Wp/8034/2010 Of Ghodawat Energy Pvt. Ltd v. Deputy Commissioner Of Income Tax And Ors

1 IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO. 8034 OF 2010 Ghodavat Energy Pvt.Pvt. ... Petitioner. V/s. Deputy Commissioner of Income Taxand others.... Respondents. P.J.Pardiwala, Senior Advocate with Ms.Aasifa Khanfor the appellant. Vimal Gupta for the respondents. CORAM :V.C.DAGA AND R.M.SAVANT, JJ.DATED : 11[th] October 2010. P.C.: Perused petition.Heard rival parties. 2.In this petition, filed under Article 226 of the Constitution of India, the basic challenge is to the order dated 18[th]August, 2010 passed by respondent No.3- Commissioner of Income Tax (Central) on the application for stay of demand moved by the petitioners on the following backdrop: 2 Factual Backdrop: 3.The petitioner, on 30[th] October, 2002, filed its return of income for the assessment year 2002-2003 declaring a total income of Rs.1,72,61,382/-. The said return was processed under section 143(1) of the Income Tax Act, 1962 (“Act” for short). The Deputy Commissioner of Income Tax, Ichalkaranji Circle i.e. the Assessing Officer passed assessment order under section 143(3) of the Act determining the total income in the sum of Rs.9,20,88,777/-. The petitioner has already paid tax on the income so assessed. 4.A search action under section 132 of the Act was carried on 4[th] February, 2009. The Assessing Officer based on the information received issued notice under section 148 of the Act. In response to the said notice, the petitioner filed its objections against the re-opening of assessment which were rejected. 5.On 30[th] December, 2009, the Assessing Officer issued show cause notice to the petitioner seeking explanation regarding alleged undisclosed sales to the extent of Rs.43,11,71,955/-. 6.The petitioner objected to the aforesaid notice on 31[st] December, 2009 and furnished explanation in respect of the alleged undisclosed sales worked out by the Assessing Officer on the basis of production of capacity per machine. 3 7.The Assessing Officer, vide his order dated 31[st ]December, 2009, completed assessment under section 143(3) read with section 147 of the Act determining total income in the sum of Rs.52,73,59,020/- making an addition of Rs.43,11,71,955/- on account of alleged undisclosed sales. 8.Aggrieved by the aforesaid order dated 31[st ]December, 2009, the petitioner filed an appeal before the respondent No.5 on 25[th] January, 2010. On the same day, petitioner filed stay application before the respondent No.1, the Deputy Commissioner of Income Tax, Central Circle, Kolhapur praying for stay of demand till the disposal of appeal by the Commissioner (Appeals), which was dismissed by the respondent No.1, vide his order dated 15[th] March, 2010. 9.The petitioner filed another stay application before the respondent No.2, the Additional Commissioner of Income Tax, Central Circle on 8[th] April, 2010 with one more stay application before the respondent No.5, the Commissioner of Income Tax (Appeals) on 12[th] April, 2010 and prayed for stay of recovery of demand. The respondent No.2, vide his order dated, 27[th] April, 2010, granted partial relief to the petitioner directing payment of 40% of the demand in installments. 10.The petitioner, not satisfied with the aforesaid order, filed one more stay application before the respondent No.3, the Commissioner of Income Tax (Central) 4 on 28[th] May, 2010 with a prayer to stay the demand made by the Revenue. In the meanwhile, the respondent No.1, vide his letter dated 28[th] May, 2010, asked the petitioner to make payment of the installments for the months of May and June, 2010 in view of the order of the respondent No.2. 10.The petitioner, not satisfied with the aforesaid order, filed one more stay application before the respondent No.3, the Commissioner of Income Tax (Central) 4 on 28[th] May, 2010 with a prayer to stay the demand made by the Revenue. In the meanwhile, the respondent No.1, vide his letter dated 28[th] May, 2010, asked the petitioner to make payment of the installments for the months of May and June, 2010 in view of the order of the respondent No.2. 11.The respondent No.3, before whom the application for stay was pending, vide his order dated 18[th] August, 2010, reiterated partial relief already granted by the respondent No.2 directing the petitioner to make payment of 40% of the demand in installments. The petitioner filed another stay application before the respondent No.4- Director General of Income Tax (Central) on 25[th] August, 2010. In the meanwhile, on 20[th] September, 2010, notice under rule 2 to Schedule-II of the Act was issued to the petitioner calling upon it to make payment of the demand within fifteen days from the receipt of the notice. 12.The petitioner has neither complied with the order passed by respondent No.2 nor that of the respondent No.3; wherein a partial relief was granted to the petitioner permitting it to pay 40% of the demand in installments. 13.The petitioner has now invoked writ jurisdiction of this Court under Article 226 of the Constitution of India to challenge the order dated 31[st] December, 2009 passed under section 143 read with section 147 of the Act and order dated 15[th] March, 2010 passed by respondent No.1 rejecting the stay application of the petitioner followed 5 by the orders granting partial relief directing it to make payment of 40% of the demand in installments. In addition to these challenges, notice dated 20[th] September, 2010 issued under rule 2 of Schedule-II of the Act is also a subject matter of challenge in this petition. Submissions: 14.Mr.Pardiwala, learned senior counsel appearing for the petitioner urged that during the pendency of the appeal, no demand can be made or enforced. He further submits that the petitioner has prima facie goodcase on merits as such the appellate authority be directed to hear and dispose of the appeal with expeditious despatch and till then entire recovery of the demand should be stayed. 