AMRITSAR IMPROVEMENT TRUST vs. ASSTT. COMMSSIONER OF INCOME TAX, AND ORS.

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CWP/13613/2009HC Punjab & HaryanaPHHC01061303200908 February 2010Author: MR. JUSTICE ALOK SINGH,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court directed the CIT(A) to decide the stay application and the appeal of the petitioner in accordance with law. Until such a decision is taken, the demand of tax against the petitioner will not be enforced. The Court reasoned that it would be appropriate to await the decision of the appellate authority on the stay application and the substantive appeal before enforcing the demand. The ratio decidendi is that procedural fairness requires a decision on a stay application before coercive recovery measures are initiated, especially when an appeal is pending. The petition was disposed of with these directions.

What were the facts?

The petitioner, Amritsar Improvement Trust, is an entity constituted under the Punjab Town Improvement Act, 1922. It was previously exempt from income tax under Section 10(20A) of the Income Tax Act, 1961. Amendments to the Act necessitated a fresh application for exemption. An Income Tax Appellate Tribunal order dated 22.2.2008 granted exemption under Section 12 of the Act. However, an assessment order dated 25.6.2008 for assessment year 2005-06 raised a tax demand. An appeal against this demand was pending before the CIT(A), along with a stay application. The matter was remanded to the CIT(A), leading to a fresh demand. The petitioner filed another stay application (Annexure P-12), but no decision was taken. The petitioner sought quashing of a notice dated 25.8.2009 for recovery of tax.

What were the issues?

1. Whether the demand of tax against the petitioner should be enforced while its stay application and appeal are pending before the CIT(A)? (Question of mixed law and fact, concerning procedural fairness and the Income Tax Act, 1961). Assessee's contention: The petitioner argued that it would not be fair to enforce the tax demand until its stay application (Annexure P-12) is decided. Revenue's contention: The revenue had no objection if a direction was issued for the decision of the appeal and the stay application before the demand is made.

Which sections of the Income-tax Act were involved?

Section 10(20A),Section 12

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.13613 of 2009 (O&M) Date of decision: 8.2.2010 The Amritsar Improvement Trust. -----Petitioner. Vs. Assistant Commissioner of Income Tax & others. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE ALOK SINGH Present:- Mr. Rohit Sood, Advocate for the petitioner. Ms. Naveender P.K. Singh, Standing Counsel for the respondents. ---

ORDER:

1.

This petition, inter-alia, seeks quashing of Notice dated 25.8.2009, Annexure P-11, for recovery of tax assessed from the petitioner.

2.

The petitioner is an Improvement Trust constituted under the provisions of the Punjab Town Improvement Act, 1922 and was exempt from the tax under Section 10(20A) of the Income Tax Act, 1961 (for short, “the Act”) upto the assessment year 2002-03 when amendments were made to the Act, necessitating fresh application by the petitioner for seeking exemption. Order dated 22.2.2008 was passed by the Income Tax Appellate Tribunal, as a result of which the petitioner is exempted from tax under Section 12 of the Act. However, as per assessment order dated 25.6.2008, Annexure P-3, for the assessment year 2005-06, demand of tax was raised from the CWP No.13613 of 2009 petitioner, against which appeal was pending before the CIT(A) and application for stay was also made therein. Though initially stay was granted but thereafter, the matter was taken to the Tribunal and thereafter, again remanded to the CIT(A), on account of which, fresh demand was raised. The petitioner filed application for stay, Annexure P-12, but no decision was being taken.

3.

Learned counsel for the petitioner submits that till application, Annexure P-12 is decided, it will not be fair to enforce demand against the petitioner.

4.

We have heard learned counsel for the parties.

5.

Learned counsel for the revenue has no objection if direction is issued for decision of the appeal and also the stay application before the demand is made.

6.

Accordingly, we direct the CIT(A) respondent No.3, where the appeal is said to be pending, to take a decision on the stay application and appeal of the petitioner in accordance with law and till such a decision is taken, we direct that demand of tax against the petitioner will not be enforced.

7.

The petition is disposed of. (ADARSH KUMAR GOEL) JUDGE February 08, 2010 ( ALOK SINGH ) ashwani JUDGE 2

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