SHAILESHKUMAR DHIRAJLAL TERAIYA vs. THE DEPUTY COMMISSIONER OF INCOME TAX. CENTRAL CIRCLE 2(1), AHMEDABAD

C/SCA/18459/2021 ORDER DATED: 07/02/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 18459 of 2021 With R/SPECIAL CIVIL APPLICATION NO. 18704 of 2021 With R/SPECIAL CIVIL APPLICATION NO. 18709 of 2021 ========================================================== NAMRATA SHAILESH KUMAR TERAIYA Versus DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), AHMEDABAD ========================================================== Appearance: MR RAVISH D BHATT(5867) for the Petitioner(s) No. 1 MS HIMANI J CHOUHAN(10826) for the Petitioner(s) No. 1 RUCHIKA R SHARMA(9635) for the Petitioner(s) No. 1 MR MR BHATT, SENIOR COUNSEL WITH MR KARAN SANGHANI, ADVOCATE FOR THE RESPONDENTS NOTICE SERVED BY DS for the Respondent(s) No. 1,2,3,4 SERVED BY RPAD (N) for the Respondent(s) No. 5 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 07/02/2022

COMMON ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 Since the issues raised in all the captioned writ applications are the same, those were taken up for hearing analogously and are being disposed of by this common order. 2 For the sake of convenience, the Special Civil Application No.18459 of 2021 is treated as the lead matter. 3 By this writ application under Article 226 of the Constitution of India, the writ applicant – an assessee has prayed for the following Page 1 of 7

C/SCA/18459/2021 ORDER DATED: 07/02/2022 reliefs: “(A) Admit and allow the present application. (B) Issue a writ of mandamus and/or any other order or direction inter alia quashing and setting aside the impugned order dated 13th November 2021 (Annexure A) passed by the present respondent no.1 and further be pleased to issue directions to respondent no.1 to pass reasoned and speaking order after providing opportunity of hearing to the applicant on the application dated 01st November 2021 (Annexure K) under Section 220(6) of the Act, in the interest of justice. (C) Issue a writ of mandamus and/or any other order or direction of quashing and setting aside the impugned communication dated 17th November 2021 (Annexure O) inter alia effecting attachment of the car of the applicant being Mercedes Benz Car, Model NO.E350D, in the interest of justice. (D) Issue appropriate writ, order or direction to the respondent no.3 to decide the pending applications of the applicant dated 16th November 2021 (Annexure C) expeditiously and in accordance with law in the interest of justice. (E) Issue appropriate directions restraining respondent no.4 from taking recourse to any coercive measures for recovery of disputed tax demand during the pendency of the stay application before the respondent no.3, in the interest of justice. (F) Pending admission, hearing and final disposal of this petition, pass an order of restraining the respondent no.4 from taking recourse to any sort of coercive action for recovery of disputed tax demand pursuant to his pursuant to his demand notice dated 29th October 2021 (Annexure I). (G) Grant ad-interim relief in terms of para 8(F) above. (H) pass any other and further order as may be deemed just, fit and proper looking at the facts and circumstances of the case in the ends of justice.” 4 The facts giving rise to this litigation may be summarized as under: 5 It appears from the materials on record that the search and seizure Page 2 of 7

C/SCA/18459/2021 ORDER DATED: 07/02/2022 operations were carried out at the premises of the writ applicant under Section 132 of the Income Tax, 1961 (for short, “the Act, 1961”) on 11th October 2019. Pursuant to the search and seizure operations, the proceedings of assessment under Sections 153A read with 143(3) of the Act for the assessment years 2014-15 to 2020-21 were undertaken. The same resulted in passing of various assessment orders dated 25th September 2021. The table below would indicate the assessed income under Section 153A compared to the regular assessment under Section 139(1) of the Act: Sr. No. Assessment Year Return

Under Section 139(1) Assessed

Income under Section 153(A) 1 2014-15 3,45,000 9,43,696 2 2015-16 3,50,990 12,91,159 3 2016-17 3,84,070 23,50,630 4 2017-18 3,69,660 46,75,407 5 2018-19 3,36,740 27,04,590 6 2019-20 4,90,140 79,94,659 7 2020-21 1,55,150 85,26,717 6 It further appears that the writ applicant made a request to the assessing officer to stay the demand as the writ applicant has preferred appeals under Section 264A of the Act against the final assessment orders. The Assessing Officer asked the writ applicant to deposit 20% of the total demand for the purpose of staying the further recovery. 7 In such circumstances referred to above, the writ applicant went before the Joint Commissioner. The Joint Commissioner, vide intimation dated 25th November 2021, brought to the notice of the writ applicant that in a case where a demand has been made by the Assessing Officer of 20% of the disputed demand by way of pre-deposit and the assessee is still aggrieved, the assessee has to approach the jurisdictional Page 3 of 7

