PARLE INTERNATIONAL LTD. vs. COMMISSIONER OF INCOME TAX AHMEDABAD III

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SCA/3118/2004HC GujaratGJHC24010410200412 March 2004Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE A.M.KAPADIA3 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court, in view of the extraordinary and peculiar circumstances, restrained the respondent-authorities from making any coercive recovery of the petitioner's tax dues pending the ITAT's decision on the stay application. Consequently, the respondent-authorities were directed to release the attached bank accounts. This relief was granted upon the petitioner's undertaking, to be filed by its Managing Director, not to withdraw Rs. 4 crores from the investment made under Section 54EA. The bank accounts were to be released from attachment with effect from the date of the order, provided the undertaking was filed by March 15, 2004. The Court expected the ITAT to hear the stay application on March 26, 2004, and decide it by March 31, 2004. The High Court clarified that it had not gone into the merits of the stay application and passed the order solely based on the peculiar facts. The petition was disposed of in terms of these directions.

What were the facts?

Parle International Ltd. (the petitioner) filed a Special Civil Application under Article 226 of the Constitution challenging coercive recovery actions, including attachment of its bank accounts, for non-payment of income-tax dues. The petitioner had already filed an appeal before the Income-tax Appellate Tribunal (ITAT), Ahmedabad, along with a stay application. The ITAT's hearing for the stay application was adjourned due to the death of a member's wife, with the next hearing scheduled for March 26, 2004. The petitioner had paid 33% of the tax demand or 24% of the tax-cum-interest demand. The petitioner also disclosed disposing of an undertaking for Rs. 29.34 crores, invested under Section 54EA of the Income Tax Act, which was still held in a mutual fund.

What were the issues?

1. Whether the High Court should entertain a petition under Article 226 of the Constitution challenging coercive recovery proceedings when an appeal and stay application are pending before the ITAT? Assessee's contentions: The petitioner sought intervention due to peculiar circumstances. Firstly, the stay application hearing was adjourned to March 26, 2004, from March 5, 2004, due to the death of a Tribunal member's wife. Secondly, the petitioner had already paid a substantial portion of the demand. Thirdly, the petitioner had invested Rs. 29.34 crores under Section 54EA, which was earning income, and undertook not to withdraw Rs. 4 crores from this investment until the stay application was decided by the Tribunal. Revenue's contentions: The judgment does not record any specific contentions from the revenue. It notes that the learned Standing Counsel for the respondent waived service of Rule on an advance copy of the petition.

Which sections of the Income-tax Act were involved?

Section 54EA

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

SPECIAL CIVIL APPLICATION No 3118 of 2004

For Approval and Signature:

HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE A.M.KAPADIA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

-------------------------------------------------------------- PARLE INTERNATIONAL LTD. Versus COMMISSIONER OF INCOME TAX AHMEDABAD III -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 3118 of 2004 MR JP SHAH for Petitioner No. 1 .......... for Respondent No. 1-2 --------------------------------------------------------------

CORAM : HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE A.M.KAPADIA

Date of decision: 12/03/2004

ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE M.S.SHAH)

RULE. Mr Manish R Bhatt, learned Standing

Counsel waives service of Rule on an advance copy of the petition having been served. In the facts and circumstance of the case, the petition is taken up for final disposal today.

What is challenged in this petition under Article 226 of the Constitution is the coercive recovery being made by the respondent-authorities including attachment of the petitioner's bank accounts for non-payment of its income-tax dues. The petitioner has already filed an appeal before the Income-tax Appellate Tribunal, Ahmedabad along with Stay Application No.9/Ahd/2004 for stay of recovery, pending hearing of the appeal.

Ordinarily, this Court would not entertain such petitions. However, the learned counsel for the petitioner has pointed out the following peculiar facts and circumstances of the case for seeking intervention of this Court under Article 226 of the Constitution :-

(i) When the petitioner's stay application was fixed for hearing before the Tribunal on 5.3.2004, unfortunately wife of one of the Members of the Tribunal passed away and, therefore, stay matter was adjourned. The Tribunal hears the stay applications on the first and last Friday of the month and, therefore, the stay application is now going to be heard on 26.3.2004;

(ii) The petitioner has already paid 33% of the tax demand or 24% of the tax-cum-interest demand;

(iii) The petitioner had disposed of an undertaking which fetched a sizeable amount of Rs.29.34 crores and the petitioner invested the same under Section 54EA of the Act. The said amount is still lying in the mutual fund with which the amount was invested and is earning regular income. The petitioner undertakes not to withdraw Rs.4 crores out of the said amount till the Tribunal hears and decides the stay application.

In view of the aforesaid extraordinary circumstances, it appears to the Court that the respondent-authorities are required to be restrained from making any coercive recovery of the petitioner's tax dues which are the subject matter of the appeal before the Tribunal till the Tribunal hears and decides Stay Application No.9/Ahd/2004. Consequently, the respondent-authorities shall also release the bank

accounts from attachment.

This shall be done upon an undertaking being filed by the Managing Director of the petitioner-Company that the petitioner-Company shall not withdraw an amount of Rs.4 crores from the aforesaid investment under Section 54EA of the Act.

In view of the statement coming from the learned counsel for the petitioner that the undertaking will be filed by 15.3.2004, the bank accounts of the petitioner shall be released from attachment with effect from today.

It is expected that the Tribunal will hear the stay application on 26.3.2004 and shall decide it by 31.3.2004. It is clarified that this Court has not at all gone into the merits of the stay application and this order is passed only in view of the peculiar facts and circumstances of the case.

The petition is accordingly disposed of in terms of the aforesaid directions. Rule is made absolute to the aforesaid extent. Direct service is permitted today.

(M.S. SHAH, J.)

(A.M.KAPADIA, J.) zgs/-

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