Court dismisses writ petition challenging tax assessment, grants stay on demand, sets appeal deadline

The court dismissed the writ petition challenging the assessment order under Section 143(3) of the Income Tax Act, citing the availability of an alternative statutory remedy. However, the court granted relief under Section 220(6) to stay the demand, directing the petitioner to deposit ten per cent of the demand within four weeks. The Commissioner (Appeals) was instructed to dispose of the appeal within four months.

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Issues Involved:
1. Maintainability of Writ Petition challenging the assessment order under Section 143(3) of the Income Tax Act, 1961.
2. Entitlement to Relief under Section 220(6) of the Income Tax Act regarding the stay of demand.

Detailed Analysis:

1. Maintainability of Writ Petition:
- Petitioner's Argument: The petitioner, an urban development authority, argued that the assessment order dated 24.3.2015, which assessed its total income as Rs. 48,22,54,670 and raised a demand of Rs. 20,41,52,870, was contrary to the provisions of Section 2(15) of the Income Tax Act. The petitioner contended that its statutory activities should not be considered as trade, commerce, or business. They cited decisions from various High Courts, including the Gujarat High Court in the case of Director of Income Tax (Exemption) v. Sabarmati Ashram Gaushala Trust, to support their claim that their activities were of general public utility and not aimed at profit-making.

- Respondent's Argument: The respondents argued that the writ petition was not maintainable as the petitioner had already availed of the statutory remedy of appeal before the Commissioner (Appeals). They cited the Supreme Court decision in Commissioner of Income Tax v. Chhabil Dass Agarwal, which emphasized that when a statutory forum is available, a writ petition should not be entertained.

- Court's Decision: The court held that none of the exceptions laid down by the Supreme Court for entertaining a writ petition were made out in this case. The petitioner had an efficacious alternative statutory remedy, which they had already availed. The court noted that the question of whether the petitioner's activities fell within the ambit of the proviso to Section 2(15) was a mixed question of fact and law, best decided by the appellate authority. Hence, the court was not inclined to entertain the writ petition challenging the assessment order.

2. Entitlement to Relief under Section 220(6):
- Petitioner's Argument: The petitioner sought relief under Section 220(6) to stay the demand raised by the assessment order. They contended that the orders passed by the respondents directing them to pay the demand in installments were non-speaking and did not consider the relevant factors such as prima facie case, balance of convenience, and conflicting decisions of different High Courts. They argued that the respondents had not applied their minds to the guidelines laid down by the CBDT Circular No.1914 dated 2.12.1993.

- Respondent's Argument: The respondents argued that the orders were in consonance with the CBDT guidelines and that no coercive action had been taken against the petitioner. They contended that the petitioner had been granted installment facilities and that the orders were reasonable.

- Court's Decision: The court found that the orders passed by the respondents under Section 220(6) were mechanical and lacked reasoning. The court emphasized that the Assessing Officer is vested with discretionary powers, which must be exercised reasonably and with consideration of all relevant factors. The court noted that the CBDT circular required a speaking order, which was not provided by the respondents. Given the conflicting decisions of different High Courts and the petitioner's status as a statutory authority, the court held that the petitioner had made out a prima facie case for the grant of stay. Instead of remanding the matter, the court directed the petitioner to deposit ten per cent of the demand and ordered the Commissioner (Appeals) to dispose of the appeal within four months.

Conclusion:
The court allowed the petition to the extent of granting relief under Section 220(6), directing the petitioner to deposit ten per cent of the demand within four weeks and instructing the Commissioner (Appeals) to dispose of the appeal within four months. The petition challenging the assessment order was not entertained due to the availability of an alternative statutory remedy.

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