SINHGAD TECHNICAL EDUCATION SOC. vs. DY. COMMISSIONER OF INCOME TAX AND ANR.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE CIVIL JURISDICTION WRIT PETITION NO. 14612 OF 2018 Sinhgad Technical Education Society, Pune .. Petitioner. v/s. Deputy Commissioner of Income Tax Central Circle 2(2), Pune & Another .. Respondents. Mr. Rafique Dada, Sr. Advocate with Mr. V. P. Sawant and Mr. Niraj Sheth i/b. Mr. Nitin Dhumal, for the Petitioner. Mr. Sham Walve, for Respondent No.

In   the   result,   all   the   stay,   applications   filed   by   the applicant are allowed as indicated above.”

Petitioner­Trust challenged the said conditional order of the Tribunal before the High Court, by filing Writ Petition No. 13099 of 2017. In the said Petition, this Court noticed a mis­representation of the Court's order by the President of the Petitioner­Trust and in connivance with the Income Tax Officer, the Trust had withdrawn sizeable amount from its bank accounts. The Division Bench of this Court, therefore, passed a detailed order on 5th January, 2018 dismissed the Petition on ground of such   mis­demeanor.   The   Court   also   initiated  suo   moto  contempt proceedings   against   the   President   of   the   Petitioner­Trust   and   the concerned   employee   of   the   Income   Tax   Department.   This   Contempt Petition   later   on   resulted   into   imposition   of   jail   term   against   the contemptnors which was also confirmed by the Supreme Court. 5 Subsequent to these developments, Tribunal passed an order on 18th  December, 2018 in the pending Appeals of the Petitioner­Trust. The Petitioner­Trust had got no relief against conditions imposed by the Tribunal  under  order dated  10th  November, 2017 to  enjoy  protection against the recoveries of the unpaid tax and interest, nor fulfilled such conditions.  The Tribunal, therefore, by its order on 18th December, 2018 dismissed the fresh stay applications filed by the Petitioner­Trust. This, order of the Tribunal passed on 18th December, 2018, Petitioner­Trust has challenged in the present Writ Petition.  In the meantime, the Department has   attached   the   Petitioner's   bank   accounts.   The   Petitioner   prays   for removing such attachments. 6 At the out set, Mr. Dada, learned Senior Counsel for the Petitioner­Trust   states   that,   Petitioner­Trust   does   not   desire   that   the condition of the Petitioner­Trust depositing an amount of Rs.18 Crores with the Income Tax Department, originally imposed in the order dated 10th  November,   2017   be,   in   any   manner,   modified   by   reducing   the condition.  He, further submitted that since Petitioner­Trust failed to get any modification of this order and also did not fulfill the conditions, the Department now seeks recovery of the entire tax dues which is in the vicinity   of   Rs.142   Crores   with   interest.   He   submitted   that,   even   the Tribunal in its earlier order dated 10th  November, 2017 recorded that, Petitioner­Trust   has,  prima   facie,   case.   Counsel   submitted   that   the Petitioner­Trust runs several educational institutions and hospitals. On account   of   the   tax   dues   and   the   coercive   recovery   initiated   by   the Department, the Petitioner­Trust finds it extremely difficult to run these institutions. He further submitted that in the different bank accounts, which are under the attachment of the Department, a sum of Rs.18 Crores is already lying. He clarified that this includes a sum of Rs.1,11,37,877/­ payable by the Government of India to the Petitioner­Trust, which also, the   Income   Tax   Department   has   attached.   The   Department   may   be allowed to withdraw Rs.18 Crores from such balance and upon which, Petitioner­Trust may be granted stay against further recoveries. 7 On   the   other   hand,   learned   Counsel   for   the   Department submitted that looking to the Petitioner's past conduct, Petitioner does not deserve unconditional stay of coercive recovery.  The condition of deposit of Rs.18 Crores was imposed by the Tribunal way­back in the month of November, 2017. Petitioner­Trust at any rate   cannot now expect stay against recoveries on same terms. 8 We have noted the facts which emerge from the record. We are conscious of the Petitioner's earlier Petition being dismissed by this Court on the ground of conduct. However, in the present Petition, we are dealing with Petitioner's challenge to fresh order dated 18th  December, 2018 passed by the Tribunal, which can be seen as a  fresh cause of action and which may not be allowed to be mixed up with past events, at least, in so far as the maintainability of the Petition is concerned.  We, have, therefore, heard learned Counsel for the parties on merits. 9 What prima facie emerges is that, the Tribunal had passed an order on 10th November, 2017, protecting the Petitioner­Trust against the recoveries of unpaid tax and interest on the condition that, the Petitioner­ Trust deposits with the Department, a total sum of Rs.18 Crores in three equal   installments.   Since   Petitioner­Trust   could   neither   have   these conditions altered, nor could the Petitioner­Trust fulfill the conditions, the Tribunal later on passed the impugned order on 18th  December, 2018, rejecting the stay applications of the Petitioner­Trust.  This would give rise to recovery of entire tax of around Rs.142 Crores with interest.  It would be   open   to   and   in   fact,   department   has   initiated   coercive   recovery. Whatever be the interim events, we cannot lose sight of the fact that the Tribunal in its order dated 10th November, 2017 had found prima facie case in favour of the Petitioner which persuaded the Tribunal to grant stay against and further recoveries on the condition of depositing Rs.18 Crores. Not protecting the Petitioner­Trust at this stage, may have severe adverse effect   on   running   its   several   educational   and   medical   institutions, rendering the staff jobless and students without college. 10 We would, therefore, put the Petitioner­Trust back to the same position as on 10th  November, 2017. The Tribunal had granted conditional stay to the Petitioner­Trust, which order, in any case, the Department   had   not   challenged.   However,   we   cannot   lose   sight   of passage of time in between. We, therefore, insist that the Petitioner­Trust deposits with the Department a total sum of Rs.20 Crores, upon which, there shall be stay against further recoveries.  Petitioner­Trust would also co­operate for the early disposal of the Appeals before the Tribunal. 11 Before closing, we notice that the Division Bench of this Court in Writ Petition No. 408 of 2018 and other connected Petitions has passed an order on 18th June, 2018, recording the dispute between the Petitioner­ Trust and the Income Tax Department.  In such Petition, the Petitioner­ Trust and the similarly situated Trusts have complained about the State Government not releasing educational grants.  From the said order passed by the Division Bench, we notice that under the order of the Court, the State Government has deposited sizeable amount which is payable to the Petitioner­Trust.  However, Division Bench did not release said amount in favour of the Petitioner, instead made following observations:­ “ Therefore, we direct that since the amount has now been credited   to  the   account   of   the   State   of  Maharashtra  and   the account of this Court in the RBI is now debited, as is clear from the certificate tendered today, let the State Government retain that   sum   till   5th  July,   2018   with   it   without   making   any adjustment or appropriation towards its outstanding dues nor it should remit the same to the Management. If within this time suitable   orders   and   directions   are   obtained   by   the   petitioner­ Management from the Bench, which is assigned cases under the direct tax laws, our order would take due note of the same and thereafter, further directions would be issued.   In the event no clarifications/directions   are   obtained   within   this   time,   on   the adjourned date, the court would be free to pass such orders as are permissible in law.” 12 We   leave   it   to   the   Petitioner­Trust   to   approach   the   Co­ ordinate   Bench   in   such   pending   Petition   for   appropriate   order   with respect to such funds.

