Gujarat High Court
Sakarpatal Vibhag Jangal Kamdar ... vs Income-Tax Officer And Ors. on 25 March, 1992
Equivalent citations: [1992]198ITR685(GUJ)
Author: G.T. Nanavati
Bench: G.T. Nanavati, J.M. Panchal
JUDGMENT G.T. Nanavati, J.
1. The petitioner-society is a co-operative society of labourers and is engaged in the business of forest coupe-cutting. The trees are cut by the society and then sold by it. The profit is shared by the society and the Government on 80 : 20 basis. The members of the petitioner-society are mostly residing in the forest area. The work of coupe-cutting is done by the members of the society by contributing labour.
2. For the assessment year 1983-84, the petitioner-society claimed exemption under section 80P(2)(a)(vi) of the Income-tax Act, 1961, in respect of the income earned by it by sale of such forest produce. The Income-tax Officer granted exemption, but the Commissioner of Income-tax, in exercise of his revisional powers, disallowed the same. The petitioner, therefore, filed an appeal to the Tribunal. That appeal was dismissed by the Tribunal on the ground of limitation. Meanwhile, pursuant to the order passed by the Commissioner, in exercise of his revisional powers the Income-tax Officer passed a fresh order of assessment whereby the exemption claimed by the petitioner-society was disallowed. Against that order, the petitioner, filed an appeal to the Commissioner of Income-tax. That appeal was dismissed by the Commissioner as not competent and the order passed by him challenged by the petitioner by filing an appeal to the Tribunal. The Tribunal allowed that appeal and directed the Commissioner to hear the appeal a fresh on merits. For the assessment year 1984-85, the Income-tax Officer passed on order of assessment on October 24, 1991. As the exemption claimed by the petitioner-society was not allowed by the Income-tax Officer, the petitioner has filed an appeal against that order also. Thus, both the appeals pertaining to the assessment years 1983-84 and 1984-85, are pending before the Commissioner of Income-tax (Appeals).
3. It appears that the petitioner-society applied to the Assessing Officer under section 220(6) for treating the society as not in default in respect of the amount in dispute in appeal pertaining to the assessment year 1983-84. It further appears that the Commissioner of Income-tax directed that the society should pay 50 per cent. of the demand on the condition that 50 per cent. of the disputed demand was paid by the society on or before February 29, 1992. The petitioner had already paid Rs. 2,11,700 and, therefore, the petitioner was required to pay Rs. 91,974. The petitioner did not pay that amount and, therefore, by an order dated January 1, 1992, the Income-tax Officer wrote to the petitioner that if the petitioner did not comply with the facility already given to the petitioner, he would be constrained to take coercive measures for recovery. By that order, the Income-tax Officer also drew the attention of the petitioner-society to the fact that Rs. 2,80,688 had fallen due as tax for the assessment year 1984-85, and, if that amount was also not paid, then for recovering the same also, coercive measures would be taken. Meanwhile, on December 13, 1991, the Income-tax Officer passed an order under section 226(3) requiring the Manager of Bank of Baroda, Ahwa Branch, and Valsad Jhilla Sahakari Bank, Waghai, and the Deputy Conservator of Forests, Ahwa, to pay to him any amount held by them, for or an account of the petitioner-society. Similar order passed under section 226(3) was also served upon the Manager of Valsad Jhilla Sahakari Bank Ltd., Waghai. The petitioner is challenging in this petition the said two orders passed on December 13, 1991, and also the orders dated December 18, 1991, passed by the Commissioner of Income-tax and dated January 1, 1992, passed by the Income-tax Officer.
4. What is contended by learned counsel for the petitioner is that the petitioner's appeals for both the assessment years are pending before the Commissioner of Income-tax (Appeals) and, therefore, the Assessing Officer ought to have granted the petitioner's application made under section 220(6) of the Act and reframed from recovering the amounts due by the coercive method. He further submitted that, by passing orders under section 226(3) of the Act, the income-tax authorities have made the working of the petitioner-society very difficult, if not impossible. He also submitted that, in view of the direction given by the Central Board of Direct Taxes on July 28, 1976, to the Commissioner of Income-tax, Ahmedabad, also the Income-tax Officer ought not to have taken steps to recover the tax due by coercive methods.
5. When an assessee makes an applications under section 220(6) to the Assessing Officer. The Assessing Officer has to consider all the relevant aspects before rejecting such an application or imposing conditions, while treating the assessee as not being in default. If all the relevant aspects are taken into consideration, then it can be said that he has properly exercised his discretion. In this case, we do not find any material on the basis of which it can be said that he had considered all the relevant aspects before imposing the conditions of making payment of 50 per cent. of the tax due for the assessment year 1983-84. It also appears that the Assessing Officer did not apply his mind to the effect of the conditions imposed by him which were likely to have on the working of the society. The facts disclose that the society could not pay even the modest amount of Rs. 91,974 within the time fixed by the Assessing Officer. As stated earlier, the petitioner-society is a co-operative society of labourers who contribute their labour and make some profit by cutting trees in the forest and selling the same. This aspect was also required to be borne in mind while imposing the condition of making 50 per cent. payment before January 9, 1992. The Assessing Officer also did not take into consideration the fact that the petitioner-society had some fixed deposits which were quite sufficient to cover the amount of tax due for the assessment year 1983-84 and 1984-85. Considering all these facts, we are of the opinion that the Assessing Officer and the Commissioner of Income-tax committed an error in imposing a condition of payment of 50 per cent. of the amount of tax due for the assessment year 1984-85. Ordinarily, we would have set aside the order passed by the Assessing Officer and directed him to pass a fresh order but, in view of the facts and circumstances of the case, we do not think it necessary to direct him to pass a fresh order. Instead of doing so, we direct that the amount of Rs. 8,64,341.70, deposited by the petitioner-assessee with Bank of Baroda, State Bank of India and Valsad Jhilla Sahakari Bank of India Ltd., the detail of which are given in the statement annexed to the affidavit filed by the secretary of the petitioner-society, shall remain under attachment till the petitioner's appeals for the assessment years 1983-84 and 1984-85 are disposed of. However, it will be open to the petitioner-society to renew those deposits of any one of those deposits matures before the appeals are disposed of.
6. For the reasons stated above, the order dated December 18, 1991, exhibit C-8 passed by the Commissioner of Income-tax and the order dated January 1, 1992, exhibit C-9, passed by the Income-tax Officer are required to be set aside and two orders both dated December 13, 1991, passed under section 226(3) will have to be modified. Both the orders dated December 13, 1991, shall be treated as operative in respect of the fixed deposits only and not in respect of other amounts which banks or the Deputy Conservator of Forests may be holding for and on behalf of the petitioner-society. However, in order to safeguard the interest of the Income-tax Department, we think it proper to direct the petitioner to give an undertaking to this court not to encash the fixed deposits till the appeals filed by it with respect to the assessments years 1983-84 and 1984-85 are disposed of.
7. In the result, this petition is partly allowed. The impugned orders dated December 18, 1991, exhibit C-8, and dated January 1, 1992, exhibit C-9, are quashed and set aside and the orders dated December 13, 1992, exhibits C-5 and C-6, are modified to the extent stated above. The petitioner shall file an undertaking to this court within three weeks from today. Rule is made absolute accordingly with no order as to costs.