PLUTO FINANCE PVT LTD vs. Union of India AND ORS

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WPO/1161/2022HC CalcuttaWBCHCO001582202207 March 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN8 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the intra-Court appeals and set aside the orders of the learned Single Bench. The Court directed that recovery proceedings initiated by the assessing officer for the assessed income should be kept in abeyance until the disposal of the assessee's appeals by the Commissioner of Income Tax (Appeals). The CIT(A) was further directed to dispose of the appeals on merits and in accordance with law, affording an opportunity of personal hearing, as expeditiously as possible, preferably within 45 days. The Court explicitly stated that it had not gone into the merits of the assessment orders and that the assessee was free to canvass all factual and legal issues before the CIT(A). The reasoning was based on the fact that the appeals were filed in 2018, stay applications were rejected belatedly in December 2022, and the assessments were considered high-pitched, potentially causing prejudice if given effect to before the disposal of the statutory appeals. The Court followed a similar view taken in the case of Great Barter Private Limited.

What were the facts?

The assessee, Jankalyan Vinimay Private Limited, filed intra-Court appeals against orders of a learned Single Bench of the Calcutta High Court. The Single Bench had dismissed writ petitions filed by the assessee. The writ petitions questioned assessment orders passed under Section 143(3) of the Income Tax Act, 1961, for assessment years 2011-12, 2012-13, and 2016-17. The assessee's primary prayer in the writ petitions was for an interim stay of these 'high-pitched' assessments until their appeals before the Commissioner of Income Tax (Appeals) were disposed of. The Single Bench dismissed the writ petitions as belated. The appeals before the High Court were filed with a delay of 166 days, which was condoned.

What were the issues?

1. Whether the learned Single Bench was justified in dismissing the writ petitions on the ground of delay, despite the assessee's prayer for interim stay of high-pitched assessments pending disposal of statutory appeals before the CIT(A)? (Question of law and mixed fact and law, concerning the maintainability of writ petitions for interim relief). Assessee's Contention: The assessee argued that the assessments were high-pitched and that granting an interim stay was necessary to prevent prejudice while their statutory appeals were pending. They relied on the principle that recovery should be stayed in cases of unduly high-pitched assessments, citing the case of Great Barter Private Limited. Revenue's Contention: The judgment does not record specific arguments made by the revenue before the High Court. However, the Single Bench's dismissal on the grounds of delay implies a contention that the writ petitions were not maintainable due to lateness.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 220(6)

AI-generated summary — verify with the full judgment below

Item No.2, 3, & 4. IN THE HIGH COURT OF JUDICATURE AT CALCUTTA CIVIL APPELLATE JURISDICTION APPELLATE SIDE HEARD ON: 07.02.2023 DELIVERED ON: 07.02.2023 CORAM: THE HON’BLE MR. JUSTICE T. S. SIVAGNANAM AND THE HON’BLE MR. JUSTICE HIRANMAY BHATTACHARYYA

F.M.A. 1160 of 2022 With I.A. No.CAN 1 of 2022 With I.A. No.CAN 2 of 2022

Jankalyan Vinimay Private Limited Vs. Deputy Commissioner of Income Tax, Circle-1(1), Kolkata & Ors. And F.M.A. 1161 of 2022 With I.A. No.CAN 1 of 2022 With I.A. No.CAN 2 of 2022

Jankalyan Vinimay Private Limited Vs. Deputy Commissioner of Income Tax, Circle-1(1), Kolkata & Ors. And F.M.A. 1164 of 2022

With I.A. No.CAN 1 of 2022 With I.A. No.CAN 2 of 2022

Jankalyan Vinimay Private Limited Vs. Deputy Commissioner of Income Tax, Circle-1(1), Kolkata & Ors. Appearance:- Mrs. Manju Agarwal, Mr. B. Manot

… for the appellant. Mr. Smarjit Roychowdhury …. for the respondents. JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, J.) 1. Since the issues involved in these appeals are common and germane, all the appeals are disposed of by this common judgment and order. 2. These intra-Court appeals have been filed by the writ petitioner against the orders passed by the learned Single Bench in W.P.A. No.11284 of 2021, W.P.A. No.11281 of 2021 and W.P.A. No.11272 of 2021 respectively dated 27th July, 2021. All the writ petitions were filed by the assessee with varied prayers and in effect questioning the assessment orders passed under Section 2

143(3) of the Income Tax Act, 1961 (for short, “the Act”). Though such varied prayers were sought for in the writ petitions, during the course of submissions before the learned Writ Court, the learned Advocate appearing for the appellant / writ petitioner confined the arguments with the prayer to dispose of the appellant’s application filed under Section 220 (6) of the Act for granting an order of interim stay of the assessments, which according to the appellant, are high-pitched assessments till the appeal filed by the assessee before the Commissioner of Income Tax (Appeals) are disposed of. 3. The learned Single Bench has dismissed the writ petitions by the impugned orders on the ground that the writ petitions were filed belated whereas the stay applications were filed before the assessing officer during September, 2018. Aggrieved by such order, the appellant is before this Court by way of these appeals. 4. There is a delay of 166 days in filing the appeals. We find sufficient cause has been shown for not preferring the appeals within the period of limitation. Hence, the delay in filing the appeals are condoned. 3

5.