13 In view of the above facts, Petition is disposed of with the following directions:­ (i) Petitioner­Trust shall deposit in its bank account such amount as may be necessary so as to make the total balance available between all accounts of the Petitioner­Trust to a minimum of Rs.20 Crores. This shall be done within six weeks from today.  It is clarified that this   requirement   of   raising   a   total   of   Rs.20   Crores   would include   a   sum   of   Rs.1,11,37,877/­   payable   by the Government of India to the  Petitioner­Trust which also Income Tax Department has attached; (ii) As soon as this is done, the Petitioner shall intimate it to the Department in writing. (iii) The   Tribunal     to   expedite     the   hearing   of   the   Petitioner's Appeals and dispose of preferably within six months from the date of receipt of this order; (iv) Petitioner­Trust is directed to co­operate with such early disposal of the Appeals; (v) Upon Petitioner­Trust fulfilling conditions of raising total sum of Rs.20 Crores in the bank accounts (inclusive of Rs.1,11,37,877/­) as mentioned above,  the Department  would withdraw and  adjust the same against the Petitioner's outstanding dues; (vi) As soon as Petitioner­Trust fulfills the conditions contained in clause (i) above, the bank account and other attachments would stand revoked; (vii) There shall be stay against further recoveries of the tax and interest dues arising out of the Petitioner's pending Appeals till the final disposal. By virtue of this order and subject to the Petitioner­Trust fulfilling   conditions   contained   herein   above,   there   shall   be   no further recoveries of the impugned tax dues from any source. (viii) It   would   be   open   for   the   Petitioner­Trust   to   approach   the   Co­ ordinate Bench in pending Writ Petition No.408 of 2018 and pray for   appropriate   relief   in   such   Petition   after   fulfilling   these conditions. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.) 8