15.The submissions made by Mr.Pardiwala were strongly opposed by the learned counsel appearing for the respondents- Revenue contending that the authorities below have taken a reasonable view of the matter considering the facts and circumstances of the case and that this Court not being a Court of appeal should only examine the decision making process and should not entertain this writ petition unless impugned order granting partial relief is found to be perverse. Consideration: 16.Having heard both parties, having examined the order dated 18[th] August, 2010, whereunder partial relief has 6 been granted to the petitioner permitting it to make payment of 40% of the demand in installments, we are of the view that the view taken by the respondent Nos.2 and 3 is a reasonable and possible view looking to the facts and circumstances of the case, hence it needs no interference. 17.The order dated 18[th] August, 2010 considers the prayer made by the petitioner in the following words: Consideration: 16.Having heard both parties, having examined the order dated 18[th] August, 2010, whereunder partial relief has 6 been granted to the petitioner permitting it to make payment of 40% of the demand in installments, we are of the view that the view taken by the respondent Nos.2 and 3 is a reasonable and possible view looking to the facts and circumstances of the case, hence it needs no interference. 17.The order dated 18[th] August, 2010 considers the prayer made by the petitioner in the following words: “3.3The assessee has also relied upon CBDT instruction No.F.No.1/6/69- ITCC dated 21/08/1969. The assessee has contended that as per this instruction in case the assessed income is twice the returned income, the demand should be kept in abeyance till decision of appeal. However, the instruction relied upon by the assessee is not operational as it stands superceded by instruction no.1914 of CBDT dated 02/12/1993 and which is in force now. As per instruction no.1914, the A.O. can grant proper installments to the assessee but the demand cannot be stayed merely because appeal has been filed. 4.Considering the above findings, I cannot agree with the assessee’s request of keeping the entire demand in abeyance. However, it is noted that there is some force in the assessee’s arguments. Also, the demand is fairly large. Therefore,keeping in view the interest of thedepartment as well as the assessee, it ishereby directed that the assessee should pay Rs.13 cr. which is 40% of the demand in 8equal monthly installments of Rs.1.6 cr. permonth staring from August, 2010 to March,2011. The assessee should also actively pursue the appeal mater with CIT(A) and cooperate in the early decision of the appeal. In case the decision is not 7 received by 31/03/2011, the installment scheme shall be reviewed. 5.Subject to the above conditions, the assessee shall not be treated as an assessee in default so far as it continues to pay the installments regularly. In case of default in payment of installments, the assessee would be deemed to be an assessee in default and necessary action for recovery would be initiated by the A.O.” (Emphasis supplied) 18.The aforesaid view taken by the Commissioner of Income Tax (Central), Pune cannot be said to be a perverse view. As stated, the aforesaid view taken is a reasonable and possible view. 19.As a matter of fact, substantial relief has been granted in favour of the petitioner by staying the demand, pending appeal, to the extent of 60% with liberty to the petitioner to make payment of balance 40% in installments. It appears that in spite of grant of installments, the petitioner has not made any payment muchless part-payment to show its bonafides. The petitioner is insisting upon the absolute stay which, in our opinion, cannot be granted merely because the appeal is pending. Pendency of appeal cannot be a ground for stay of the recovery in toto. 20.At this juncture, it is relevant to mention that during the course of hearing, we called upon Mr.Pardiwala to indicate the extent of amount which his client can afford to deposit at this stage. In reply, Mr.Pardiwala 8 offered to make payment of negligible amount which we found it difficult to accept, especially, when the amount which is due and recoverable from the petitioner is running in crores. 20.At this juncture, it is relevant to mention that during the course of hearing, we called upon Mr.Pardiwala to indicate the extent of amount which his client can afford to deposit at this stage. In reply, Mr.Pardiwala 8 offered to make payment of negligible amount which we found it difficult to accept, especially, when the amount which is due and recoverable from the petitioner is running in crores. 21.In our view, this Court not being a court of appeal would not be justified in substituting its views in place of the impugned orders. No fault can be found with the decisions impugned or the decision making process. The impugned order is a reasoned order with application of mind. In the circumstances, neither prima facie case nor the balance of convenience lies in favour of the petitioner. In the totality of the facts, in our view, this is not a fit case wherein this Court should exercise its extra ordinary writ jurisdiction in favour of the petitioner, who has no inclination to show its bonafides. 22.The petition is liable to be dismissed being without any substance. However, it is made clear that we have considered the validity of the orders granting partial stay to the petitioner. We did not examine other contentions since they are subject matter of appeal pending before the Appellate Authority. The Appellate Authority shall decide appeal on its own merits. To that extent, all rival contentions are kept open. 23.In the result, petition is dismissed in limine in terms of this order with no order as to costs. (R.M.SAVANT, J.) (V.C.DAGA J.)