SMT. DINA MARIA DA SILVA vs. THE ASST. COMMISSIONER OF INCOME TAX,

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WP/468/2010HC BombayHCBM05001623201030 June 2010Bench: F. M. REIS,A. S. OKA7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that a copy of the order allegedly passed on the Petitioner's application under Section 220(6) was not produced. While communications dated February 22, 2010, and April 15, 2010, indicated a rejection of the stay request, there was no specific order on the application filed on January 22, 2010. Therefore, the grounds for rejection were unknown, and the order, if any, was set aside. The Court directed the Respondent to decide the application afresh by passing a speaking order within two weeks. Until then, no further steps were to be taken on the Section 226(3) notices. The Court explicitly stated it was not adjudicating on the merits of the demand or the application. The Petitioner was granted a week from the communication of the fresh order to act upon the Section 226(3) notice if the decision was adverse.

What were the facts?

The Petitioner, Smt. Dina Maria da Silva, filed a writ petition challenging the legality of notices issued under Section 226(3) of the Income Tax Act, 1961. The Petitioner had filed a return of income, and an assessment order was passed under Section 143(3). She then filed an appeal before the Commissioner of Income Tax (Appeals) and simultaneously an application under Section 220(6) seeking to be treated as not in default for the disputed amount during the pendency of the appeal. The Assistant Commissioner of Income Tax rejected the stay request, demanding payment of the full amount. Subsequently, notices under Section 226(3) were issued. The Petitioner contended that the order on her Section 220(6) application was not provided and was in breach of natural justice, rendering the subsequent Section 226(3) notices illegal.

What were the issues?

1. Whether the notices issued under Section 226(3) of the Income Tax Act, 1961, are illegal, considering that the order on the Petitioner's application under Section 220(6) was not provided and allegedly in breach of principles of natural justice? (Question of law and fact, concerning Section 220(6) and Section 226(3)). Assessee's Contention: The Petitioner argued that the order on her application under Section 220(6) was not made available, violating principles of natural justice. Consequently, the subsequent exercise of powers under Section 226(3) was illegal. Revenue's Contention: The Respondent pointed out that the rejection of the Section 220(6) application was reflected in communications dated February 22, 2010, and April 15, 2010. The Petitioner was aware of the rejection but took no steps. The Respondent further submitted that the Petitioner should seek relief of stay in her pending appeal before the Commissioner (Appeals).

Which sections of the Income-tax Act were involved?

Section 139,Section 142(1),Section 143(2),Section 143(3),Section 156,Section 220(6),Section 226(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO. 468 OF 2010

1.

Smt. Dina Maria da Silva, 50 years of age, housewife, residing at Portais Verem, Reis Magos Bardez-Goa. ..... Petitioner V e r s u s 1.. The Assistant Commissioner of Income Tax, Circle – 2(1), Panaji, with its office at Ayakar Bhavan, Patto Plaza, Panaji-Goa. ..... Respondents Mr. V. P. Thaly, Advocate for the Petitioner. Ms. Asha Dessai, Advocate for Respondent. Coram: A. S. OKA & F. M. REIS, JJ DATE: 30TH JUNE, 2010. P.C: 1. We have heard the Learned Counsel appearing for the Petitioner and the Learned Counsel appearing for the Respondent. 2. Considering the narrow controversy involved in the petition we have taken up the petition for final hearing. 3. The Petitioner filed a return of income under Section 139 of the income Tax Act, 1961. Notice under section 142(1) and

2 section 143(2) of the said Act of 1961 was issued to the Petitioner. On 29th December, 2009, the Assistant Commissioner of Income Tax passed an order of assessment under section 143(3) of the said Act of 1961. The notice of demand under section 156 of the said Act of 1961 was issued to the petitioner. The Petitioner has preferred an appeal before the Commissioner of Income Tax (Appeals) against the order of assessment. On 22nd January, 2010, the petitioner filed an application before the Assistant Commissioner of Income Tax under section 220(6) of the said Act. A prayer was made by the Petitioner in the said application that it may be treated that the Petitioner is not in default in respect of the amount in dispute in the appeal. A communication was issued by the Assistant Commissioner of Income Tax on 2nd February,2010 to the Petitioner in which it was stated that the demand has already fallen due and therefore, after making the payment of the amount demanded, the Petitioner should produce a copy of the challan by 9th February, 2010. It was stated in the letter that filing of an appeal before the Commissioner of Income Tax (Appeals) or application of stay with higher authorities (unless the application for stay is granted), is not a sufficient reason for not making the payment of demand. It is further stated in the petition that by letter 15th April

