With I.a v. The Assistant Commissioner Of Income Tax, Circle-Iii, Jamshedpur

IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) 565 of 2015withI.A.No. 1197 of 2015 with I.A. No. 1835 of 2015withI.A. No. 2420 of 2015 M/s Sidhi Vinayak Metcom Limited, a Company incorporated under Companies Act, 1956 carrying on business from 1J, Shanti Hari Awasan, 1, Inner Circle Road, Bistupur, Jamshedpur-831001, through one of its Director Shri Shivjee Singh, S/o Shri Ram Bahadur Singh, resident of Goshala Nala Road, P.O. & P.S. Jugshalai, Jamshedpur, District-East Singhbhum-831006 ……Petitioner Versus 1.Union of India through Ministry of Finance Department of Revenue, South Block, P.O.-New Delhi, P.S.- Parliament Street, New Delhi-1100012.Commissioner of Income Tax, having its office at 47, Circuit House Area, P.O. & P.S. Bistupur, Jamshedpur, District-East Singhbhum-8310013.The Deputy Commissioner of Income Tax, Circle-III, Jamshedpur, having its office at 2 Bagmati Road, P.O. & P.S. Sakchi, Jamshedpur, East Singhbhum 4.The Assistant Commissioner of Income Tax, Circle-III, Jamshedpur, having its office at 2 Bagmati Road, P.O. & P.S. Sakchi, Jamshedpur, East Singhbhum ......Respondents ------ CORAM:HON'BLE MR. JUSTICE D.N. PATELHON'BLE MR. JUSTICE RATNAKER BHENGRA ----- For the Petitioner:Mr. Ashok Kr JhaFor the Respondents:Mr. Deepak Roshan ----- 04/Dated 6th May, 2015Per D.N.Patel,J. 1.This petition is preferred mainly for the following reliefs: (i) Quashing the Notices dated 21.01.2015 issued by the Income Tax Department u/s 226(3) of the Income-Tax Act, 1961 (Hereinafter to be referred to be as 'The Act of 1961'(ii)To refund the money appropriated under the order of the attachment to the petitioner till the appeal before CIT (Appeals) is pending (iii) For quashing, withdrawing, rescinding and revoking of the impugned final reassessment order along with demand dated 25.03.2014 for the assessment year 2010-11 and 2011-12 and consequent demands (iv) To pass an interim order during the pendency of the instant writ application restraining the respondent authorities from giving any effect and/or further effect to the said impugned orders dated 25.3.2014 (order of reassessment) etc. Submissions made by counsel for the petitioner: 2.Counsel appearing for the petitioner submitted that initially order of assessment was passed for the Assessment years 2010-11 and 2011-12. Thereafter, Notice under section 148 of The Act of 1961 was issued for reassessment under Section 147 of the Act of 1961 for the aforesaid assessment years. Ultimately order of re-assessment for both theaforesaid years was passed on 25thMarch, 2014, which was challenged in appeal preferred before the Commissioner of Income Tax (Appeals) (Hereinafter to be referred to as 'CIT (Appeals)') and during pendency of the appeal, W.P.(T) 5557 of 2014 was preferred before this court challenging the order of re-assessment along with demand dated 25[th ]March, 2014 for the assessment year 2010-11 and 2011-12 and subsequent demands of Rs. 48,75,050/- and for Rs. 43,12,391/- by demand notice dated 25[th] June, 2014. Ultimately, a Division Bench of this court dismissed the writ petition vide order dated 20[th]January, 2015, finding no illegality on the part of the respondents because no application was preferred for stay against the recovery of demandalong with the memo of appeal filed before Commissioner of Income Tax (Appeals). 3.It is further submitted by the counsel for the petitioner that appeal was preferred before the C.I.T. (Appeals) by this petitioner against the order of reassessment in the month of April, 2014. Thereafter, stay application was preferred during the period from 21[st]January-February, 2015, upon which an order was passed by the CIT (Appeals) on 17[th ]February, 2015. Said order is at Annexure 2 to the I.A. No. 1197 of 2015, wherein it has been ordered by C.I.T. (Appeals) that so far as interest charged over and above the returned income under Section 234(B) of the Income Tax Act, 1961 is concerned, demand was stayed and for rest of the amount direction was given to the Assessing Officer to grant or suitably modify installments granted to the appellant for the payment of outstanding demands. In pursuance of this order of the CIT(Appeals), a letter dated 20[th]February, 2015 was written by this petitioner for granting installments for payment of the rest approximately Rs. 64,00,000/- as per order dated 17[th]February, 2015 of CIT (Appeals). 