C/SCA/18459/2021 ORDER DATED: 07/02/2022 administrative Principal Commissioner of Income Tax for review of such decision of the Assessing Officer. 8 The intimation referred to above reads thus: “Subject : Regarding stay for outstanding demand for Assessment Year A.Y. 2014-15 to 2020-21 – reg. Ref : Your stay petition filed on 16.11.2021. …. Please refer to the above. 2 Your attention is invited to CBDT OM number F.No.404/72/93- ITCC dated 29/02/2016 and 31.07.2017 which partially modified the instruction NO.1914 dated 21/03/1996. Clause (c) to para 4 of the above instruction provides as under:- “In a case where stay of demand is granted by the assessing officer on payment of 20% of the disputed demand and the assessee is still aggrieved, he may, approach the jurisdictional administrative Pr. CIT/CIT for review of the decision of the assessing officer.” In view of the above, you are requested to approach the Pr. CIT (Central), Ahmedabad for a review of the decision of the Assessing Officer. 3 Your petition dated 16.11.2021 accordingly stands disposed off.” 9 Thus, it appears that the writ applicant went before an authority praying for stay who could be said to be having no jurisdiction to stay the demand of the total liability assessed. 10 In such circumstances referred to above, the writ applicant came before this Court with the present writ applications. 11 When this writ application was taken up for hearing for the first Page 4 of 7

C/SCA/18459/2021 ORDER DATED: 07/02/2022 time, an argument was canvassed before us that the case is one of a high pitched assessment, and in such circumstances, at least, till the point of time the CIT(A) decides the appeals, the demand or the recovery should be stayed. The learned counsel appearing for the writ applicant also pointed out the financial hardships that the writ applicant may have to face if he is to deposit 20% of the total demand for getting the recovery stayed. 12 This Court vide order dated 17th January 2022 issued notice and also passed an ad-interim order in terms of para 8(F). 13 Today, when the matter was taken up for further hearing, Mr. M. R. Bhatt, the learned Senior Counsel appeared for the Revenue pointed out that in the appeals filed by the writ applicant before the CIT(A) under Section 246A of the Act, interim applications have also been filed requesting the CIT(A) to stay the demand or recovery. 14 In a very recent pronouncement by this very Bench in the case of Harsh Dipak Shah vs. Union of India [Special Civil Application No.19804 of 2021 decided on 4th January 2022], this Court took the view that the Principal Commissioner, undoubtedly, has the power and the jurisdiction to stay the demand or recovery under Sub-section (6) of Section 220 of the Act, but while saying so, this Court also took the view that the CIT(A), being an appellate authority, also has the inherent power to stay the recovery or demand pending the final disposal of the appeal. We quote the relevant observations in this regards as under: “50. So far as the other two connected writ applications are concerned, we decline to interfere having regard to the quantum of the amount involved in both the matters. However, we leave it open for the writ applicants of both the said writ applications to file an appropriate application seeking appropriate relief before the First Appellate Page 5 of 7

C/SCA/18459/2021 ORDER DATED: 07/02/2022 Authority, i.e, the CIT (Appeals). We are saying so because such powers to grant stay can be implied as inherent power of the First Appellate Authority. The powers of the Appellate Authorities are indisputably concurrent and co-extensive with that of the Assessing Authority but wider and superior in nature. Section 251 of the Act clearly stipulates that in disposing of an appeal, the CIT (Appeals) can confirm, reduce, enhance or annul the assessment. Section 251 (1) (c) of the Act further provides that in other cases, he may pass such orders in appeal as he thinks fit. These words harmoniously read, definitely mean that powers of appellate authorities under the Act are wide enough. Such powers could not be intended to be drained out or rendered meaningless, if the power to grant stay against the recovery of disputed demand is to be taken away from the first appellate authority. Such implied, necessary and inherent power must necessarily be read into these provisions conferring the powers upon the appellate authority to modify the impugned assessment order in any manner. In specific terms, the first appellate authority can even enhance the taxable income, while he has the power to reduce or completely set at naught the assessment. The words "as he thinks fit" in Section 251 (1) (C) are not redundant, as no such redundancy can be attributed to the Parliament. Therefore, mere absence of words "power to grant stay" in Section 251 of the Act cannot mean that such powers are specifically excluded from the jurisdiction of the first appellate authority. [See Maheshwari Agro Industries vs. Union of India, (2012) taxmann.com 68 (Raj.)]” 15 We are of the view that no useful purpose would be served by adjudicating this writ application on merits because we want the CIT(A) to look into the interim applications filed by the writ applicant and take an appropriate decision whether any case has been made out for stay of the demand or recovery pending the final disposal of the appeals. 16 All the three writ applications are disposed of with a direction to the CIT(A) to take up all the interim applications filed by the writ applicants and pass an appropriate order in accordance with law. Till the CIT(A) decides such applications, the interim order passed by this Court shall continue. We may only observe that while deciding such applications, the CIT (A) shall keep in mind the principles of law explained by this Court in the case of Harsh Dipak Shah (supra). Page 6 of 7

C/SCA/18459/2021 ORDER DATED: 07/02/2022 17 With the aforesaid, all the three writ applications stand disposed of. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) CHANDRESH Page 7 of 7