2015 (3) TMI 1272 - HC - Income Tax

Petitioner Granted Writ of Mandamus for Stay Application, Stay on Recovery Proceedings

M/s. Teleradiology Solutions Pvt. Ltd., Versus Dy. Commissioner Of Income Tax Circle-12 (4)

The court granted the petitioner's request for a writ of mandamus directing the CIT (Appeals) III to consider the stay application and restrain recovery ... Stay application - recovery proceedings - Held that:- The assessee being aggrieved by the assessment order has filed an appeal before CIT (Appeals) III – third respondent as evidenced from the appeal memorandum appended to the present writ petition which is at Annexure-D. An application for stay of re-assessment order has also been filed seeking for stay of the demand as evidenced from the stay application which is at Annexure-E. Hence, without going into the merits namely as to whether Assessing Officer was justified in disallowing the claim made by the assessee under Section 10A of the Act requires to be examined by CIT (Appeals) III in the facts and circumstances of the case and also taking into consideration the fact that CIT (Appeals) III is now seized of the matter, this Court is of the considered view that ends of justice would be met if CIT (Appeals) III – third respondent is directed to dispose of the stay application that has been filed by the petitioner expeditiously within a time frame. Since learned Sr. counsel appearing for petitioner has submitted that issue is no more res integra in view of the decision taken by the Division Bench in respect of allowability of deduction under Section 10A of the Act, this Court is of the considered view that impugned demand raised by the Assessing Officer pursuant to re-assessment order requires to be stayed till the application filed by petitioner before appellate authority – CIT (Appeals) III (Annexure-E ) is disposed of. Issues involved:1. Writ of mandamus to direct consideration of stay application and restrain recovery proceedings during appeal.2. Disallowance of deduction under Section 10A of the Income Tax Act.3. Rejection of application for stay of demand by Assessing Officer.4. Jurisdiction of CIT (Appeals) III to examine the matter.5. Stay of recovery proceedings pending disposal of stay application.Issue 1: Writ of MandamusThe petitioner sought a writ of mandamus to direct the third respondent to consider the application for stay and restrain recovery proceedings during the pendency of the appeal before the third respondent. The petitioner, engaged in medical transcription services, had claimed deduction under Section 10A of the Income Tax Act for the assessment year 2010-11. However, the deduction was disallowed by the Assessing Officer, leading to the appeal before the CIT (Appeals) III. The petitioner also filed an application under Section 220(6) of the Act for stay of demand, which was rejected by the Assessing Officer. The court directed the CIT (Appeals) III to dispose of the stay application expeditiously within a specified timeframe, while staying the recovery proceedings during this period.Issue 2: Disallowance of DeductionThe Senior Counsel for the petitioner argued that the Assessing Officer's decision to disallow the deduction under Section 10A was without jurisdiction, as it amounted to a mere change of opinion and a review of earlier assessment orders. The counsel relied on a Division Bench decision to support the contention that the issue of deduction under Section 10A was settled law. The court noted that the merits of the Assessing Officer's decision should be examined by the CIT (Appeals) III, considering that the appellate authority was already seized of the matter.Issue 3: Rejection of Stay ApplicationThe Assessing Officer had rejected the petitioner's application for stay of demand under Section 220(6) of the Act. The court, however, held that the demand raised by the Assessing Officer pursuant to the reassessment order needed to be stayed until the CIT (Appeals) III disposed of the stay application filed by the petitioner. The court emphasized the need for expeditious disposal of the stay application by the appellate authority.Issue 4: Jurisdiction of CIT (Appeals) IIIThe court acknowledged that the CIT (Appeals) III was the appropriate authority to examine the merits of the Assessing Officer's decision to disallow the deduction under Section 10A. It directed the CIT (Appeals) III to consider the stay application and dispose of it within a specified timeframe, while refraining the Assessing Officer from enforcing the demand during this period.Issue 5: Stay of Recovery ProceedingsIn light of the pending stay application before the CIT (Appeals) III, the court ordered a stay on the recovery proceedings by the Assessing Officer for a specified period or until the disposal of the stay application, whichever was earlier. This interim relief was granted to ensure that the petitioner's appeal and application for stay were adjudicated upon effectively and expeditiously.This detailed analysis of the judgment addresses the issues involved comprehensively, outlining the legal arguments presented by both parties and the court's decision on each issue.