4.Respondents have shown undue haste to recover the amount sinceappeal against the order of reassessment is still pending before the CIT(Appeals):It is further submitted by counsel for the petitioner that ultimately 16 installments were granted, but, the Assistant Commissioner of Income Tax, Circle-3, Jamshedpur (Respondent No. 4) has passed an order ofattachment of the bank accounts and has also written letters to thecustomers/debtors of the petitioner. It is further submitted by counsel for the petitioner that as per the Circular dated 21st August, 1969 (CBDT'sInstruction No. 95), issued by the Central Board of Direct Taxes,regarding stay petition higher authority can interfere with the decision ofthe Assessing Officer when assessment is substantially higher e.g.assessment at twice the amount of the returned income tax and therefore,in the facts of the present case, the order of attachment of the AssessingOfficer should have been heldin abeyance till the decision of the appealbecause when the assessment is substantially higher or high pitched andgoing to cause genuine hardship to the assessee, stay should be given tothe order of attachment. Counsel for the petitioner placed reliance on thiscircular and submitted that department should have waited for sometimeinstead of attaching the bank accounts and writing letters to thecustomers/debtors of the petitioner and these illegal actions taken in hastehas caused substantial loss to the petitioner. Interlocutory Applicationspreferred in this writ petition with different prayers may kindly be allowedby this court. Submissions made on behalf of counsel for the respondents: 5.No observation may be made regarding the order ofreassessment dated 25th March, 2014: Counsel for the respondents submitted that nothing may be observed on the orders of the reassessment dated 25[th] March, 2014 passed by the respondents because appeal against the said order of reassessment is pending. 6.No undue haste shown for recovery by the respondentDepartment: It is submitted by counsel for the respondents that order of reassessment was passed on 25[th] March, 2014 and the petitioner preferred appeal before the CIT (Appeals) in the month of April, 2014. Department has not initiated any action to recover the reassessed tax for more than a considerable period. A writ petition, beingW.P.(T) No. 5557/2014, was preferred by thepetitioner, which has also been dismissed by this court vide order dated 20th January, 2015 as there was no stay application preferred by thispetitioner before the CIT( Appeals). Notice was issued under Section 226(3) of the Income Tax Act, 1961 for recovery on 21[st] January, 2015. Meanwhile, stay application was preferred by this petitioner before the CIT (Appeals) which has been decided vide order dated 17[th] February, 2015. A writ petition, beingW.P.(T) No. 5557/2014, was preferred by thepetitioner, which has also been dismissed by this court vide order dated 20th January, 2015 as there was no stay application preferred by thispetitioner before the CIT( Appeals). Notice was issued under Section 226(3) of the Income Tax Act, 1961 for recovery on 21[st] January, 2015. Meanwhile, stay application was preferred by this petitioner before the CIT (Appeals) which has been decided vide order dated 17[th] February, 2015. 7.A reasonable order on the application for stay filed before CIT (Appeals): It is further submitted by counsel for the respondents that the CIT (Appeals) has granted stay so far as demand of interest under Section 234 (B) of the Income Tax Act is concerned and for rest of the amount the matter was referred to the Assessing Officer for grant of suitable installments. It is submitted by the counsel for the respondents that Income Tax Department has scrupulously followed the order passed by this court as well as CIT Appeals and 16 installments, each of Rs.4,00,000/- were allowed to this petitioner for payment of approximately Rs.64,00,000/-. Leniency to the all possible extent has been shown by the respondents, but, the petitioner has failed to make the payment of the very first installment and therefore, a letter has been written by the respondent Assistant Commissioner of Income Tax, Circle-III, Jamshedpur that if the installments are not paid legal recourse will be taken to recover the outstanding amount assessed by the respondents. It is submitted by counsel for the respondents that no illegal action was initiated by the respondents, but, as this petitioner is failing at every stage, i.e. W.P.(T)-No. 5557 of 2014 filed by the petitioner was dismissed, nonfiling of stayapplication before CIT(Appeals), failure to make payment of the firstinstallment, now the respondents are left with no option but to take legalrecourse under the Income Tax Act of 1961 and therefore, the petition aswell as three Interlocutory Applications may not be entertained by thiscourt. 