M/S RAINBOW REALTORS, vs. ASST COMMISSIONER OF INCOME TAX,

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WP(C)/9270/2021HC KeralaKLHC01073685202030 November 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS8 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that since the petitioner had already paid the 20% of the disputed tax as directed by the appellate authority, it was reasonable for the interim order of stay to continue until the disposal of the appeals. The Court viewed the order directing the deposit of 20% as an exercise of discretion, and in light of this, no further deposit was warranted. Consequently, the interim order of stay, which was previously extended until the disposal of appeals, was confirmed to continue until such disposal. Furthermore, recognizing that the appeals for assessment years 2011-12, 2012-13, 2015-16, and 2016-17 were still pending, the Court directed the second respondent (CIT(A)) to dispose of these appeals expeditiously, at any rate, within a period of six months from the date of receipt of a copy of the judgment. The writ petition was disposed of with these directions.

What were the facts?

The petitioner, M/s Rainbow Realtors, is an assessee under the Income Tax Act, 1961. The assessee was subjected to significant tax liabilities through assessment orders for assessment years 2011-12, 2012-13, 2015-16, and 2016-17. These orders were challenged before the Commissioner of Income Tax (Appeals) (CIT(A)). Coercive proceedings were initiated for additional assessment years 2013-14 and 2014-15, leading the assessee to approach the High Court in WP(C) No. 2193 of 2019 for a stay. The Court directed the CIT(A) to dispose of stay petitions. The CIT(A) then ordered the deposit of 20% of the demanded amount in four installments. This was challenged in WP(C) No. 15061 of 2019, where the Court increased the installments to six and stayed the balance demand for six months or until appeal disposal, whichever was earlier. Appeals for 2013-14 and 2014-15 were disposed of on 26.02.2020. However, appeals for 2011-12, 2012-13, 2015-16, and 2016-17 remained pending, causing the interim stay to expire.

What were the issues?

1. Whether the interim order of stay granted by the High Court should be extended until the disposal of the pending appeals for assessment years 2011-12, 2012-13, 2015-16, and 2016-17, given that the assessee has already complied with the 20% deposit condition. Assessee's Contention: The assessee argued that since the appeals for the specified assessment years could not be disposed of within the time stipulated by the earlier High Court order, and the interim stay had expired, coercive proceedings should be restrained. They sought a direction for the disposal of these pending appeals in a time-bound manner. Revenue's Contention: The judgment records that the learned Standing Counsel for the revenue was heard, but their specific contentions are not detailed.

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 BECHU KURIAN THOMAS TUESDAY, THE 30TH DAY OF NOVEMBER 2021/ 9TH AGRAHAYANA, 1943 WP(C) NO. 9 270 OF 2021 PETITIONER: M/S RAINBOW REALTORS, RAINBOW SUITES, BELLARD ROAD, KANNUR - 670001, REPRESENTED BY ITS MANAGING PARTNER ETTOOL KALATHIL ABDULHAMEED. BY ADV S.ARUN RAJ RESPONDENTS: 1 ASST COMMISSIONER OF INCOME TAX, CIRCLE - 1, KANNUR - 670006, 2 COMMISSIONER OF INCOME TAX(APPEALS) AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE - 673001, 3 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE - 673001. BY ADV.CHRISTOPHER ABRAHAM-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.9270/21 -:2:- BECHU KURIAN THOMAS, J. ----------------------------------------- W.P.(C) No.9270 of 2021 ---------------------------------------- Dated this the 30th day of November, 2021

JUDGMENT Petitioner is an assessee under the Income Tax Act, 1961. By four different assessment orders for the assessment years 2011-12, 2012-13, 2015-16 and 2016-17, petitioner was saddled with a huge liability. The orders were challenged in appeal before the second respondent.

2.

In the meantime, since coercive proceedings were initiated, including for two more additional assessment years of 2013-14 and 2014-15, petitioner approached this Court through W.P.(C) No.2193 of 2019 seeking stay of the recovery proceedings. By judgment dated 24.01.2019, this Court directed the stay petitions to be disposed of by the appellate authority. Thereafter, the second respondent, by Ext.P5 order, directed the petitioner to deposit 20% of the amount demanded in the assessment orders, for all the years in four instalments. When the said order was challenged before this Court in W.P.(C) No.15061 of 2019, by judgment dated 20.06.2019, this Court found that the condition of 20% directed to be deposited was not arbitrary, however the number of instalments were increased to six instalments. While extending the instalment facility to six instalments, this Court observed that the balance of demand shall stand stayed for six months or till the disposal of the appeal, whichever is earlier.

3.

Though all the appeals were posted for hearing before the 2nd respondent on 19.11.2019, due to a technical issue, only the appeals relating to the assessment years 2013-14 and 2014-15 alone were heard. The remaining appeals, i.e., those for the assessment years 2011-12, 2012-13, 2015-16 and 2016-17 could not be heard on the said date. Thereafter, by order dated 26.02.2020, the appeals relating to the assessment years 2013-14 and 2014-15 were disposed of.

4.

Petitioner contends that, unfortunately, since the appeals for the assessment years 2011-12, 2012-13, 2015-16 and 2016-17 could not be disposed of and the interim order of stay granted by this Court prescribed a time limit of six months or till the disposal of the appeal whichever was earlier, the stay granted by this Court expired in the meantime. It is in such circumstances that the petitioner has approached this Court seeking a direction to dispose of the appeals for the aforesaid years in a time bound manner and also to restrain the continuance of the coercive proceedings, till such orders are passed.

5.

I have heard the learned counsel for the petitioner, Sri.Arun Raj S., as well as the learned Standing Counsel Sri.Christopher Abraham.

