Calcutta High Court
M/S.Sandersons & Morgans & Ors vs The Deputy Commissioner Of Income Tax & ... on 23 February, 2010
Author: Soumitra Pal
Bench: Soumitra Pal
WP No. 210 of 2010
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
M/S.SANDERSONS & MORGANS & ORS Petitioner/Applicant
Versus
THE DEPUTY COMMISSIONER OF INCOME TAX & ANR Respondent
For Petitioner : MR.J.P.KHAITAN,SENIOR ADVOCATE WITH MS. A.BANERJEE,ADVOCATE For Respondent : MR.R.N.MITRA, SENIOR ADVOCATE WITH MR.P.DHUDHORIA,ADVOCATE BEFORE:
The Hon'ble JUSTICE SOUMITRA PAL Date : 23rd February, 2010.
The Court : Let affidavit-of-service filed in court today be kept with the records.
This writ petition has been filed by M/s.Sandersons & Morgans, a partnership firm duly registered under the Partnership Act, 1933 challenging the order dated 2nd February, 2010 passed by the Deputy 2 Commissioner of Income Tax, Circle-54, Kolkata, respondent no.1 disposing of the application for stay of realization of a sum by requesting to pay the tax dues for the assessment year 2007-2008.
The facts in brief are that being aggrieved by and dissatisfied with the assessment order passed on 24th December, 2009 for the assessment year in question, the petitioner had filed an appeal on 27th January, 2010 before the Commissioner of Income Tax (Appeals), XXXVII, respondent no.2. It appears that on the day on which assessment order was passed the respondent no.1 had issued the notice of demand requesting the petitioner to pay Rs.1,68,76,440/-. After receiving such notice of demand the petitioner had filed an application for stay, as already noted, which was disposed of by an order dated 2nd February, 2010 the order impugned, the relevant portion of which is as under :
" Sub: Petition for stay on realization of demand for the A/Y 2007-08.
I would like to draw your attention to the Stay Petition Dated 29/01/2010 M/s Sandersons & Morgans.
3) A request has been made in the aforesaid Petition for staying the demand till the disposal of appeal filed against the Assessment Order dated 24/12/2009 u/s 143(3) of the Act for the A/Y 2007-08. I am of the view that there is little 3 scope or possibility for relief in appeal. Financial stringency does not come in the way of payment of the Tax in your case. Therefore, I am not inclined to treat you as on assessee not being in default in respect of the Tax liability.
4. Thus the present stay petition is hereby disposed off. Now you are requested to pay the aforesaid tax dues immediately and furnish the proof of payment." In order to decide the issue it is necessary to refer to section 220(6) of the Income Tax Act, 1961, which is as under :
"220.(6) 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 of."
As seen, section 220(6) of the Act postulates that where an appeal under section 246 or under section 246A is pending, the Assessing Officer has the discretion, subject to such conditions as he may think fit to impose, to treat the assessee as not being in default in respect of the amount in dispute in the appeal, as long as such appeal remains pending 4 though the time for payment might have expired. Therefore, statute confers discretion on the Assessing Officer to grant stay of realization of taxes after protecting the interest of the Revenue. Thus, once the Assessing Officer chooses to exercise his discretion, in my view, it is to be done judiciously. From a perusal of the order impugned I find that discretion has been exercised mechanically and without application of mind. Since an assessee has a statutory right to prefer appeal against an order of assessment, the observation of the Assessing Officer in the order impugned that "I am of the view that there is little scope or possibility for relief in appeal" is against the spirit of the section. That apart, the observation that "financial stringency does not come in the way of payment of the Tax in your case" is uncalled for as it is the subject matter of the appeal preferred against the order of assessment. Since discretion has to be exercised in a sound and judicious manner, which in the instant case was not done, the order dated 2nd February, 2010 under challenge cannot be sustained and is, thus, set aside and quashed. Hence, the writ petition is allowed.
Since appeal has been preferred and is pending, the respondent no.2 is requested to dispose of the appeal preferably within a period of eight weeks from the date of communication of this order.
Till the appeal is heard, order is passed and communicated, the respondents shall not take any coercive action. 5
I make it clear that I have not gone into the merits of the appeal which shall be dealt with by the respondent no.2.
Since the writ petition is disposed of at the stage of admission without calling for filing of affidavits, the allegations made in the petition are deemed not to have been admitted by the respondents.
No order as to costs.
All parties concerned are to act on a signed copy of the minutes of the operative part of this order on the usual undertakings.
(SOUMITRA PAL, J.) ssaha AR(C.R.)