TaxTMI 
TaxTMI 
2016 (5) TMI 927
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.... writ, order or direction quashing the proceedings taken by them, as also the notices of Tax Recovery Officer at Annexures-G, I and J and the other of the Principal Commissioner of Income Tax, at Annexure-L. [B] this Hon'ble Court be pleased to grant the stay of demand of Rs. 22,94,74,880/- till the disposal of the appeal by the Commissioner of Income Tax (Appeals). [C] this Hon'ble Court be pleased to ask the Tax Recovery officer to lift all attachments done on (i) all properties belonging to the petitioner, particularly on 114 flats and the land belonging to the petitioner and (ii) Bank Account No.05332560003644 of the petitioner with HDFC Bank Ltd., Varachha, Surat." 4. The petitioner, a partnership firm, started construction of Om Township Project in the assessment year 2011-12. It is the case of the petitioner that no sales were effected in assessment years 2011-12 and 2012-13, and sales of Rs. 30,97,77,000/- were made in assessment year 2013-14. The petitioner came to be searched under section 132 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") on 17.07.2012. By order dated 31.03.2015 passed under section 153A of the Act, the petitioner came to be ass....
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....ing and restraining the petitioner from transferring 114 flats belonging to it. 4.1 The petitioner, therefore, addressed an application dated 14.09.2015 to the Principal Commissioner of Income Tax, Surat, the third respondent herein, praying that the Tax Recovery Officer be asked to lift the attachment on the bank account, as also the residential flats and not to treat the petitioners in default. By an order dated 06.11.2015, the Principal Commissioner of Income Tax, Surat called upon the petitioners to pay 50% of the demand before 31st March, 2016 in equal monthly installments starting from November, 2015, that is, Rs. 2,29,00,000/- every month for five months, totalling to Rs. 11,45,00,000/-, and stating that the attachment on the bank accounts and the residential flats shall be considered on furnishing bank guarantee of the total demand of Rs. 22,94,74,880/- and that in case the petitioner fails to make such payment, he may be treated as an assessee in default. Being aggrieved, the petitioner has filed the present petition. 5. Mr. J. P. Shah, learned advocate for the petitioner, submitted that the petitioner had made an application under section 220(6) of the Act to the Assess....
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....ceedings is Rs. 22,71,92,750/-. All the orders were passed on 31.03.2015 and dispatched through the Notice Server. The Notice Server has submitted his report dated 31.03.2015 to the ACIT, Central Circle-2, Surat, wherein, he has reported that Shri Bhagirath Baldha, partner of the petitioner firm had refused to receive the assessment orders and asked him to deliver the orders on the next day. It was submitted that under the provisions of the Act, refusal to receive notice/letters on the part of the assessee is considered as a deemed service and therefore, the assessment orders are deemed to have been served on the petitioner firm on 31.03.2015 itself. It was pointed out that as mentioned in the demand notice under section 156 of the Act, the petitioner was required to pay the amount within thirty days of receipt of the notice or alternatively, the assessee could have requested the Assessing Officer to keep the demand in abeyance till the disposal of appeal, if filed by the assessee before the expiry of thirty days from the date of receipt of the notice of demand. It was submitted that in this case, the application for keeping the demand in abeyance was received by the office of the ....
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....oner raising a demand of Rs. 22,94,74,880/-. The petitioner on the other hand moved three stay applications dated 04.05.2015 in relation to each assessment year before the first respondent - Assessing Officer. From the averments made in the affidavit-inreply, it is evident that the Assessing Officer did not entertain the applications made by the petitioner under section 220(6) of the Act on the ground that the same had been filed after the expiry of the period mentioned in the notice of demand. The notice of demand is dated 31.03.2015 and in terms of the said notice, the amount was required to be paid within a period of thirty days from the date of receipt of such notice. Thus, the period of thirty days from the date of the notice would expire on 02.05.2015. The petitioner filed stay applications under section 220(6) of the Act on 04.05.2015. The Assessing Officer, however, refused to entertain such applications and on the other hand, took steps to make coercive recovery under section 226(3) of the Act. The petitioner, thereafter, moved the Principal Commissioner of Income Tax seeking a direction to the Assessing Officer to first decide the stay applications made by the petitioner.....
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....on (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 payment by installments, subject to such conditions as he may think fit to impose in the circumstances of the case. Thus, sub-section (3) of section 220 of the Act can be invoked in a case where an assessee has accepted the order passed by the Assessing Officer and seeks extension of the time for payment of the installments, in which case, it is permissible for the Assessing Officer to extend the time for payment and allow payment to be made by installments subject to such conditions as he may think fit to impose. Sub-section (6) of section 220 of the Act, under which the petitioner had made the stay application, provides that where an assessee has presented an appeal under section 246 or section 246A, the Assessing Officer may, in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired as long as such appeal remains undisposed ....
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....esidential flats) can be considered subject to furnishing bank guarantee of amount of total outstanding demand. Thus, in effect and substance, the Principal Commissioner of Income Tax has directed the petitioner to pay 50% of the outstanding demand and to furnish a bank guarantee for the remaining 50% for lifting the attachment on the properties of the petitioner. 10. At this juncture, reference may be made to Instruction No.1914 dated 02.02.1993 of the Board. Paragraph 2(A)(i)(d) thereof provides that it shall be the responsibility of the Assessing Officers and the Tax Recovery Officer to collect every demand that has been raised, except the following: Demand stayed in accordance with paras B & C below. Paragraph (B) provides for stay petitions and says that stay petitions filed with the Assessing Officers must be disposed of within two weeks of the filing of petition by the taxpayer and the assessee must be intimated of the decision without delay. In the facts of the present case, apart from the fact that the Assessing Officer has not disposed of the stay applications within the period stipulated under the said Instructions, the Assessing Officer has refused to entertain the app....
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....ime for payment has expired as long as such appeal remains undisposed of subject to such conditions as he may think fit to impose. Clause (iv) of paragraph (C) of the said Instructions provides that since the phrase "stay of demand" does not occur in section 220(6) of the Income Tax Act, the Assessing Officer should always use in any order passed under section 220(6) or under section 220(3) or section 220(7), the expression that occurs in the section viz., that he agrees to treat the assessee as not being in default in respect of the amount specified, subject to such conditions as he deems fit to impose. Clause (v) thereof provides that while considering an application under section 220(6), the Assessing Officer should consider all relevant factors having a bearing on the demand raised and communicate his decision in the form of a speaking order. 12. In the facts of the present case, while the Assessing Officer has not passed any order on the applications made by the petitioner under section 220(6) of the Act, including not informing the petitioner that the application is not being entertained, the Principal Commissioner of Income Tax, in the order dated 06.11.2015, has no where c....
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....pendency of the stay application, which had been filed almost immediately after the period stipulated in the notice under section 156 of the Act had expired, there was no warrant for the respondents to resort to drastic measures of making coercive recovery without first taking the decision on the application under section 220(6) of the Act. The action of the respondents in attaching the bank accounts and flats of the petitioner, therefore, cannot be sustained. 14. In the aforesaid premises, the court is of the view that the interests of justice would best be served if the fourth respondent herein - Commissioner of Income Tax (Appeals-4), Surat is requested to conclude the appeal proceedings within a period of three months from the date of receipt of a copy of this judgment and in the meanwhile, the petitioner may be put to some conditions to secure the interest of the revenue. 15. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 06.11.2015 passed by the Principal Commissioner of Income Tax (Central), Surat (Annexure "L" to the petition) as well as the recovery notices issued by the Tax Recovery Officer (Annexures "G", "I" and....