M/S JHALANI TRADING COMP vs. INCOME TAX OFFICER AND ANR

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CW/3890/2012HC RajasthanRJHC02047942201229 March 2012Bench: ALOK SHARMA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the writ petition was not maintainable as the stay applications filed by the assessee before the Commissioner of Income Tax (Appeals) for both assessment years 2005-06 and 2009-10 had been decided on March 27, 2012. The Court noted that the orders dated March 27, 2012, provided for partial payments to stay further recovery. The revenue's submission that the cause of action for the writ petition had ended was accepted. The Court found no occasion to interfere with the writ petition. However, considering that the appeals involved "high pitched assessment" where the assessed income was significantly higher than the returned income (in one case over 1000 times), the Court directed that the appeals filed by the assessee before the Appellate Authority be decided within 30 days from the submission of a certified copy of the High Court's order. The writ petition was disposed of accordingly, and the stay application was dismissed.

What were the facts?

The assessee, M/s Jahalani Trading Company, filed a writ petition before the Rajasthan High Court challenging orders dated January 23, 2012, and March 7, 2012, issued by the Income Tax Officer. These orders sought recovery of disputed income tax demands for assessment years 2005-06 and 2009-10. The demands included Rs. 96,224/- for AY 2005-06 and Rs. 2,50,000/- plus Rs. 20,000/- per month for AY 2009-10. The assessee argued that recovery was being sought while their appeals against the assessment orders and stay applications were pending before the Commissioner of Income Tax (Appeals). The revenue contended that the stay applications had been disposed of by the Appellate Authority on March 27, 2012.

What were the issues?

1. Whether the writ petition is maintainable when the stay applications filed along with the appeals against the assessment orders for assessment years 2005-06 and 2009-10 have been decided by the Commissioner of Income Tax (Appeals)? (Question of law and fact, turning on the procedural stage of the appeal and the availability of alternative remedies). Assessee's contentions: - The writ petition is maintainable because recovery actions are being pursued while appeals and stay applications are pending before the appellate authority. Revenue's contentions: - The writ petition is not maintainable as the stay applications have been disposed of by the Commissioner of Income Tax (Appeals) on March 27, 2012. The assessee, if aggrieved by these orders, should challenge them directly. - The cause of action for the writ petition has ended with the disposal of the stay applications.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 220(6)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH ORDER S.B. CIVIL WRIT PETITION NO.3890/2012 (M/s Jahalani Trading Company Vs. The Income Tax Officer & Anr.) Date of Order : 29.03.2012 HON'BLE MR. JUSTICE ALOK SHARMA Mr. N.K. Baid, for the petitioner. Mrs. Parinito Jain, for the respondents. This petition has been filed with the following prayers : (a) By an appropriate writ, order or direction the respondent No.1's order / direction dated 23.01.2012 (Annexure-4) and order / direction dated 07.03.2012 (Annexure-6) be quashed/set aside/cancelled for recovery of highly disputed & illegal Income Tax demand of Rs.96,224/- + Rs.2,50,000/- + Rs.20,000/- per month starting from June, 2012. (b) By an appropriate writ, order or direction the respondent No.1 be directed to withdraw and / or cancel the impugned letter/order dated 23.01.2012 (Annexure-4) and letter/order dated 07.03.2012 (Annexure-6). (c) to restrain the respondents from taking any further coercive action in relation to the impugned notice/order dated 07.03.2012. (d) directing the respondent No.2 to hear the appeals immediately, out of turn and in the meanwhile to stay the disputed demand till the disposal of appeal pending before him. (e) that this Hon'ble Court be pleased to issue a writ of prohibition, or a writ in the nature of prohibition, or any other appropriate writ, order of prohibiting, the respondent themselves from attaching the Bank accounts of the petitioner or taking any other coercive action to recover the highly disputed demand as referred to hereinabove.

2 Mrs. Parinitu Jain, appearing for the respondents at the outset submits that the ground on which the writ petition is fundamentally based is that even while the stay application in the appeal instituted against the order under Section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act of 1961) passed against the petitioner-assessee is pending, recoveries of the amounts in terms of the order of assessment and a further order on an application under Section 220(6) of the Act of 1961 by the assessing authority are sought to be made from the petitioner-assessee who is being required to deposit a sum of Rs.96,224/- against the alleged outstanding demand pursuant to the assessment year 2005-06 and a sum of Rs.2,50,000/- + Rs.20,000/- per month against the alleged outstanding demand for assessment year 2009-10. Counsel for the respondent-Department submits that in appeal before the Commissioner of Income Tax Appeals by the petitioner-assessee, the stay application filed along with appeal has been disposed of vide order dated 27.03.2012 whereby it has been directed that in respect of assessment year 2005-06, the petitioner pay a sum of Rs.40,000/- upto 15.04.2012 and in the event of the aforesaid payment, the reminder of the demand in respect of the assessment year 2005-06 would remain stayed. It has

3 been further pointed out that on the stay application in the appeal in respect of demand created qua assessment year 2009-10, also vide order dated 27.03.2012, the Appellate Authority by way of an interim order has directed that the petitioner-assessee pay a sum of Rs.1 lakh each for the month of April, May and June, 2012 whereupon further recoveries under the order of assessment would remain stayed. Counsel for the respondents submits that the application for stay accompanying the appeal filed by the petitioner-assessee before the Appellate Authority having been decided, the cause of action on which the writ petition is founded has ended and the petitioner-assessee if at all is aggrieved, can now challenge the order dated 27.03.2012. Having heard the counsel for the parties and having perused the writ petition as also the orders dated 27.03.2012 passed by the Appellate Authority in respect of both the assessment years 2005-06 and 2009-10, a copy whereof has also been supplied to the counsel for the petitioner-assessee, I am of the view that there is no occasion to interfere in the writ petition as the stay application in the appeals against the orders of assessment for assessment years 2005-06 and 2009-10 have been decided on 27.03.2012. It is however directed that as the appeals filed by the petitioner-assessee before the Appellate

4 Authority are against a high pitched assessment whereagainst the return income or assessed income in one case is over 1000 times, the appeals filed by the petitioner- assessee be decided within a period of 30 days from the submission of the certified copy of this order. The writ petition is accordingly disposed of. Stay application is also dismissed. (ALOK SHARMA), J MS/-154 All corrections made in the judgment/order have been incorporated in the judgment/order being emailed. - Manoj Solanki, Jr. P.A.

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