8.Having heard counsel for both sides and looking to the facts and circumstances of the case, we see no reason to entertain this writ petitionas well as of the three interlocutory applications mainly for the followingreasons: REASONS (I)Appeal against the order of reassessment was filed before theCIT (Appeals) without a stay application: Order of reassessment was passed by the respondents for the assessment year 2010-11 and 2011-12 vide order dated 25[th] March, 2014. Previous history prior to the order of reassessment is deliberately not mentioned in this order as it is not required for disposal of this writ petition as well as three interlocutory applications. This order of reassessment is challenged by this petitioner before the CIT (Appeals). Appeal has been preferred by the petitioner in the month of April, 2014 without any stay application. (II)During pendency of the aforesaid appeal, Writ Petitionpreferred against the order of reassessment was also dismissed: A writ petition, bearing W.P. (T) No. 5557 of 2014 was also preferred by the petitioner before this court challenging the order of reassessment dated 25[th] March, 2014. Thus, petitioner took one more chance before the writ court. This writ petition was dismissed vide order dated 20[th] January, 2015. (III)Notice under Section 226(3) of the Act of 1961 issued afterdismissal of the writ petition and before application for stay filedbefore CIT (Appeals): (II)During pendency of the aforesaid appeal, Writ Petitionpreferred against the order of reassessment was also dismissed: A writ petition, bearing W.P. (T) No. 5557 of 2014 was also preferred by the petitioner before this court challenging the order of reassessment dated 25[th] March, 2014. Thus, petitioner took one more chance before the writ court. This writ petition was dismissed vide order dated 20[th] January, 2015. (III)Notice under Section 226(3) of the Act of 1961 issued afterdismissal of the writ petition and before application for stay filedbefore CIT (Appeals): This petitioner preferred stay application before the CIT Appeals in-the month of JanuaryFebruary, 2015. Meanwhile, respondents issued a Notice under Section 226 (3) of the Income Tax Act, 1961 for recovery of the amount. This Notice was issued on 21st January, 2015 mainly for the reason that writ petition preferred by this petitioner was dismissed on 20thJanuary, 2015and there was no application for stay before the CIT Appeals. This behaviour of the respondent authorities has been criticized by the petitioner. It has been argued out by counsel for the petitioner thatrespondents should have waited till the appeal is decided by the CIT (Appeals) This contention of the petitioner is not accepted by this court mainlyfor the following reasons: (a)In the facts of the present case, order of re-assessment was passed on 25[th] March, 2014.passed on 25[th] March, 2014. (b)Appeal was preferred by this petitioner before CIT (Appeals) in the month of April, 2014in the month of April, 2014 (c )No stay application was preferred before CIT (Appeals), but W.P.(T) No. 5557 of 2014 was preferred by this petitioner before this court, which was dismissed on 20[th] January, 2015 by this court. It is clear that the Department has waited till 20[th] January, 2015 before sending Notice on 21[st] January, 2015. It appears that this conduct of the respondents is more than reasonable because the Order of Reassessment is dated 25[th] March, 2014 and Income Tax Department waited till 20[th] January, 2015, which is a period more than sufficient for the petitioner to either make the payment or to get a stay order, but, as stated herein above, there is no application praying for stay filed before the CIT (Appeals). It appears that respondent Department is absolutely reasonable in the action it has taken and no undue haste is shown on the part of the respondent department for recovery of the amount reassessed. (d)Thereafter, the department, for the first time, issued notice of recovery under Sub-section 3 of Section 226 of the Act of 1961 for recovery of the income tax reassessed. We see no reason to criticize the respondents for issuance ofthis Notice. On the contrary, if the department has not issued noticewe would have criticized such action because enough time haslapsed after order of reassessment was passed and therefore, thisnotice is rightly issued by the respondents for recovery in the light ofthe fact that there was no stay application filed by the petitionerbefore CIT (Appeals). The respondents has to recover thereassessed income tax. Thus, taking into consideration the aforesaid facts, we find nosubstance in the hue and cry made by the petitioners against theconduct of the respondents and we find no undue haste made bythe respondents for recovery of the income tax reassessed. On thecontrary, it is apparent that the department has waited for aconsiderable period (IV)Decisions and circular relied upon by the petitioner do not holdgood in the facts of the present case: In support of the contention that respondents should have waited till the appeal was decided by the CIT (Appeals), petitioner has placed reliance on the following decisions: (i)MAHINDRA & MAHINDRA LTD. versus UNION OF INDIA reported in 1992 (59) E.L.T. 505 (Bom.) Thus, taking into consideration the aforesaid facts, we find nosubstance in the hue and cry made by the petitioners against theconduct of the respondents and we find no undue haste made bythe respondents for recovery of the income tax reassessed. On thecontrary, it is apparent that the department has waited for aconsiderable period (IV)Decisions and circular relied upon by the petitioner do not holdgood in the facts of the present case: In support of the contention that respondents should have waited till the appeal was decided by the CIT (Appeals), petitioner has placed reliance on the following decisions: (i)MAHINDRA & MAHINDRA LTD. versus UNION OF INDIA reported in 1992 (59) E.L.T. 505 (Bom.) (ii)Rpg Enterprises Ltd. vs Deputy Commissioner of Income Tax by the Income Tax Appellate Tribunal, Mumbai vide order dated 14[th] July, 2000Tax by the Income Tax Appellate Tribunal, Mumbai vide order dated 14[th] July, 2000 (iii)W.P.