Wp/7296/2011 Of Andhra Pradesh Housing Board v. The Additional Commissioner Of Income Tax

THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE P. DURGA PRASADWRIT PETITION No.7296 of 2011 ORDER: (per Hon’ble Sri Justice Goda Raghuram) Heard Sri S.Ravi, learned Senior Counsel instructed by Sri Ch.Pushyam Kiran, learned Counsel for the petitioner-Andhra PradeshHousing Board and Sri J.V.Prasad, learned Senior Standing Counselfor the Income Tax Department-respondent Nos.1 and 2. The Writ Petition is directed against the order of the Income TaxAppellate Tribunal (ITAT), Hyderabad Bench ‘A’ dated 15.03.2011,whereby and whereunder the applications filed by the petitionerseeking extension of stay of recovery of the income tax dues for theassessment years 2005-06 and 2006-07 in ITA.Nos.44 & 45/Hyd/10were rejected. The petitioner preferred the appeals before the ITAT againstassessment orders for the assessment years 2005-06 and 2006-07. Inexercise of powers conferred under the 1[st] and 2[nd] provisos to Section254 (2A) of the Income Tax Act, 1961 (for short ‘the Act’), the ITAT byits order dated 05.02.2010 granted stay of the tax demand for theassessment years in question, for a period of 180 days. The StateGovernment had on the anvil amendments to the A.P. Housing BoardAct, 1961, to incorporate a provision for vesting of the surplus funds ofthe A.P. Housing Board in the State Government. The amendmentwas eventually incorporated by gazette notification dated 07.08.2010of A.P. Act No.12 of 2010. The petitioner qua the above amendment asserted immunity fromtaxation claiming benefit under the provisions of Article 289 of the Constitution of India. The ITAT is now required to consider the claimof the petitioner qua the provisions of Article 289 of the Constitution ofIndia. It is represented by Sri S.Ravi, learned Senior Counsel for thepetitioner, that the learned ITAT has concluded hearing in ITA.Nos.44& 45/Hyd/10 and pronouncement of the judgment is awaited. Since the earlier order of stay dated 05.02.2010 for a period of180 days had expired, the Revenue has attached the bank accounts ofthe petitioner. The petitioner therefore filed stay application Nos.28 &29/Hyd/11 in its two appeals seeking further grant of stay for a periodof 180 days. These were rejected by the order impugned, by the ITAT. The reason recorded by the ITAT is that the assessee/petitionerherein had taken several adjournments on 04.03.2010, 05.10.2010and 07.03.2010, for hearing of the appeals and therefore non-disposalof the appeals is attributable to the assessee and in the circumstancesexercise of discretion for granting stay is declined. On a true and fair construction of the 1[st] and 2[nd] provisos toSection 254(2-A) of the Act, the Appellate Tribunal may, afterconsidering the merits of an application by the assessee, pass anorder of stay in any proceedings under sub-section (1) of Section 253,for a period not exceeding 180 days from the date of such order andthe Appellate Tribunal shall dispose of the appeal within the saidperiod of stay specified in the said order (first proviso). The secondproviso is to the effect that where such appeal is not so disposed ofwithin the period of stay as specified in the first proviso, the AppellateTribunal may, on an application made by the assessee and on beingsatisfied that the delay in disposing of the appeal is not attributable tothe assessee, extend the period of stay, or pass an order of stay for afurther period or periods as it thinks fit; so, however that the aggregateof the period originally allowed and the period or periods so extendedor allowed shall not, in any case, exceed 365 days. Sri S.Ravi, learned Senior Counsel for the petitioner, contendsthat the petitioner-assessee had sought adjournments for the singularreason that the Amendment by the State legislature of the provisions ofthe A.P. Housing Board Act, 1961 were in active contemplation;eventually the amendments were incorporated by Act No.12 of 2010. In the circumstances, the order of the Tribunal declining stay on theground that the delay in non-disposal of the appeal was attributable tothe assessee is an irrational exercise of discretion. The petitioner-assessee is an instrumentality of the State. It is not the case of therevenue that recovery of the Income Tax dues would be difficult incase stay is granted. Sri J.V.Prasad, learned Senior Standing Counsel for the IncomeTax Department, does not content that the petitioner-assessee hadsought adjournments in the appeals on irrelevant or casual grounds;other than processing of the Amendments, by the State legislature. In the totality of the circumstances, this Court is of the view thatthe order of the ITAT, impugned herein, declining grant of stay on theapplications of the petitioner warrant interference and the petitioner isentitled to grant of stay particularly as it is represented that the learnedITAT has concluded hearing of the Appeals and is about to pronouncejudgment in the appeals preferred by the petitioner. Accordingly, there shall be a direction to the respondents not toemploy coercive measures for recovery of income tax dues for theassessment years 2005-06 and 2006-07 from the Petitioner till thepronouncement of the judgments/orders by the ITAT in ITA.Nos.44 &45/Hyd/10 or for a period of 180 days whichever is earlier. The Writ Petition is allowed as above and at the admissionstage, after hearing Sri S.Ravi, learned Senior Counsel for thepetitioner, and Sri J.V. Prasad, learned Senior Standing Counsel for the Income Tax Department. There shall be no order as to costs. GODA RAGHURAM,JP.DURGA PRASAD,J Date : 11.04.2011Note : Furnish copy by 13.04.2011.b/ousd/ndr THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE P. DURGA PRASAD WRIT PETITION No.7296 of 2011(per Hon’ble Sri Justice Goda Raghuram) Date : 11.04.2011