Wp/6753/2005 Of Sri Chaitanya Educational Committee v. The Commissioner Of Income Tax

THE HON’BLE MR. JUSTICE B. SUDERSHAN REDDY AND THE HON’BLE MR. JUSTICE S. ANANDA REDDY WRIT PETITION NO. 6753 OF 2005 DATED: 09-11-2005 BetweenSri Chaitanya Educational Committee, rep. byPresident Sri Dr. B. Satyanarayana Rao,S/o Nagabhushanam, Aged about 57 years,Chaitanya Nagar, Tadigadapa, Poranki,Krishna District.…………… PETITIONERAndThe Commissioner of Income Tax,Central Circle, Hyderabad and another.……………… RESPONDENTS THE HON’BLE MR. JUSTICE B. SUDERSHAN REDDY AND THE HON’BLE MR. JUSTICE S. ANANDA REDDY WRIT PETITION NO. 6753 OF 2005 (ON BEING MENTIONED) ORDER:(per Sri B. Sudershan Reddy, J) The writ petition is filed by the petitioner invoking the extraordinary jurisdiction of thisCourt under Article 226 of the Constitution of India with a prayer to issue a writ ofMandamus declaring the action of the respondents in attaching the bank accountsand initiating recovery proceedings when the appeal is pending before the appellateTribunal filed against the orders of the Commissioner of Income Tax, the 1[st]respondent herein in CIT (C)/Hyd/Chaitanya group dated 26-07-2004 as illegal,arbitrary, unconstitutional and without any power and authority of jurisdiction. Thepetitioner accordingly prayed for issuance of consequential blanket directions to therespondents “not to take any coercive steps and not to collect taxes till thefinalization of the above appeal before the appellate Tribunal……”. On the strength of the application for registration under Section 12 A of the IncomeTax Act, 1961 (for short ‘the Act’), the Commissioner of Income Tax, Visakhapatnamvide proceedings dated 14-08-1992 registered the petitioner – Society as charitabletrust. The fact remains that the Department conducted search and seizer operationson 02-07-2002 and initiated proceedings under Chapter XIV B of the Act. Thereafter,the 1[st] respondent issued show cause notice dated 15-10-2003 proposing towithdraw the registration under Section 12 A of the Act and requested the petitioner– Society to file its objections within ten days. On receipt of the said show causenotice, the petitioner claims to have submitted an explanation inter alia contendingthat the 1[st] respondent herein has no power either to withdraw or cancel theregistration. The 1[st] respondent passed orders dated 26-07-2004 withdrawing thebenefit under Sections 11 and 12 of the Act. The petitioner filed appeal before theIncome Tax Appellate Tribunal on 24-09-2004 which is stated to be still pendingunder consideration of the appellate Tribunal. The present writ petition has been filed on the ground that the 2[nd] respondentpassed orders under Section 158 BC of the Act on 30-07-2004 withdrawing thebenefits under Sections 11 and 12 of the Act basing on the orders of the 1[st]respondent dated 26-07-2004 and assessed the income of the Society and levied huge tax. The actionof the 2[nd] respondent in making such an assessment and imposing tax, according tothe petitioner, is illegal and unconstitutional. Be it noted, the proceedings of the 2[nd] respondent in making assessment andimposing tax as against the petitioner is not the subject matter of the writ petition.Evidently, it is also not the subject matter of appeal before the appellate Tribunal. Even that being the situation, this Court disposed of the writ petition filed by thepetitioner in the following manner: “The only grievance made in this Writ Petition is that the petitionerfiled an appeal before the Income Tax Appellate Tribunal against the order passed by the 1[st] respondent – Commissioner ofIncome Tax, Hyderabad, dated 26-07-2004, and the same ispending. In the meanwhile, he is resorted to coercive steps, andtherefore, he seeks appropriate direction. Be it noted, the proceedings of the 2[nd] respondent in making assessment andimposing tax as against the petitioner is not the subject matter of the writ petition.Evidently, it is also not the subject matter of appeal before the appellate Tribunal. Even that being the situation, this Court disposed of the writ petition filed by thepetitioner in the following manner: “The only grievance made in this Writ Petition is that the petitionerfiled an appeal before the Income Tax Appellate Tribunal against the order passed by the 1[st] respondent – Commissioner ofIncome Tax, Hyderabad, dated 26-07-2004, and the same ispending. In the meanwhile, he is resorted to coercive steps, andtherefore, he seeks appropriate direction. 2. After hearing the learned counsel for the petitioner and learnedstanding counsel, we find it appropriate to direct the Income TaxAppellate Tribunal to dispose of the appeal filed by the petitionerwithin three weeks from the date of receipt of a copy of this order.Till such time, the respondents shall not resort to any coercivesteps”. It is evident from the order itself that such an order resulting in far reachingconsequences has been passed without hearing the other side. No rule nisi hasbeen issued nor even notice before admission has been ordered. We fail toappreciate as to how the petitioner could have obtained such a blanket orderrestraining the respondents from taking any coercive steps for realization of the taxdue and payable by it pursuant to the order of assessment made by the 2[nd]respondent which is not the subject matter of writ petition nor the subject matter ofappeal before the appellate Tribunal. In the absence of challenge to the orderspassed by the 2[nd] respondent, this Court could not have passed orders restrainingthe respondents from taking any coercive steps. For the aforesaid reasons, we find it difficult to sustain the order which wasobviously passed under a mistaken impression, perhaps based on the statementmade across the Bar during the course of hearing of the writ petition. The mistake isrequired to be corrected by this Court. In the affidavit filed by the Department, it is now explained that the petitioner is inarrears of tax of more than Rs. 55 Crores apart from the accrued interest. Obviously,this Court never intended to interdict any of the proceedings of the 2[nd] respondent. For the aforesaid reasons, we consider it appropriate to modify the order dated 30-03-2005 made in the writ petition. We fail to appreciate as to how the Tribunal couldnot deliver its judgment even though the arguments were heard and completed asearly as on 05-05-2005 as stated in the affidavit filed in support of the application.Therefore, the Income Tax Appellate Tribunal, Hyderabad Bench ‘B’ is directed topronounce its verdict in I.T.A No. 887/Hyd/2004 on or before 07-12-2005 without fail. The petitioner is not entitled for grant of any further relief. The petitioner shall nothave the benefit of that portion of the order passed in the writ petition directing therespondents not to take coercive steps against it. The order is accordingly modified. The Writ Petition is accordingly disposed of. (B. Sudershan Reddy, J) 09..11..2005 (S. Ananda Reddy, J) ks Note: Registry is directed to communicate this Order to the Income Tax Appellate Tribunal, HyderabadBench ‘B’, apart from the other respondents by tomorrow.B/O