TaxTMI 
TaxTMI 
2013 (9) TMI 16
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....arch 13, 2013, on the ground that the object of the trust was not charitable as defined under Section 2(15) of the Act. 1.3 A notice of demand dated March 13, 2013 under Section 156 of the Act along with notice under Section 274 read with Section 271 of the Act came to be issued which was received by the petitioner on March 20, 2013. The period of seven days was granted to the petitioner for payment of total sum of Rs. 1,41,07,755/-(Rupees One Crore Forty One Lac Seven Thousand Seven Hundred Fifty Five only) instead of statutory period of 30 days from the date of service of notice as prescribed under Section 220 of the Act. 1.4 The petitioner preferred an appeal along with a stay application before the Commissioner of Income Tax (Appeals) against such order passed by the respondent. However, in the meantime, the respondent recovered a sum of Rs. 1, 39,70,275/- from the bank account of the petitioner on March 28,2013. The notice under Section 226(3) of the Act and the letter substantiating such payment by the bank to the respondent is brought on record. 1.5 Aggrieved by such act of reduction of time ....
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....oner of Incometax, reported in [2012] 24 taxmann.com 125 (Bom.) as well as in the case of Rajasthani Sammelan Sarvoday Balika Vidyalaya v. Assistant Director of Incometax (Exemption)I(1), reported in [2012] 21 taxmann.com 238 (Bom.). Reliance is also placed on the decision of the Division Bench of this Court in the case of Gujarat State Energy Generation Ltd. v. Assistant Commissioner of Income Tax, rendered in Special Civil Application No.3600 of 2013and allied matters, decided on May 06, 2013, on merits in respect of registration under Section 12A of the Act. Also he urged that the decision of the Apex Court in the case of Asstt. CIT v. Surat City Gymkhana reported in 300 ITR 214, which approved the decision of this Court in the case of Hiralal Bhagwati v. CIT [2000] 246 ITR 188, favours the petitioner. 3. Per contra, the learned advocate Shri Parikh appearing for the Revenue has urged that it is the discretion of the Assessing Officer to reduce the period prescribed under the Act. He has urged that the petitioner has already preferred an appeal against the demand notice issued under Section 156 of the Act and, therefore, when an effective alternative remedy has already been r....
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.... period can be curtailed by him. The said provision requires to be reproduced profitably as under : "220.(1) Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within thirty days of the service of the notice at the place and to the person mentioned in the notice : Provided that, where the Assessing Officer has any reason to believe that it will be detrimental to revenue if the full period of thirty days aforesaid is allowed, he may, with the previous approval of the Joint Commissioner, direct that the sum specified in the notice of demand shall be paid within such period being a period less than the period of thirty days aforesaid, as may be specified by him in the notice of demand. xxxxxxxxxxxxxx (3) Without prejudice to the provisions contained in sub-section (2), on an application made by the assessee before the expiry of the due date under sub-section (1), the Assessing Officer may extend the time for payment or allow paymen....
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....a case where the Assessing Officer directed the assessee to pay the amount within seven days of the assessment order. An application was filed by the assessee inter alia contending that such shortening of the period was unnecessary as there was no detriment to the interest of the Revenue as the Commissioner had already levied a provisional attachment under the provisions of Section 281B of the Act. Such application was rejected by the Commissioner. In such circumstances, the Court held in favour of the assessee in the following manner : "5 Under the provisions of Section 220(1) it has been stipulated that any amount other than by way of advance tax specified as payable in a notice of demand under Section 156 shall be paid within thirty days of the service of a notice. The proviso to Sub-section (1) stipulates that where the Assessing Officer has any reason to believe that it would be detrimental to the interests of the Revenue if the full period of 30 days is allowed, he may direct, with the previous approval of the Joint Commissioner, that the sums specified in the notice of demand shall be paid within a period of less than 30 days. The proviso to Sub-s....
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.... of each case and an exhaustive catalogue of circumstances cannot be laid down. Consequently, we find that there is absolutely no justification for the Assessing Officer for making an order of demand directing the Assessee to deposit the entire demand by 16 March 2012. The action is highhanded and contrary to law." 11. Yet another decision of the Bombay High Court in the case of Rajasthani Sammelan Sarvoday Balika Vidyalaya (supra) has been relied upon by the petitioner, where the assessee was deemed in default. The assessee, an exempt public charitable trust, was running educational institutions. On the ground that donations received by it were not voluntary, the assessment order was passed. The appeal was preferred before the Commissioner (Appeals) and the application for stay of demand was moved before the Assessing Officer. The Assessing Officer while disposing of the stay application directed the assessee to make payment within three days without giving any reasons. Considering the fact that there were serious issues already contended before the Commissioner (Appeals) with regard to continuity of exemption, the Court held that the Director of Income-tax ought to have grante....
