TaxTMI 
TaxTMI 
2004 (1) TMI 8
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....nally attached the fixed deposits of the petitioner in different banks and in response thereto the petitioner had claimed that its income was exempt from tax under the Act. On January 9, 2003, the Assistant Commissioner issued show-cause notices to the petitioner for the said assessment years to show cause as to why exemption as claimed by the petitioner should not be disallowed and why the entire income of the petitioner for the assessment years under reference should not be treated as taxable as per the provisions of the Act. On February 28, 2003, the Assistant Commissioner issued orders of provisional attachment of the fixed deposits of the petitioner in U.T.I. Bank Ltd., Satyanagar, Bhubaneswar, Canfin Homes, Kharavela Nagar, Bhubaneswar, Vysya Bank, Ashok Nagar, Bhubaneswar, Canara Bank, Cuttack Road Branch, Bhubaneswar, Canara Bank, Bapuji Nagar, Bhubaneswar and Canara Bank, Sahid Nagar Branch, Bhubaneswar. In the said orders of provisional attachment it was stated that the assessment proceedings against the petitioner were pending for disposal and it was likely that substantial tax liability will be created on completion of the assessment and by the said provisional attachme....
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....tioner was a public institution. Soon thereafter, Miscellaneous Case No. 3179 of 2003 was filed by the Department for some clarification and by order dated April 2, 2003, the court clarified that by the order dated March 28, 2003, in W.P.(C) No. 3137 of 2003 the court had not examined the validity of the demand and that the period of thirty days was available to the petitioner to file appeals against the demands. On April 15, 2003, the petitioner filed Miscellaneous Case No. 3703 of 2003 stating therein that at the end of the banking hours on March 31, 2003, the Department deposited some refund vouchers but have not fully restituted the petitioner to its original position and praying for a direction to the Department as well as the banks to implement the order dated March 28, 2003, directing restitution of the petitioner to its original position as on March 28, 2003. On April 15, 2003/April 16, 2003, the petitioner filed appeals against the assessment orders dated March 13, 2003, under section 147/143(3) of the Act for the assessment years 1996-97 to 2001-02 and applications for stay of the disputed tax demands till disposal of the appeals before the Commissioner of Income-tax (....
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....ssuing notice to the opposite parties and directing release of the accounts of the petitioner by squeezing Rs. 4,71,05,427 and for directing the four banks to allow operation after the squeezing of the aforesaid amount. By the said order dated July 25, 2003, the matter was to be listed again on June 27, 2003, along with W.P. (C) No. 4937 of 2003 for further orders. On June 27, 2003, the court passed orders in W.P. (C) No. 4937 of 2003 and Miscellaneous Case No. 4624 of 2003 that the interim orders passed by the court on May 16, 2003, will continue till the interim matter was decided and passed orders in W.P.(C) No. 5356 of 2003 that the matter will be listed along with W.P.(C) No. 4937 of 2003. Thereafter on July 4, 2003, after hearing learned counsel for the parties, the court passed a common order in W.P. (C) No. 4937 of 2003 and W.P. (C) No. 5356 of 2003 that the aforesaid amount of Rs. 4,71,05,427 will be retained in the aforesaid banks in fixed deposit accounts and will not be withdrawn by the petitioner until further orders are passed by this court but the petitioner will be allowed to operate the current accounts or any other account over and above the said fixed deposit ....
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....3 to April 3, 2003, after encashment of the fixed deposits the money was with the Department and hence the banks were not liable for interest for the said period. The portion of the order dated March 28, 2003, in W.P. (C) No. 3137 of 2003 in which the restitution was directed is quoted herein below: "For the above reasons, the impugned notices at annexure 18 series cannot be supported in law which are hereby quashed. Shri Das, learned counsel for the petitioner, submitted that the bank has collected pay orders from opposite parties nos. 7 to 10. In view of the fact that we have quashed the impugned notices, as indicated above, the Department is directed to Destitute the petitioner to the original position by March 31, 2003 ..." It is clear from the aforesaid portion of the order dated March 28, 2003, passed by the court that the grievance made by counsel for the petitioner before the court was that the pay orders had been collected from the U.T.I. Bank Ltd., Canfin Home Finances, Vysya Bank and Canara Bank pursuant to the impugned notices of the Income-tax Department which were quashed by the said order of the court and the court directed only the Income-tax Department ....
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....n the Assessing Officer. Mr. Das cited the decision of the Division Bench in Orissa Forest Corporation Ltd. v. Asst. Collector, Central Excise [1982] ELT 875 (Orissa), for the proposition that decisions rendered by an Appellate Collector should be respected by the subordinate revenue authorities so long as they remain in force and are not set aside by higher authorities. In the said decision, the Division Bench further held that if the demand for one period is set aside by the appellate authority, another demand cannot be raised for subsequent period on the same facts until the order of the appellate authority is not set aside by the revisional authority. Mr. Das argued that the petitioner had thus a strong prima facie case and the Assistant Commissioner should have passed an order under section 220(6) of the Act treating the petitioner as not being in default in respect of the amounts which were in dispute in the appeals before the Commissioner of Income-tax even though the time for payment had expired as long as the appeals of the petitioner remained undisposed of. Mr. Das further submitted that the Central Board of Direct Taxes has issued circulars on how the discretion of the A....
