HY. STATE COOP SUPPLY AND MARKETING FED. vs. COMMR. OF INCOME TAX PKL AND ANR.

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CWP/4345/2008HC Punjab & HaryanaPHHC01068066200824 March 2008Author: MR JUSTICE RAKESH KUMAR GARG,MR. JUSTICE SATISH KUMAR MITTAL3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Assessing Officer should keep the disputed demand in abeyance until the disposal of the petitioner's appeal by the CIT(A). This decision was based on the admitted position that the appeal was pending and that a similar issue had been decided in the assessee's favour for an earlier assessment year by the Income Tax Appellate Tribunal. The Court also considered CBDT Circular No. 530, which provides that in such circumstances, the assessee should not be treated as in default. The Court directed the CIT(A) to dispose of the petitioner's appeal within two months. The petition was disposed of accordingly.

What were the facts?

The petitioner, Haryana State Co-operative Supply & Marketing Federation Ltd., filed a writ petition challenging a notice dated 18.2.2008 for recovery of additional demand arising from an assessment order dated 24.12.2007. For assessment year 2005-06, the petitioner claimed exemption under Section 80P(2)(e) for godown rent, which the Assessing Officer disallowed under Section 143(3). The petitioner contended that a similar claim was allowed in an earlier year and upheld in appeal. An appeal against the current assessment order was pending before the CIT(A). The petitioner's application to the Assessing Officer to keep the demand in abeyance, citing CBDT Circular No. 530, was ignored. The Assessing Officer proceeded to demand the disputed amount, prompting the writ petition.

What were the issues?

1. Whether the Assessing Officer was justified in issuing a notice for recovery of additional demand when the assessee's appeal against the assessment order was pending before the CIT(A)? (Question of law and fact, relating to recovery proceedings during pendency of appeal). Assessee's Contentions: - The Assessing Officer should have kept the disputed demand in abeyance in view of CBDT Circular No. 530, which mandates that where a disputed issue has been decided in favour of the assessee in an earlier year by an appellate authority or court, the assessee should not be treated as in default pending appeal. - The Assessing Officer ignored this circular and the fact that a similar issue was decided in the assessee's favour in a prior assessment year. Revenue's Contentions: - The revenue did not dispute that the appeal filed by the petitioner was pending. - The revenue did not dispute that for an earlier assessment year, the Income Tax Appellate Tribunal had decided a similar issue in favour of the assessee.

Which sections of the Income-tax Act were involved?

Section 80P(2)(e),Section 143(3),Section 119

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No. 4345 of 2008 DATE OF DECISION : 24.03.2008 Haryana State Co-operative Supply & Marketing Federation Ltd., Panchkula .... PETITIONER Versus Commissioner of Income Tax, Panchkula and another ..... RESPONDENTS

CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE RAKESH KUMAR GARG

Present: Mr. Rajesh Garg, Advocate, for the petitioner. Mr. Yogesh Putney, Advocate, for the respondents.

* * * SATISH KUMAR MITTAL , J.

The petitioner has filed this writ petition under Articles 226/227 of the Constitution of India for setting aside the notice dated 18.2.2008 (Annexure P-3), issued by the Assessing Officer, respondent No.2 herein, for recovery of the additional demand in terms of the assessment order dated 24.12.2007 (Annexure P-1) passed by him; and further for issuance of a writ in the nature of mandamus directing respondent No.2 not to recover the disputed demand during the pendency of the first appeal filed by the petitioner.

-2- In the present case, the petitioner filed return of its income for the assessment year 2005-06, in which it claimed exemption under Sections 80P (2) (e) of the Income Tax Act, 1961 (hereinafter referred to as `the Act') being rent of the godowns. The Assessing Officer, while framing the assessment under Section 143 (3) of the Act, disallowed the exemption, claimed by the petitioner. It is the case of the petitioner that in the earlier assessment year, the similar claim made by it was allowed and the said order was upheld in appeal. It is the further case of the petitioner that against the assessment order, it has already filed an appeal before the Commissioner of Income Tax (Appeals) [hereinafter referred to as `the CIT (A)], which is pending. Therefore, the petitioner moved application before the Assessing Officer for keeping the disputed demand in abeyance, in view of the Circular No. 530 dated 6.3.1989, passed by the Central Board of Direct Taxes under Section 119 of the Act. The Assessing Officer, without considering the prayer and by ignoring the aforesaid Circular, asked the petitioner to deposit the disputed amount of additional demand. In that situation, the petitioner has filed the instant petition.

We have heard counsel for the parties. Undisputedly, the appeal filed by the petitioner against the assessment order is still pending. It has also not been disputed by counsel for the respondents-revenue that for the earlier assessment year of the petitioner-assessee, the Income Tax Appellate Tribunal has decided the -3- similar issue in favour of the assessee. In view of the aforesaid admitted position as well as the Circular No. 530 dated 6.3.1989, which provides that where the demand in dispute relates to issues that have been decided in favour of the assessee in an earlier year by an appeallate authority or court in assessee's own case, the assessee shall not be treated in default in respect of amount attributable to such disputed points so long as such appeal remains un-disposed of, we deem it appropriate that till the disposal of the appeal of the petitioner by the CIT (A), respondent No.2 will keep the disputed amount in abeyance. However, we further direct the CIT (A) to dispose of the appeal filed by the petitioner, within a period of two months. Petition stands disposed of accordingly. ( SATISH KUMAR MITTAL ) JUDGE March 24, 2008 ( RAKESH KUMAR GARG ) ndj JUDGE

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