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....s was allowed, the petitioner would have defaulted or would have in any manner frustrated the recovery. Under the circumstances, we would have examined the question further and considered whether the period specified in the impugned notice should be tampered with. However, prima facie believing that, under the circumstances that we considering, notice under section 156 thus may not be rendered ineffective, since it may be possible to argue that recovery notice under section 156 can be severed from the period from which the sum demanded under such notice would become payable under section 220(1) of the Act, we are not inclined to pass any further or final order in this respect. Additionally, as already noted, under the order of this Court, the petitioner did receive full period of 30 days and beyond for recovery and in the meantime, the Assessing Officer himself passed an order staying recoveries." 13. In a matter before Delhi High Court in the case of Sony India Ltd. (supra), the Assessing Officer had reduced the period of payment of tax demand. When it was challenged before the Delhi High Court, it was of the opinion that the belief of the Assessing Officer must have a direct n....
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....acy or sufficiency of reasons can hardly be investigated by the court. Reasonableness, relevancy and good faith are factors which should be demonstrated in the order itself or at best the record in support thereof. "Reason to suspect" is not "reason to believe". They are terms of apparent definition and cannot be permitted to be interchanged in operation of fiscal provisions. Reasons are the link between the material on which the conclusions are based and they alone can exhibit how the mind is applied to the subject-matter for arriving at a decision. Rational nexus between the facts considered and conclusions reached is the main consideration. "Reason to believe" must relate to the standards of belief of a reasonable man and not to a prejudicial or, biased mind." 14. Thus, it can be deduced from the above discussion that sub-section (1) of Section 220 of the Act provides that any amount otherwise then advance tax as payable in the notice of demand to be issued under Section 156 of the Act, needs to be paid within 30 days of the service of the notice. However, the proviso to Section 220(1) of the Act gives discretionary powers to the Assessing Officer to reduce such period. Two c....
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....the period of 30 days as per proviso to Section 220(1) of the IT Act, 1961. This should be viewed as need of Government and should be termed as detrimental to Revenue. 5. The net budget collection as on 31.03.2012 of this ward was Rs. 1,07,27,252/-. The budget collection as per the data made available from the BCP (OLTAS), as on 05.03.2013 collected Rs. (-)82,98,339/- which is far below the budget target allotted to this ward. The CBDT, CCIT has directed to exceed the budget collection, compared to last year by making efforts to collect the current demand. 6. It is also discussed that the Anand Range, Anand is also running short of budget deficit, and to meet the budget deficit in a short span of time the every efforts is to be made by each of the Officers. 7. The assessee having rich cash flow and there is probability that if the period of 30 days is reduced to be payable before 31.03.2013, which may if paid by the assessee the budget deficit may be met and/or the target may achieved. In the above circumstances, Assessing Officer has reason to believe that it will be detrimental to Revenue if the f....
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....Secondly, the approval of the Joint Commissioner admittedly has come on March 18, 2013. It is necessary to reproduce the grant of such request of reduction of period of 30 days issued from the office of the Joint Commissioner of Income-tax, which reads as under : "2. In this connection approval is granted u/s.220(1) of the Act to shorten the period of payment of demand from 30 days to 7 days in the following five cases. (i) Amul Research & Development Association A.Y. 2010-11 (ii) Animal Breeding Research Organization A.Y. 2010-11 (iii) Gujarat Environment Service Society (GESS) A.Y. 2010-11" 18. Prior to such communication of March 18, 2013 by the Joint Commissioner, the Assessing Officer had already communicated the period of reduction on March 13, 2013 itself by way of impugned notice. It is although a condition precedent to obtain the permission of the Joint Commissioner. Admittedly, such permission has come subsequent to the communication of period of reduction in payment of tax, no reason com....
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....m meeting the target of budget deficit and thus it can be concluded that the belief had neither any relevant or valid reasons and it also does not have any direct nexus to the conclusion of reduction of period. Both the authorities have acted without truly grasping the essence of use of this provision. Resultantly, the action of invocation of the discretionary powers under Section 220(1) of the Act shall have to fail. 21. Almost immediately after the Amendment Act was passed on March 13, 2013, notice under Section 156 of the Act was issued by the respondent demanding sum of Rs. 1,41,00,000 (rounded off) reducing normal period of 30 days for payment and immediately on completion of seven days' period, exercising powers under Section 226 of the Act, the respondent recovered a sum of Rs. 1,39,00,000/- (rounded off) without granting any time to the petitioner. 22. Some of the vital issues raised while arguing this petition needs to be briefly dealt with. It was emphasised all along by the respondent that Note (3) of the notice of demand under Section 156 of the Act can permit the assessee to seek extension of time for payment of the amount, which in this case has not been done by....