DEVAMATHA ROCK PRODUCTS vs. THE CENTRAL BOARD OF DIRECT TAXES

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WP(C)/27774/2020HC KeralaKLHC01069340202014 December 2020Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala, while hearing the writ petition, quashed the order passed by the 2nd respondent under Section 220(6) of the Income Tax Act (Ext.P4). The Court directed the 3rd respondent (Commissioner of Income Tax (Appeals)) to consider and pass orders on the petitioner's stay petition (Ext.P5) within four months from the date of receipt of the judgment, after hearing the petitioner. Consequently, recovery steps for the amounts confirmed against the petitioner by the assessment order (Ext.P1) were ordered to be kept in abeyance until the 3rd respondent passes an order on the stay petition and communicates it to the petitioner. The Court did not decide on the merits of the assessment order itself, but focused on the procedural aspect of demanding payment during the pendency of a stay application.

What were the facts?

The petitioner, Devamatha Rock Products, is challenging an assessment order (Ext.P1) under the Income Tax Act. They have filed an appeal (Ext.P2) and a stay petition (Ext.P5) before the Commissioner of Income Tax (Appeals), the 3rd respondent. While the stay petition was pending, the Income Tax Officer, Ward 1&TPS, Aluva (2nd respondent) issued an order under Section 220(6) of the Income Tax Act, demanding payment of 20% of the confirmed amount to avoid being declared an assessee in default. The petitioner contends that no payment should be demanded until their stay petition is decided by the appellate authority.

What were the issues?

1. Whether the 2nd respondent was justified in issuing an order under Section 220(6) of the Income Tax Act demanding 20% of the confirmed amount while the petitioner's stay petition was pending before the 3rd respondent appellate authority. Assessee's Contention: The petitioner argued that since a stay petition is pending before the appellate authority, they should not be compelled to pay any amount until the stay petition is considered and decided. They relied on the principle that recovery steps should be deferred pending the decision on a stay application. Revenue's Contention: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 220(6)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR MONDAY, THE 14TH DAY OF DECEMBER 2020 / 23RD AGRAHAYANA, 1942 WP(C).No.27774 OF 2020(V) PETITIONER: DEVAMATHA ROCK PRODUCTS ASAMANNOOR ROAD, ODAKKALY, PERUMBAVOOR, ERNAKULAM-683549 REPRESENTED BY ITS PARTNER LEELA JOSEPH BY ADVS. DR.K.P.PRADEEP SHRI.HAREESH M.R. SRI.T.T.BIJU SMT.T.THASMI RESPONDENTS: 1 2 3 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI-110001, REPRESENTED BY ITS CHAIRMAN INCOME TAX OFFICER, WARD 1&TPS, ALUVA, INCOME TAX DEPARTMENT K.A.P. COMMERCIAL COMPLEX, OFFICE OF ADDITIONAL CIT, ALUVA RANGE, R.S ROAD, ALUVA-683101 COMMISSIONER OF INCOME TAX(APPEALS), KOCHI, POORNIMA BUILDINGS, PANAMPILY NAGAR KOCHI-682036 BY ADV.SRI.CHRISTOPHER ABRAHAM,SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.27774 OF 2020(V) 2

JUDGMENT Against Ext.P1 assessment order order under the Income Tax Act, the petitioner has preferred Ext.P2 appeal and Ext.P5 stay petition before the 3rd respondent. It is the case of the petitioner that in the meanwhile, the 2nd respondent has passed an order under Section 220(6) of the Income Tax Act directing the petitioner to pay 20% of the confirmed amount in order to avoid the status of an assessee in default. It is the case of the petitioner that inasmuch as the stay petition is pending before the 3rd respondent appellate authority, he ought not to be directed to pay any amount till such time as the stay petition is considered by the Appellate Authority.

2.

I have heard the learned counsel appearing for the petitioner and also the learned Government Pleader appearing for the respondents. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I dispose the Writ Petition with a direction to the 3rd respondent to consider and pass orders on Ext.P5 stay petition within four months from the date of receipt of a copy of this judgment, after hearing the petitioner. In order to enable the 3 rd respondent to consider Ext.P5 stay petition, I quash Ext.P4 order of the WP(C).No.27774 OF 2020(V) 3 2nd respondent. Recovery steps for recovery of amounts confirmed against the petitioner by Ext.P1 assessment order shall be kept in abeyance till such time as the 3rd respondent passes orders on Ext.P5 stay petition as directed and communicates the said order to the petitioner. The petitioner shall produce a copy of the writ petition together with a copy of this judgment, before the respondents, for further action. A.K.JAYASANKARAN NAMBIAR

JUDGE mns/14.12.2020

WP(C).No.27774 OF 2020(V) 4

Appendix — schedule of exhibits
APPENDIX PETITIONERS EXHIBITS EXHIBIT -P1 TRUE COPY OF THE ASSESSMENT ORDER NO ITBA/AST/S/143(3)/2019-20/1023308237(1) DATED 28.12.2019 ISSUED FOR THE YER 2017-18 BY THE 2ND RESPONDENT EXHIBIT P2- TRUE COPY OF THE APPEAL DATED 27.01.2020 FILED BEFORE THE 3RD RESPONDENT FOR THE ASSESSMENT YEAR 2017-18 EXHIBIT P3- TRUE COPY OF THE DEMAND NOTICE NO.ITBA/AST/S/156/2019- 20/1023308357(1) DATED 28.12.2019 FOR THE YEAR 2017-18 ISSUED BY THE 2ND RESPONDENT EXHIBIT P4 TRUE COPY OF THE NOTICE NO.ITBA/COM/F/17/2019- 20/1024369070(1) DATED 28.01.2020 FOR THE YEAR 2017-18 ISSUED BY THE 2ND RESPONDENT EXHIBIT P5- TRUE COPY OF THE STAY APPLICATION FILED ON 27.01.2020 BEFORE THE 3RD RESPONDENT IN EXT.P2 APPEAL RESPONDENTS EXHIBITS:NIL //TRUE COPY// P.A TO JUDGE

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