1997 (9) TMI 81 - HC - Income Tax

Commissioner's Tax Order Upheld; Appeals Process Clarified

The court upheld the Commissioner of Income-tax's order regarding block assessment and stay of tax recovery pending appeal before the Income-tax Appellate ... Applicability of section 220(6) - Scope of Board circular dated August 21, 1969 - Power to stay recovery pending appeal - Appeal under section 253(1)(b) to the Income-tax Appellate TribunalApplicability of section 220(6) - Scope of Board circular dated August 21, 1969 - Power to stay recovery pending appeal - Whether section 220(6) and the Board circular dated August 21, 1969 are applicable to stay recovery in a block assessment appeal pending before the Incometax Appellate Tribunal under section 253(1)(b). - HELD THAT: - The court held that section 220(6) is attracted only where an appeal has been presented under section 246 and is pending; it permits the Assessing Officer, in his discretion and subject to conditions, to treat the assessee as not in default in respect of the amount in dispute while such appeal remains undisposed of. The Board circular of August 21, 1969 refers specifically to cases contemplated by section 220(6) and to the exercise of powers up to the stage of first appeal by appropriate officers. An appeal under section 253(1)(b) to the Incometax Appellate Tribunal (as in appeals against block assessments under section 158BC) is not an appeal under section 246; therefore neither section 220(6) nor the Board circular is attracted to such proceedings. Applying these principles, the court concluded that the circular and section 220(6) do not provide a basis to stay recovery in cases where the remedy lies under section 253(1)(b).Section 220(6) and the Board circular of August 21, 1969 do not apply to appeals under section 253(1)(b) against block assessments; hence they cannot be invoked to stay recovery in such cases.Power to stay recovery pending appeal - Appeal under section 253(1)(b) to the Income-tax Appellate Tribunal - Whether the Commissioner's observation directing the assessee to approach the Incometax Appellate Tribunal amounted to a refusal to exercise jurisdiction or a nonexercise of jurisdiction. - HELD THAT: - The impugned order rejected the petitioner's application in limine on two grounds: that the circular was not relevant to block assessments and that the assessee should approach the Tribunal for stay. Given the narrow scope of section 220(6) and the circular, the Commissioner's direction that the assessee seek relief before the Tribunal was a correct statement of the appropriate forum and did not constitute a declination to exercise vested jurisdiction. The court found no illegality in the order insofar as it referred the petitioner to the Tribunal for appropriate interim relief in appeals under section 253(1)(b).The Commissioner's direction that the assessee approach the Incometax Appellate Tribunal did not amount to nonexercise of jurisdiction and the order is not illegal on that ground.Final Conclusion: The writ petitions are dismissed as without merit. The court, however, permitted continuation of the interim orders previously granted and directed that those interim orders shall remain in force until September 26, 1997; otherwise the impugned order is sustained. Issues:Validity of order passed by the Commissioner of Income-tax for block assessment and stay of recovery of tax pending appeal before the Income-tax Appellate Tribunal.Analysis:The judgment dealt with three writ petitions presenting the same question of law, challenging the validity of an order passed by the Commissioner of Income-tax, Andhra Pradesh, Hyderabad, regarding block assessment and stay of tax recovery pending appeal. The petitioners, a public limited company engaged in various construction projects, filed writ petitions seeking a writ of certiorari to quash the order. The order in question was communicated by the first respondent, rejecting the application for stay of tax collection pending appeal before the Tribunal.The main contention revolved around the interpretation of section 220(6) of the Income-tax Act, 1961, and a circular issued by the Central Board of Direct Taxes in 1969. The petitioner's counsel relied on the circular to argue that the rejection of the application by the Commissioner was a non-exercise of jurisdiction. On the other hand, the Revenue's counsel contended that the circular did not apply when the appeal was not filed under section 246 of the Act.The judgment analyzed the impugned order passed by the Commissioner, which stated that the circular was not relevant to block assessment and directed the assessee to approach the Income-tax Appellate Tribunal for stay. The court examined the circular's context, emphasizing that it pertained to cases where an appeal under section 246 of the Act was pending, granting the Assessing Officer the power to stay tax collection. Since the appeals in question were filed under section 253 of the Act and pending before the Tribunal, the court held that the Commissioner's order was not illegal.Ultimately, the court dismissed the writ petitions, finding them without merit. However, considering the circumstances, the court allowed the interim orders granted by the court to remain in force for two weeks to enable the petitioners to seek appropriate relief from the Income-tax Appellate Tribunal. The judgment concluded by dismissing the writ petitions, subject to the continuation of interim orders until a specified date.