that has beenraised “except the following”, whichincludes “(d) demand stayed inaccordance with the pars B and Cbelow”. Para B relates to stay petitions.As extracted above, sub-cl. (iii) of paraB clearly indicates that a higher/superiorauthority could interfere with thedecision of the AO/TRO only inexceptionalcircumstances.Theexceptional circumstances have beeindicated as - “where the assessmentorder appears to be unreasonably highpitched or where genuine hardship islikely to be caused to the assessee”. Thevery question as to what wouldconstitute the assessment order asbeing reasonably high pitched inconsideration under the said InstructionNo.96 and, there, it has been noted byway of illustration that assessment attwice the amount of the returnedincome would amount to being S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. 6 substantially higher or high pitched. Inthe case before this Court in ValvolineCummins Ltd. (Supra) the assessee'sincome was about eight (8) times thereturned income. This Court was of theview that was high pitched. In thepresent case, the assessed income isapproximately 74 time the returnedincome and obviously, this would fallwithin the expression “unreasonablyhigh pitched.” S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. 6 substantially higher or high pitched. Inthe case before this Court in ValvolineCummins Ltd. (Supra) the assessee'sincome was about eight (8) times thereturned income. This Court was of theview that was high pitched. In thepresent case, the assessed income isapproximately 74 time the returnedincome and obviously, this would fallwithin the expression “unreasonablyhigh pitched.” From the above you will please see that theCentral Board of Direct Taxes have used theword 'should be held in abeyance' and so itautomatic that when the assessed income ismore then double of the returned income thenthe demand should be stayed till the decisionof appeal.” From perusal of the order impugned, it is apparent thatwhile deciding the stay application, the Assistant Collector hasnot taken into consideration the judgment and circulars cited bythe petitioner. Having considered all the facts of the case, I deem itappropriate to quash the order dated 23.1.2012 and furtherremanding the matter to the Assistant Collector of Income Tax,Circle-Sri Ganganagar to consider the stay application submittedby the petitioner afresh by providing an opportunity of hearing to S.B. CIVIL WRIT PETITION NO.1169/2012Urban Improvement Trust Vs. Assistant Commissioner of Income-tax and Ors. 7 the petitioner and also by taking into consideration judgmentsand circulars cited by the petitioner. Such an order is requiredto be passed on or before 21.2.2012. The petitioner through itsrepresentatives shall report to the Assistant Commissioner,Income Tax, Sri Ganganagar for the purpose aforesaid on15.2.2012. The petition for writ is disposed of accordingly. (GOVIND MATHUR), J. ns.