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....and the petitioner will suffer immense hardship. Mr. Das further submitted that the petitioner has not moved the Commissioner of Income-tax in revision because the nil assessments of the petitioner for different years have been reopened and the provisional attachment orders have been passed with the approval of the Commissioner of Income-tax and the revision before the Commissioner of Income-tax would be an exercise in futility. He further explained that although the petitioner has filed application for stay before the Commissioner of Income-tax (Appeals) along with the appeal, it is doubtful as to whether the Commissioner of Income-tax (Appeals) would have powers to grant stay. In this regard, Mr. Das submitted that there is no express provision in the Act conferring powers on the Commissioner of Income-tax (Appeals) to pass an order of stay with regard to a matter in appeal before him whereas section 220(6) of the Act confers powers on the Assessing Officer to treat the assessee as not in default when the assessee has filed an appeal against the assessment. Mr. Das submitted that a Division Bench of this court in State of Orissa v. Member, Sales Tax Tribunal [1971] 28 STC 652, fo....
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....nd (v), the income of the petitioner is not exempt from tax. Relying on the averments in paragraph 10 of the counter-affidavit Mr. Mohapatra submitted that in instruction No. 1914 of the Central Board of Direct Taxes the decision in the matter of stay of demand should normally be taken by the Assessing Officer and his superior authority will interfere with the decision of the Assessing Officer only in exceptional circumstances, for example, where the Assessing Officer's order will appear to be high-pitched or a genuine hardship is likely to be caused to the assessee. He submitted that instead of exhausting the normal departmental channels the assessee has sought to directly approach this court under article 226 of the Constitution. In reply to the contention of Mr. Das that it will be an exercise in futility for the petitioner to file a revision before the Commissioner of Income-tax against the order dated May 7, 2003, of the Assessing Officer, Mr. Mohapatra argued that even if the Commissioner approves the reopening of the assessment or provisional attachment orders, the proceedings under section 220 of the Act and revisions arising therefrom are entirely different proceedings. Mr....
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....) of section 220 as an appealable order either before the Deputy Commissioner of Income-tax (Appeals) or before the Commissioner of Income-tax (Appeals). The petitioner, however, has filed applications for stay before the Commissioner of Income-tax (Appeals). There is no express power vested under the Act on the Commissioner of Income-tax (Appeals) to grant stay, but express power has been vested under sub-section (6) of section 220 of the Act on the Assessing Officer not to treat the assessee as being in default pending appeal before the Commissioner of Income-tax (Appeals). The decision of the Supreme Court in M.K. Mohammed Kunhi's case [1969] 71 ITR 815 is on the point that the Income-tax Appellate Tribunal has the implied power to grant stay as incidental and ancillary to its appellate jurisdiction and not that the Commissioner of Income-tax (Appeals) has the implied power to grant stay in appeals pending before him. This court in State of Orissa v. Member, Sales Tax Tribunal [1971] 28 STC 652, after considering the said decision of the Supreme Court has held that express power of stay in some other authority conferred under the Act will rule out implied power in the appellate ....
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....re statutory remedies are available are not matters where the court should bypass the statutory remedy, but this is not to say that in no matter involving revenue where statutory remedies are available, the High Court will interfere under article 226 of the Constitution. The acid test, in our considered opinion, would be whether interference of the High Court under article 226 of the Constitution is necessary for vindication of public justice to meet the demands of an extraordinary situation, as has been clearly held in the aforesaid judgment of the Supreme Court. Thus, what is to be considered in this case is whether the impugned order dated May 7, 2003, of the Assistant Commissioner rejecting the application of the petitioner as not being in default in respect of the amounts in dispute in appeals before the Commissioner of Income-tax (Appeals) as long as the appeal remains undisposed of needs interference in the interest of public justice to meet the demands of an extraordinary situation. Sub-section (6) of section 220 of the Act is quoted herein below: "220. When tax payable and when assessee deemed in default.- ... (6) Where an assessee has presented an appeal under se....
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....l of appeal or where a subsequent pronouncement by a higher appellate authority or court alters the situation referred to in paragraph 2 above, the Assessing Officer will no longer be bound by these instructions and will exercise his discretion independently." Thus, the Central Board of Direct Taxes has issued the aforesaid instructions in Circular No. 530, dated March 6,1989 that where the demand in dispute relates to issues that have been decided in favour of the assessee in an earlier order by an appellate authority or court in the assessee's own case, the assessee should be treated as not being in default in respect of the amount in dispute in appeal keeping in mind the well-settled principle of justice and equity. These instructions have not been superseded but reiterated and clarified by the Central Board of Direct Taxes in its Circular No. 589 dated January 16, 1991. In the very case of the petitioner for the assessment year 1992-93 the Assessing Officer had rejected the claim of the petitioner for exemption on the ground that although the petitioner had applied claiming exemption, no notification had been issued by the Central Government in respect of the petitioner unde....
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....02 relate to issues which have been decided earlier in favour of the petitioner by the appellate authority in the very case of the petitioner and as per the instructions issued in Circular No. 530 dated March 6, 1989, by the Central Board of Direct Taxes quoted above, the Assistant Commissioner should have exercised discretion under sub-section (6) of section 220 of the Act subject to such conditions as she thought fit to impose so as to treat the petitioner as not being in default in respect of the amounts in dispute in the appeals. But by the impugned order dated May 7, 2003, the Assistant Commissioner has rejected the application of the petitioner under sub-section (6) of section 220 of the Act to treat the petitioner as not being in default in respect of the amounts in dispute in appeals before the Commissioner of Income-tax (Appeals) contrary to the said instructions of the Central Board of Direct Taxes. No useful purpose will be served in such a case by asking the petitioner to file a revision before the Commissioner under section 264 of the Act because the Commissioner in such a revision cannot be expected under law to pass an order contrary to the said instructions of the C....