Court directs prompt resolution of pending appeals, grants interim relief, and sets conditions for protection

The court directed the Income Tax Appellate Tribunal to promptly resolve pending appeals and provided interim relief to a Development Institute by staying the demand of income tax, interest, and penalty amounting to Rs. 18,05,59,608 until the tribunal's decision. The petitioner was granted four weeks of protection upon depositing Rs. 5.8 crores, with coercive measures suspended during this period. Failure to comply would result in the automatic vacation of the interim protection.

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Issues:
Petition to stay demand of income tax, interest, and penalty for assessment years 2003-04 to 2010-11 pending appeals before the Income Tax Appellate Tribunal, Indore due to the non-functioning of the tribunal.

Analysis:
The petitioner, a Development Institute engaged in Industrial Infrastructure Development in Madhya Pradesh, filed a writ petition under Article 226 of the Constitution of India seeking to halt the demand of income tax, interest, and penalty until the pending appeals before the Income Tax Appellate Tribunal, Indore are decided. The demand arose from a lease premium liability treated as a revenue receipt instead of a tax liability by the petitioner. The total liability amounted to Rs. 55,19,95,445, of which Rs. 37,14,35,837 had been paid, leaving a balance of Rs. 18,05,59,608. The petitioner argued that the demand would adversely affect its operations and development work. The respondent, the Income Tax Department, had directed the petitioner to pay 50% of the outstanding demand by a certain date, which had not been done, leading to the threat of coercive action, including bank account attachment.

The petitioner contended that the nature of the lease premium was a one-time payment and had been treated as a capital receipt in the past. The petitioner emphasized the potential negative impact on its operations if forced to pay the outstanding amount. The court considered the arguments and noted that the appeals against the assessment orders were pending before the non-functioning Income Tax Appellate Tribunal, Indore. The court directed the President of the Income Tax Appellate Tribunal, Mumbai, to decide on the application for constituting a bench in Indore or assign the case to another bench for expeditious handling within three months. The court granted interim protection to the petitioner for four weeks upon depositing Rs. 5.8 crores, barring any coercive recovery measures until the stay application is decided. Failure to comply would automatically vacate the interim protection.

In conclusion, the writ petition was disposed of with the court's directions to the Income Tax Appellate Tribunal for prompt resolution of the pending matters and the provision of interim relief to the petitioner pending the tribunal's decision.

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