Wp/812/2020 Of Mayur Kanjibhai Shah v. The Income Tax Officer-25(3)(1) And 2 Ors

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.812 OF 2020 Mayur Kanjibhai ShahV/s. … Petitioner The Income Tax Officer – 25(3)(1) and ors. … Respondents--- Mr.D.H.Jain with Ms.Radha Halbe, Advocate for the Appellant.Mr.Sham Walve with Mr.Pritish Chatterji, Advocate for theRespondents. --- CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. DATE : MARCH 13, 2020 P.C.:- 1.Heard Mr.D.H.Jain, learned counsel for the petitioner; andMr.Sham Walve, learned standing counsel, Revenue for therespondents. 2.This petition filed under Article 226 of the Constitutionof India assails the legality and validity of the order dated30[th] January, 2020 passed by respondent No.1 rejecting theapplication of the petitioner for stay of demand as well asorder dated 17[th] February, 2020 passed by respondent No.2,also rejecting the stay application of the petitioner and furtherseeks a direction to the respondents to keep in abeyancerecovery of demand till disposal of the appeal by theCommissioner of Income Tax (Appeals). 3.From the materials placed on record, we find thatpetitioner is an assessee under the Income Tax Act, 1961 Priya Soparkar 2 8 wp 812-20-o (briefly “the Act” hereinafter) within the jurisdiction ofrespondent No.1. 4.Petitioner is running a proprietorship concern called“M/s Evergreen Enterprises”. For the assessment year 2012-13, petitioner had earlier filed his return of income on 28[th]September, 2012 declaring total income of Rs.5,05,981.00,which was processed under Section 143(3) of the Act.Subsequently, it was decided to reopen the assessmentunder Section 147 of the Act, for which notice under Section148 was issued. Following assessment proceedings on re-opening culminating in the assessment order dated 21[st]December, 2019 passed under Section 143(3) of the Act readwith Section 147 of the Act, Assessing Officer held that anamount of Rs.3.25 crores was extended by the petitioner toM/s Evergreen Enterprises / Shri Nilesh Bharani which wastreated as unexplained money under Section 69A of the Actand was added to the total income of the petitioner. 5.Pursuant to the order of assessment, respondent No.1as the Assessing Officer issued notice on demand dated 21[st]December, 2019 to the petitioner under Section 156 of theAct calling upon him to pay an amount of Rs.2,17,76,850.00within the period prescribed. 6.It is seen that against the order of assessment petitionerpreferred appeal before the Commissioner of Income Tax(Appeals)-37, Mumbai on 21[st]January, 2020 bearingacknowledgment No.294193161210120. Priya Soparkar 3 8 wp 812-20-o 7.Simultaneously, petitioner filed an application beforerespondent No.1 on 28[th] January, 2020 for stay of demandwhich was received in the office of respondent No.1 on 29[th]January, 2020. By the order dated 30[th] January, 2020, passedunder Section 220(6) of the Act, respondent No.1 rejectedthe stay application giving liberty to the petitioner to pay20% of the demand in which event it was stated that thebalance of the outstanding dues would be kept in abeyance. 8.Petitioner preferred further application for stay beforerespondent No.2 on 5[th] February, 2020, received on 7[th]February, 2020. By the order dated 17[th] February, 2020,respondent No.2 rejected the prayer of the petitioner forcomplete stay of demand. However, petitioner was givenliberty to pay the demand in installments as per the schedulementioned in the said order. 9.Aggrieved, the present writ petition has been filedseeking the reliefs as indicated above. 8.Petitioner preferred further application for stay beforerespondent No.2 on 5[th] February, 2020, received on 7[th]February, 2020. By the order dated 17[th] February, 2020,respondent No.2 rejected the prayer of the petitioner forcomplete stay of demand. However, petitioner was givenliberty to pay the demand in installments as per the schedulementioned in the said order. 9.Aggrieved, the present writ petition has been filedseeking the reliefs as indicated above. 10.Respondents have filed a common affidavit. In theaffidavit respondents have justified reopening of assessmentin the case of the petitioner for the assessment year 2012-13and has contended that the assessment order uponreopening suffers from no error or infirmity. Regarding thedecision of respondent No. 2 directing the petitioner to payoutstanding dues as per installments, it is stated that thesame reflects due application of mind by respondent No.2 tothe facts and circumstances of the case and it cannot be said Priya Soparkar 4 8 wp 812-20-o that respondent No.2 had acted arbitrarily. In paragraph No.17of the affidavit, it is stated that summons under Section 131of the Act was issued to Shri Nilesh Bharani, but Shri NileshBharani instead had sent a copy of letter dated 14[th] October,2014 addressed to the Director of the Income Tax-2, Mumbai. 11.We have heard rival submissions as well as consideredthe pleadings on record. Only to satisfy ourselves as towhether a prima facie case had been made out by thepetitioner seeking stay, we have given our attention to theassessment order dated 21[st] December, 2019. We find thatthe assessment order on reopening has been made primarilyon the basis of certain entries (in coded language) made inthe diary recovered from the premises of Shri Nilesh Bharaniin the course of search and seizure under Section 132 of theAct. The finding that the petitioner had lent/provided cashamount of Rs.3.25 crores to M/s Evergreen Enterprises/ShriNilesh Bharani was also reached on the statement made byShri Nilesh Bharani. From the assessment order, we do notfind that Shri Nilesh Bharani was subjected to any cross-examination by the petitioner; rather in the affidavit of therespondents it is stated that Shri Nilesh Bharani has retractedhis statement made. Prima facie on the basis of codedlanguage diary entries and retracted uncorroboratedstatement of an alleged beneficiary, perhaps, the additionsmade by the Assessing Officer is highly questionable. In suchcircumstances, we feel that instead of taking a mechanicalapproach by directing the petitioner to pay 20% of the taxdemand or providing installments, respondent Nos.1 and 2 Priya Soparkar 5 8 wp 812-20-o ought to have considered the prima facie case, balance ofconvenience and financial hardship, if any, of the petitioner.From the impugned order, we do not find that respondentshad alluded to the above aspects. That apart, petitioner’sappeal before the Commissioner of Income Tax (Appeals) ispending for consideration. In such circumstances, we are ofthe view that it would be in the interest of justice if thedemand raised is kept in abeyance till disposal of the appealby the Commissioner of Income Tax (Appeals). 12.Ordered accordingly. 13.Let the appeal be decided by the Commissioner ofIncome-Tax (Appeals) within a period of four months fromthe date of receipt of an authenticated copy of the order. Tilldisposal of the appeal within the said period, notice ofdemand dated 21[st] December, 2019 pursuant to assessmentorder for the assessment year 2012-13 shall be kept inabeyance. 14.Before parting with the record, we make it clear that thediscussions and observations made in this order are only inthe context of considering the prayer for stay of thepetitioner and that the same should not in any manner betreated as final observations or findings on merit. 12.Ordered accordingly. 13.Let the appeal be decided by the Commissioner ofIncome-Tax (Appeals) within a period of four months fromthe date of receipt of an authenticated copy of the order. Tilldisposal of the appeal within the said period, notice ofdemand dated 21[st] December, 2019 pursuant to assessmentorder for the assessment year 2012-13 shall be kept inabeyance. 14.Before parting with the record, we make it clear that thediscussions and observations made in this order are only inthe context of considering the prayer for stay of thepetitioner and that the same should not in any manner betreated as final observations or findings on merit. 15.Writ Petition is disposed of. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.)