(T) No. 6400 of 2014 (TATA STEEL LIMITED versus The STATE OF JHARKHAND AND ORS.) vide Order dated The STATE OF JHARKHAND AND ORS.) vide Order dated 27[th] February, 2015. In this context, this court finds that following facts make the present case different from the facts of the judgments upon which heavy reliance has been placed by the counsel for the petitioner: Order of the Reassessment was dated 25[th] March, 2014 andthough this order was challenged before the CIT (Appeals), no stay application was preferred till January/February, 2015though this order was challenged before the CIT (Appeals), no stay application was preferred till January/February, 2015 The Writ petition preferred by this petitioner bearing W.P.(T) No. 5557 of 2014 was dismissed by this court vide order dated 20[th ]January, 2015.5557 of 2014 was dismissed by this court vide order dated 20[th ]January, 2015. Meanwhile, the Notice dated 21[st] January, 2015 was issued under Section 226 (3) of the Income Tax Act, 1961 for recovery of the reassessed amount. under Section 226 (3) of the Income Tax Act, 1961 for recovery of the reassessed amount. Now, this petitioner preferred a stay application before CIT Appeals in the month of January-February, 2015, which is annexed with I.A. No. 1197 of 2015. Appeals in the month of January-February, 2015, which is annexed with I.A. No. 1197 of 2015. (V)Disposal of the application for Stay by the CIT(Appeals) with a very reasonable direction : The application for stay was decided by the CIT (Appeals) and demand of interest under Section 234-B of the Act of 1961 has beenstayedand for the rest of the amount request was made to the Assessing Officer to consider the prayer for suitable installments. This prayer for grant of suitable installments has also been accepted by the respondents. For payment of Rs. 64,00,000/-, 16 suitable installments of Rs. 4,00,000/- each was allowed. Therefore, in view of the total turn-over of the petitioner, which runs into more than Rs. 56,00,00,000/(Rupees 56 Crores) per annum (as it appears from the entries of the-financial year 201314), perhaps, lesser number of installments couldhave been allowed. As this is not the matter in dispute, we are notgoing into the leniency shown by the respondents, but suffice it to say that no undue haste has been displayed by the respondents withrespect to recovery of the amount of the income tax reassessed. Therespondents have followed scrupulously the orders passed by thisCourt in W.P.(S) No. 5557 of 2014 and CIT (Appeals) and evenallowed the petitioner stay as per his convenience, which is more thanreasonable. that no undue haste has been displayed by the respondents withrespect to recovery of the amount of the income tax reassessed. Therespondents have followed scrupulously the orders passed by thisCourt in W.P.(S) No. 5557 of 2014 and CIT (Appeals) and evenallowed the petitioner stay as per his convenience, which is more thanreasonable. (VI)Non-compliance of even such a reasonable order:Unfortunately, order of 16 installments, which is without a doubt very lenient in the facts of the present matter, has also not been complied with as it is submitted by counsel for the respondents that there is default in payment of the very first installment and therefore, a letter has been written by the Assistant Commissioner of Income Tax, Circle III, Jamshedpur that if this installments are not paid, they will initiate allpermissible legal actions under the provisions of the Income Tax Act of1961 and the Rules made thereunder, which are absolutely in accordance with law and can never be termed as excessive. At this stage, counsel for the petitioner submits that this petitioner will make payment of Rs. 4,00.000/- as monthly installments granted by the Assessing Officer. It would not be out of context to mention here that If the order was complied with earlier, i.e. if the petitioner had scrupulously complied with the order of installments granted by the respondents, there would not have been any occasion for the respondents to take actions, which were necessary for recovery of the reassessed amount of the income tax. 9.As a cumulative effect of the aforesaid facts and reasons, there is no substance in the writ petition, which is accordingly dismissed. 10.In the light of the dismissal of this writ petition, all the Interlocutory Applications also stand dismissed. (D.N.Patel, J.) (Ratnaker Bhengra, J.)