3 2010 issued by the Assistant Commissioner of Income Tax addressed to the Petitioner, the Petitioner was called to pay the entire amount by 22nd April, 2010, as the Petitioner's request for stay of demand had been rejected. The Petitioner was informed that if the payment was not made, the Petitioner will be treated as “assessee in default” and that further recovery proceedings including coercive measures will be initiated against the Petitioner. The said communication records that the request made by the Petitioner for granting of stay of demand has been already rejected. 4. On 18th June, 2010 notices under section 226(3) of the said Act of 1961 were issued by the Assistant Commissioner of Income Tax. It must be stated here that letter dated 22nd April, 2010 sent by the Petitioner to the Assessing Officer notes that the request for stay of demand has been already rejected, as stated in letter dated 15th April, 2010 sent by the Assistant Commissioner of Income Tax. The contention of the Petitioner is that notice dated 18th June, 2010 issued by the Assistant Commissioner of Income Tax in purported exercise of powers under section 226(3) of the said Act of 1961 is illegal. The submission of the Learned Counsel appearing for the Petitioner is that order passed on application under section 220(6) has not been made available to the Petitioner.

4 He submitted that the order on the said application is in breach of principles of natural justice. He further submitted that as the rejection of application under section 220 (c) of the said Act of 1961 is illegal, the exercise of powers under section 226(3) is also illegal. 5. The learned Counsel appearing for the Respondent pointed out that the application under section 220(6) made by the Petitioner has been rejected and the same is reflected from communications dated 22nd February, 2010 and 15th April, 2010. The Learned Counsel further submitted that though the Petitioner is aware of the rejection of the said application, he has not taken any steps. The Learned Counsel further pointed out that the appeal preferred by the Petitioner before the Commissioner (Appeals) is pending and it is for the Petitioner to seek relief of stay in the appeal. 6. We have given careful consideration to the submissions made. A copy of the order allegedly passed on application made by the Petitioner under section 220(6) of the said Act of 1961 has not been produced before us. The communication dated 22nd February, 2010 issued by the Respondent does not refer to any such application made by the Petitioner, though the

5 application appears to have been filed on 22nd January, 2010. There is a reference in the communication dated 15th April, 2010 issued by the Respondent that the request for stay has been already rejected. It appears that there is no specific order passed on application dated 22nd January, 2010 made by the Petitioner. Therefore, it is not possible to know the grounds on which the said application has been allegedly rejected. In the circumstances, the order, if any, passed on the said application will have to be set aside and the respondent will have to be directed to decide the application afresh in accordance to law, by passing a speaking order. Till such application is decided, we will have to direct that no further steps should be taken on the basis of notices under section 226(3A) of the said Act of 1961. We make it clear that we are not making any adjudication on merits of the demand and the merits of the application made by the Petitioner. 7. We dispose the writ petition by issuing the following directions: a) Order, if any, passed by the respondent on the application made by the Petitioner under Section 220(6) of the said Act of 1961 is set aside. The said application shall be decided afresh by the Respondent

6 in accordance with law. The application shall be decided within a period of two weeks from today by passing a speaking order. b) All contentions as regards merits of the said application are kept open. c) For a period of two weeks from today, the notice under section 226(3) of the said Act of 1961 issued on 18th June, 2010 shall not be acted upon. In the event order passed on application under section 220(6) of the said Act of 1961 is adverse to the Petitioner, the said notice dated 18th June, 2010 shall not be acted upon for a period of one week from the date of communication of the order to the Petitioner. d) Petition is disposed of accordingly. e) Parties to act upon authenticated copy. A. S. Oka, J. F. M. Reis, J ap/-

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