Wp/8665/2013 Of Apex Encon Projects Private Limited v. The Joint Commissioner Of Income-Tax

THE HON’BLE Ms. JUSTICE G.ROHINIAnd THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR WRIT PETITION No.8665 OF 2013 Dated: 22.03.2013 Between: Apex Encon Projects Private Limited .. Petitioner And The Joint Commissioner of Income-Taxand another .. Respondents THE HON’BLE Ms. JUSTICE G.ROHINIAndTHE HON’BLE SRI JUSTICE C.PRAVEEN KUMARWRIT PETITION No.8665 OF 2013 ORDER: (Per Hon’ble Ms. Justice G.Rohini) This writ petition is filed aggrieved by the order of the 1[st] respondent dated 15.03.2013 whereunder the petitioner’s requestfor stay of collection of tax demanded for the Assessment Year 2011-2012 till the appeal pending before the 2[nd] respondent is decided, hasbeen rejected. We have heard the learned senior counsel Sri A.V.KrishnaKoundinya, appearing for the petitioner as well as Sri S.R.Ashok, thelearned senior counsel appearing for the respondents. The fact that under Sub-Section 6 of Section 220 of the IncomeTax Act, 1961 (for short, ‘the Act’), the assessing officer is empoweredto grant stay of recovery of the amounts in dispute pending the appealunder Section 246 or Section 246A of the Act is not in dispute. Admittedly, this is a case where the petitioner preferred anappeal before the 2[nd] respondent against the original assessmentorder passed by the 1[st] respondent dated 08.02.2013. The fact thatthe said appeal is pending before the 2[nd] respondent is also not indispute. It is submitted by the learned counsel for the petitioner that theimpugned order was passed by the 1[st] respondent without assigningany reasons on a wholly erroneous view of law and fact and withoutexercising the discretion judiciously. It is also contended that theimpugned order is a predetermined one and in fact a notice under Section 226 (3) was already issued to the petitioner’s Banker on14.3.2013 itself. The further contention is that as per the Circularsissued by the Central Board of Direct Taxes (for short, CBDT),payment of disputed tax cannot be insisted till the disposal of the firstappeal. A perusal of the impugned order shows that the request of thepetitioner for stay of collection was rejected merely on the ground thatthe Instruction No.96 of CBDT, dated 21.8.1969 relied upon by thepetitioner was superseded by Instruction No.1914, dated 2.12.1993which among other circumstances states that mere filing of an appealagainst the assessment order will not be a sufficient reason to stay therecovery of demand. It was also observed in the impugned order thatas the assessment order came to be passed in terms of the libertygranted by this Court while granting interim stay in a writ petition filedby the petitioner himself, the assessee is liable to pay the tax levied. Having given our thoughtful consideration to the submissionsmade by the learned counsel for both the parties and the materialavailable on record, it appears to us that the reasons assigned by the1[st] respondent while rejecting the petitioner’s request for stay ofcollection of the tax demanded are untenable and do not stand thejudicial scrutiny. The first respondent is exercising the discretionary powerconferred under Section 220 (6) of the Income-tax Act, 1961 whileconsidering the application for stay pending appeal under Section 246or Section 246A before the appellate authority. Therefore, it isobligatory on his part to give valid reasons while passing an orderparticularly when the assessee’s request is rejected. It may be true that Instruction No.96 of CBDT is superseded,however according to the learned counsel for the petitioner even asper Instruction No.1914 which is in operation as of today there is nochange in the position as regards stay pending first appeals. It is alsothe specific case of the petitioner that the mere fact that this Courtwhile granting interim order in W.P.No.34226 of 2012 left it open to The first respondent is exercising the discretionary powerconferred under Section 220 (6) of the Income-tax Act, 1961 whileconsidering the application for stay pending appeal under Section 246or Section 246A before the appellate authority. Therefore, it isobligatory on his part to give valid reasons while passing an orderparticularly when the assessee’s request is rejected. It may be true that Instruction No.96 of CBDT is superseded,however according to the learned counsel for the petitioner even asper Instruction No.1914 which is in operation as of today there is nochange in the position as regards stay pending first appeals. It is alsothe specific case of the petitioner that the mere fact that this Courtwhile granting interim order in W.P.No.34226 of 2012 left it open to proceed with regular assessment, does not in any way preclude the 1[st]respondent to exercise his discretionary power conferred underSection 220 (6) of the Income-tax Act, 1961. In the light of the facts and circumstances noticed above, wefind force in the above noticed submissions of the learned counsel forthe petitioner that the 1[st] respondent failed to exercise the discretionconferred under sub-section (6) of Section 220 of the Income-tax Act.Hence, the matter requires reconsideration. Accordingly, the impugned order is hereby set aside and theWrit Petition is disposed of with a direction to the 1[st] respondent toreconsider the petitioner’s request for stay and pass appropriate ordersafresh in accordance with law. No fresh notice need be given by the 1[st] respondent and thewrit petitioner shall appear before the 1[st] respondent on 25.03.2013and make its submissions, if any, in support of the application for stay. No costs. Consequently, Miscellaneous Petitions, if any, pending in thisWrit Petition shall stand closed. _____________ G.ROHINI, J _______________________ C.PRAVEEN KUMAR, J