6.

On a consideration of the issues arising in the case, I am of the view that since the petitioner had already paid the 20% directed to be deposited, it is only reasonable that the interim order continues till the disposal of the appeal. The order directing deposit of 20% of the disputed tax is an exercise of discretion. When such a discretion was exercised, a direction for any further deposit is not warranted in the facts and circumstances of the case.

7.

In view of the above, the interim order dated 11.03.2019 in ITA-11222, ITA-11225, ITA-11227, ITA-11232/CIT(A)/CLT/2016-17, ITA No.11232, ITA 11311/CIT(A)/CLT/2018-19 as ordered through Ext.P5, shall stand extended until disposal of the said appeals.

8.

Since the appeals preferred by the petitioner for the assessment years 2011-12, 2012-13, 2015-16 and 2016-17 are still pending consideration before the second respondent, it is essential in the interests of justice that the said appeals be directed to be disposed of in a time bound manner.

9.

Accordingly while the interim stay already directed will continue till disposal of the appeals, there will be a direction to the second respondent to consider and pass appropriate orders on the appeals filed by the petitioner relating to the assessment years 2011- 12, 2012-13, 2015-16 and 2016-17, as expeditiously as possible, at any rate, within a period of six months from the date of receipt of a copy of this judgment. The writ petition is disposed of as above. BECHU KURIAN THOMAS JUDGE vps

Appendix — schedule of exhibits
APPENDIX OF WP(C) 9270/2021 PETITIONER'S/S' EXHIBITS EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 31.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2011-12. EXHIBIT P1(a) TRUE COPY OF THE ASSESSMENT ORDER DATED 31.12.2016 PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2012-13. EXHIBIT P1(b) TRUE COPY OF THE ASSESSMENT ORDER DATED 29.12.2017 PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2015-16. EXHIBIT P1(c) TRUE COPY OF THE ASSESSMENT ORDER DATED 28.12.2018 PASSED BY THE DY.CIT. ASMNT. FOR THE AY 2016-17. EXHIBIT P2 TRUE COPY OF APPEAL MEMORANDUM ALONG WITH THE GROUND OF APPEAL FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY 2011-12. EXHIBIT P2(a) TRUE COPY OF THE APPEAL MEMORANDUM ALONG WITH THE GROUND OF APPEAL FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY 2012-13. EXHIBIT P2(b) TRUE COPY OF THE APPEAL MEMORANDUM ALONG WITH THE GROUND OF APPEAL FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY 2015-16. EXHIBIT P2(c) TRUE COPY OF THE APPEAL MEMORANDUM ALONG WITH THE GROUND OF APPEAL FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER FOR THE AY 2016-17. EXHIBIT P3 TRUE COPY OF STAY PETITION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT FOR THE AY 2011-12. EXHIBIT P3(a) TRUE COPY OF STAY PETITION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT FOR W.P.(C) No.9270/21 -:7:- THE AY 2012-13 EXHIBIT P3(b) TRUE COPY OF STAY PETITION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT FOR THE AY 2015-16. EXHIBIT P3(c) TRUE COPY OF STAY PETITION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT FOR THE AY 2016-17. EXHIBIT P4 TRUE COPY OF THE JUDGMENT DATED 24.01.2019 IN WP(C) NO. 2193/2019 PASSED BY THIS HONOURABLE COURT. EXHIBIT P5 TRUE COPY OF THE COMMON ORDER DATED 11.3.2019 PASSED BY THE 2ND RESPONDENT EXHIBIT P-3,P-3(A), P-3(B) AND P-3(C) FOR THE AY'S 2011-12, 2012-13, 2015-16 AND ALSO IN THE STAY PETITIONS FOR AY'S 2013-14 AND 2014-15. EXHIBIT P6 TRUE COPY OF THE JUDGMENT DATED 20.06.2019 IN WP(C) NO. 15061 OF 2019 PASSED BY THIS HONOURABLE COURT. EXHIBIT P7 TRUE COPY OF THE JUDGMENT DATED 13.08.2019 IN W.A NO. 1769 OF 2018 PASSED BY THE DIVISION BENCH OF THIS HONOURABLE COURT. EXHIBIT P8 TRUE COPY OF THE ORDER PASSED BY THIS HONOURABLE COURT IN I.A NO.1/2019 IN WP(C) NO. 15061 OF 2019. EXHIBIT P9 TRUE COPY OF THE FORM 26AS FOR THE RELEVANT ASSESSMENT YEAR 2011-12. EXHIBIT P9(a) TRUE COPY OF THE FORM 26AS FOR THE RELEVANT ASSESSMENT YEAR 2012-13. EXHIBIT P9(b) TRUE COPY OF THE FORM 26AS FOR THE RELEVANT ASSESSMENT YEAR 2015-16. EXHIBIT P9(c) TRUE COPY OF THE FORM 26AS FOR THE RELEVANT ASSESSMENT YEAR 2016-17. EXHIBIT P10 TRUE COPY OF THE NOTICE OF POSTING FOR HEARING THE THE APPEALS FOR THE AY 2011- 12. EXHIBIT P10(a) TRUE COPY OF THE NOTICE POSTING FOR W.P.(C) No.9270/21 -:8:- HEARING THE APPEALS FOR THE AY 2012-13. EXHIBIT P10(b) TRUE COPY OF THE NOTICE POSTING FOR HEARING THE APPEALS FOR THE AY 2015-16. EXHIBIT P10(c) TRUE COPY OF THE NOTICE POSTING FOR HEARING THE APPEALS FOR THE AY 2016-17.

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