We have heard Mrs. Manju Agarwal, learned counsel appearing for the appellant and Mr. Smarajit Roychowdhury, learned counsel appearing for the respondents. 6. Admittedly, the assessments are high-pitched assessments having completed in the year 2017-2018. The assessments relate to the assessment years 2011-12, 2012-13 and 2016-17. Well within the period of limitation, the appellant had filed the statutory appeals before the Commissioner of Income Tax (Appeals) and the appeals are pending since 2018. It is not clear as to why the appeal petitions have not been disposed of in spite of passage of time and very recently, the assessing officer has rejected the stay application buy communication dated 8th December, 2022. 7. Be that as it may, this Court is of the view that during the pendency of the appeals, if the assessment orders are to be given effect to, it may cause prejudice. Normally, while granting an order of interim stay, condition would be imposed on the assessee to pay part of the assessed tax. However, there have been cases where such payment / deposit has not been ordered when the assessments are unduly high-pitched. 4

8.

In the instant case, since the appeals were filed in 2018 and the stay applications filed before the Deputy Commissioner of Income Tax during the year 2018 followed by subsequent reminders, were rejected only on 8th December, 2022 and the assessments orders were not given effect to till date, we are of the view that the appeals filed before the Commissioner of Income Tax (Appeals) could be disposed of at an early date and until then, the respondents/department should not take any coercive action against the appellant / assessee for recovery of the income tax, which has been assessed. 9. Identical view was taken by this Court in the case of Great Barter Private Limited Vs. Assistant Commissioner of Income Tax, Circle-1(1), Kolkata & Ors in MAT 244 of 2020 and MAT 245 of 2020 dated 6th December, 2022. The operative portion of the order reads as follows:- “9. Admittedly, the assessments are high pitched assessments and when such high pitched assessments are appealed against and an order of stay is sought for either before the assessing officer by filing an application under Section 220(6) of the Income Tax Act, orders are passed by the assessing 5

officer either keeping the notice of recovery in abeyance and not treating the assessee as an assessee in default till the appeal is disposed of. 12. In both these cases, the Hon’ble Division Bench of the High Court of Delhi has considered high pitched assessments and has also taken note of the instruction issued by the CBDT and have held that when the assessments are unreasonably high pitched, the notices of recovery should remain stayed till the disposal of the appeal by the first appellate authority. In cases on hand, the return filed by the assessee was a loss return. However, the assessing officer has assessed the income and it is definitely a high pitched assessment. That apart, we find that the appeal was filed before the Commissioner of Income Tax (Appeals) well within the period of limitation and is pending since 25th January, 2018. 14. In the light of the above, the appeals are allowed and the order passed in the writ petitions is set aside with a direction to keep the recovery notices issued by the assessing officer kept in abeyance and direct the Commissioner of Income Tax (Appeals), the appellate authority, to disposed of the appeals on merits and in accordance with law after affording an opportunity of personal hearing to the authorised representative of the assessee as expeditiously as possible preferably within a 6

period of 45 days from the date of receipt of the server copy of this judgment and order. 10. In the light of the above discussion, these appeals are allowed and the orders passed in the writ petitions are set aside with a direction to keep the recovery proceedings initiated by the assessing officer in abeyance with a further direction to the Commissioner of Income Tax (Appeals) to dispose of the appeal petitions filed by the assessee on merits and in accordance with law after affording an opportunity of personal hearing to the authorised representative of the assessee as expeditiously as possible, preferably within a period of 45 days from the date of receipt of the server copy of this judgment and order. 11. We make it clear that we have not gone into the merits of the matters and it will be well open to the assessee to canvass all factual and legal issues in the pending appeals before the Commissioner of Income Tax (Appeals). 12. There shall be no order as to costs. 7

13.

Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.

(T.S. SIVAGNANAM, J) I agree,

(HIRANMAY BHATTACHARYYA, J.)

NAREN/PALLAB(AR.C) 8

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