Wa/989/2019 Of K.p.shan v. The Principal Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI WEDNESDAY,THE 03RD DAY OF APRIL 2019 / 13TH CHAITHRA, 1941 WA.No. 989 of 2019 AGAINST THE JUDGMENT DATED 26-03-2019 IN WP(C) 9106/2019 of HIGHCOURT APPELLANT/PETITIONER: K.P.SHAN,AGED 36 YEARS, S/O.PUSHPAN, KILIYANPARAMBIL HOUSE, VELIYANNUR, THRISSUR-680021. BY ADVS.SRI.GEORGE SEBASTIANSRI.ARUN LUCKOSE ABRAHAM RESPONDENTS/RESPONDENTS: 1THE PRINCIPAL COMMISSIONER OF INCOME TAX,AYAKAR BHAVAN, THRISSUR-680001. 2THE JOINT COMMISSIONER OF INCOME TAX,RANGE-2, AYAKAR BHAVAN, THRISSUR-680001.RANGE-2, AYAKAR BHAVAN, THRISSUR-680001. 3THE COMMISSIONER OF INCOME TAX (APPEAL),THRISSUR-680001.THRISSUR-680001. OTHER PRESENT: SC(GOI), TAXES-SRI JOSE JOSEPH THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.04.2019,ALONG WITH WA Nos. 994 & 998/2019 THE COURT ON THE SAME DAY PASSEDTHE FOLLOWING: WA Nos.989, 994 & 998/2019 C.K. ABDUL REHIM, J. &R. NARAYANA PISHARADI, J. ------------------------------------------------- W.A. Nos. 989, 994 & 998 OF 2019------------------------------------------------- DATED THIS THE 3[rd] DAY OF APRIL, 2019 J U D G M E N T Abdul Rehim, J: The above writ appeals arise out of a common judgmentpassed by the learned Single Judge in W.P (C) Nos.9106/2019,9141/2019 & 9123/2019, dated 26[th] March 2019. The appellantsare the petitioners and the respondents are the respondents inthe writ petition. 2.The writ petitions were filed seeking direction to theCommissioner of Income Tax (Appeals), Thrissur to dispose ofthe statutory appeals and stay petitions filed by the appellantsand till then to keep in abeyance the steps initiated for recoveryof the income tax assessed. In all these cases, after filing of thestatutory appeals under Section 246 of the Income Tax Act, 1961(hereinafter referred to as 'the Act' for short) the appellantsapproached the Assessing Officer himself seeking stay of therecovery, pending disposal of the appeals. The Assessing Officerhad passed orders in all these cases directing for remittance of20% of the demand, as a pre-condition for consideration of such The writ petitions were filed seeking direction to the WA Nos.989, 994 & 998/2019 applications, relying on a Memorandum issued by the Board(F.No.404/72/93-ITCC dated 31-07-2017). The appellants havenot complied with the condition stipulated. Instead, they movedbefore the appellate authority under interim applications seekingstay of enforcement of the demand until disposal of the appeals.Since those applications were not considered, the appellantshave approached this court invoking the jurisdiction vestedunder Article 226 of the Constitution of India. 3.The learned Single Judge while dealing with the writpetitions found that, the prayers in the writ petition aresubstantially against the inaction of the appellate authority indisposing the stay petitions and the appeals. But on taking noteof the orders passed by the Assessing Authority insisting uponpayment of 20% of the amount as a pre-condition, it wasdirected that the appellants should deposit 10% of the amountunder demand, within 4 weeks from the date of the judgmentand shall produce proof before the appellate authority, forconsideration of the stay petitions. On such deposit the staypetitions were directed to be considered and disposed ofexpeditiously, preferably within 2 months from the date ofreceipt of a copy of the judgment. Further, direction was issuedto the appellate authority to consider the appeals also expeditiously, if the appellants had complied with the conditionsstipulated. The appellants are assailing the conditions stipulatedas above. expeditiously, if the appellants had complied with the conditionsstipulated. The appellants are assailing the conditions stipulatedas above. 4.Heard; counsel for the appellants and StandingCounsel appearing for the respondents. It is contended on behalfof the appellants that the insistence for deposit of 10% of thedemand as a pre-condition for consideration of the applicationfor interim stay, is quite unreasonable and unwarranted. It isargued that, such a direction will amount to usurping into thediscretionary powers vested on the appellate authority. It ispointed out that, power to grant stay is a discretionary powervested on the appellate authority, which has to be exercised bythat authority independently. Whether a condition need to beimposed for granting stay pending disposal of the appeals, is amatter which is coming within the discretionary powers of theAppellate Authority. Since the statute does not insist on any suchpre-condition for the purpose of consideration of the staypetition, the insistence made by the learned Judge is quiteunreasonable and unsustainable, is the contention. Questionwhether any condition need to be imposed for granting stay, is amatter which need to be decided based on the prima facie remitof the appeal, which has to be appreciated by the Appellate WA Nos.989, 994 & 998/2019 Authority, is the argument. 5.On the other hand, learned Standing Counselcontended that, the appeals were filed as early as on 02-01-2019and on the same day itself the appellants have moved before theAssessing Officer seeking stay of the demand by invokingSection 220 (6) of the Act. Eventhough the assessing authorityhad insisted upon deposit of 20% for consideration of the staypetition, the appellants have failed to comply with such astipulation. On the other hand, after lapse of more than 1 ½months the appellants have approached the Appellate Authorityunder the stay petitions. Therefore it is contended that thelearned Judge was perfectly justified in insisting upon paymentof 10% as a pre-condition, for directing consideration of the staypetitions, is the contention. 6.We take note of the fact that the power to grant stay ofrecovery pending disposal of the appeal is a power vested on theappellate authority, which is discretionary in nature and whichneed to be exercised based on prima facie satisfaction about themerits of the appeal. Since the statute does not stipulate anypre-condition for deposit of any portion of the demand forconsideration of the stay petition, it is not just and proper forthis court to insist upon any such pre-condition for consideration WA Nos.989, 994 & 998/2019 of the stay petitions. We also found that the non-compliance ofthe conditions stipulated by the Assessing Authority will not inany manner preclude the appellants from approaching theAppellate Authority seeking stay of the demand, pendingdisposal of the appeal. 7.Therefore we are inclined to allow the writ appeal andto modify the impugned judgments to the following terms; (i)There will be a direction to the 3[rd] respondent(Commissioner of Income Tax (Appeals) to consider and passappropriate orders on Ext.P7 stay petitions filed by theappellants seeking stay of the recovery, pending disposal of thestatutory appeals, at the earliest, after affording an opportunityof personal hearing to the appellants. At any rate, the staypetitions shall be disposed of within one month from the date ofreceipt of this judgment. (ii)Till the disposal of the stay petitions as directed above,the demands impugned in the statutory appeals shall be kept inabeyance. Sd/-R. NARAYANA PISHARADI, JUDGE.JUDGE