Temporary stay granted on substantial tax demand for development authority pending appeal.

The court granted a temporary stay on the recovery of a substantial tax demand for the assessment year 2006-07 to the petitioner, a development authority appointed by the State Government for various projects. The court emphasized the petitioner's statutory role as an agent of the State Government under relevant provisions and previous judicial recognition. It directed the appellate authority to expedite the appeal hearing and provided a six-week stay on recovery post-appeal decision to safeguard the petitioner from coercive measures, ensuring justice and due process.

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Issues:
1. Grant of stay on recovery of demand for assessment year 2006-07.

Analysis:
The petitioner challenged the Commissioner of Income-tax's order denying a stay on the recovery of a demand for the assessment year 2006-07 under Article 226 of the Constitution. The primary issue before the court was whether a case for granting a stay pending appeal against the assessment order was established. The petitioner, appointed as the New Town Development Authority for various regions by the State Government, argued that it is only liable for tax on agency commission received from the State Government. The Assessing Officer had accepted this contention for previous assessment years, but for 2006-07, the petitioner was held chargeable to tax for all projects, leading to a substantial demand. The petitioner filed an appeal with an application for stay, which was rejected by the Commissioner of Income-tax. The petitioner contended that it acts as an agent of the State Government for various projects, emphasizing statutory obligations and the nature of its operations. On the other hand, the Revenue argued against financial hardship and for partial payment of the demand.

The court considered the petitioner's submissions regarding its role as an agent of the State Government under relevant statutory provisions. It noted that for previous years, the Assessing Officer had accepted the petitioner's status as an agent for the Navi Mumbai project. Sections 113(3A) and 40(1B) of the Maharashtra Regional and Town Planning Act, 1966, empower the State Government to appoint agencies or authorities as special planning authorities or new town development authorities, with dissolution provisions ensuring liabilities are enforceable against the State Government. A previous judgment had recognized the petitioner as an agent of the State Government for development work in New Bombay. The court directed the appellate authority to expedite the appeal hearing for 2006-07 and granted a stay on recovery of the demand for six weeks post-appeal decision, emphasizing the petitioner's legislative enactment status and the security of Revenue dues.

In conclusion, the court disposed of the petition by issuing directions for expediting the appeal hearing and granting a temporary stay on recovery post-appeal decision. The judgment aimed to ensure justice by allowing due process while safeguarding the petitioner from coercive recovery measures during the specified period.

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