GREATER LUDHIANA AREA DEVELOPMENT AUTHORITY vs. COMMISSIONER OF INCOME TAX & ANR.

PDF · subscribers
CWP/5607/2012HC Punjab & HaryanaPHHC01087220201226 March 2012Bench: MR. JUSTICE ALOK SINGH,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition. The Court held that tax liability is ordinarily not to be stayed. The mere filing of an appeal is not a sufficient ground for granting a stay, particularly when the assessee is in a sound financial position with good liquidity. The Court reasoned that allowing the huge arrears of tax to remain unpaid would unnecessarily result in the payment of interest by a public body like the petitioner. It was also noted that there is no provision in the Income Tax Act that would rescue the petitioner in this situation. The impugned orders passed by the respondent authorities were found to be free from any legal infirmity warranting interference. The Court clarified that its observations were not an expression of opinion on the merits of the controversy.

What were the facts?

The petitioner, Greater Ludhiana Area Development Authority, filed a writ petition challenging orders dated March 20, 2012, by the Commissioner of Income Tax III, Ludhiana, and March 12, 2012, by the Additional Commissioner of Income Tax, Ludhiana. The latter order dismissed the petitioner's application for a stay on a tax demand of Rs. 32,40,98,857/-, which was raised after assessment under Section 143(3) of the Income Tax Act, 1961, completed on December 28, 2011. The petitioner had also filed a rectification application under Section 154 on March 6, 2012. Following the dismissal of the stay application, a garnishee order under Section 226(3) of the Act was issued on March 23, 2012, attaching the petitioner's accounts.

What were the issues?

1. Whether the High Court should interfere with the orders of the Income Tax authorities dismissing the petitioner's application for a stay on the tax demand, considering the petitioner's financial position and the pendency of an appeal. (Question of law and fact, concerning the discretion of authorities under the Income Tax Act, 1961). Assessee's Contention: The petitioner sought to quash the orders of the Commissioner and Additional Commissioner and the garnishee order, praying for an interim stay on the demand and coercive steps. The petitioner argued that the mere filing of an appeal should be sufficient grounds for a stay, especially given the significant tax liability. Revenue's Contention: The judgment does not record specific arguments made by the revenue. However, the orders of the authorities, which were upheld, indicate that the revenue opposed the stay, citing the petitioner's sound financial position and the potential for interest accrual on unpaid taxes.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 154,Section 226(3)

AI-generated summary — verify with the full judgment below

CWP No. 5607 of 2012 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH. CWP No. 5607 of 2012 Date of decision 26.3.2012 Greater Ludhiana Area Development Authority ..Petitioner Versus Commissioner of Income Tax III, Ludhiana and another .. Respondents. CORAM: HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR. JUSTICE ALOK SINGH Present: Mr.Akshay Bhan , Advocate for the petitioner 1. To be referred to the Reporter or not ? 2. Whether the judgement should be reported in the Digest ? M.M.KUMAR,J. 1. The instant petition under Article 226 of the Constitution prays for quashing order dated 20.3.2012 (P7) passed by the Commissioner of Income Tax, Ludhiana and order dated 12.3.2012 (P.5) passed by the Addl. Commissioner of Income Tax, Ludhiana. By the later order, the application filed by the petitioner-assessee for staying the demand of tax has been dismissed and a direction has been issued for depositing the outstanding demand of crores of rupees failing which coercive steps are to be taken. A further prayer for quashing garnishee order dated 23.3.2012 (P.8) passed under Section 226(3) of the Income Tax Act, 1961 (for brevity 'the Act') attaching the accounts of the petitioner and initiation of coercive steps has also been made with a prayer for interim stay. 2. It has come on record that assessment in this case under Section 143(3) of the Act was completed on 28.12.2011 and demand of crores of rupees was created. The petitioner- assessee filed rectification application on 6.3.2012 under Section 154 of the Act which was disposed of on the same day and the total demand raised was at Rs.32,40,98,857/-. The order was duly served on the petitioner- assessee on 9.3.2012. An effort was made for securing interim order by moving an application. Personal hearing was granted. Holding that mere filing of appeal is not a

CWP No. 5607 of 2012 2 sufficient reason to stay recovery of demand particularly when the petitioner- assessee is of sound financial position with good liquidity funds. The Additional Commissioner has given various reasons in para 5 of the order for rejecting the request of interim stay. Vide order dated 20.3.2012 (P7) the application for stay was also rejected by the Commissioner of Income Tax III, Ludhiana- respondent no.1. Thereafter garnishee notice dated 23.3.2012 (P8) was issued under Section 226(3) of the Act. 3. We have heard learned counsel for the petitioner at a considerable length and are of the view that tax liability ordinarily is not to be stayed. The mere fact that appeal has been filed is no ground for granting stay particularly when the petitioner- assessee has sound financial position. The huge amount of arrears of tax if not paid would unnecessarily result in the payment of interest by a public body like the assessee- petitioner. There is no provision in the Act which may come to the rescue of the petitioner-assessee. The impugned order passed by the respondent authorities do not suffer from any legal infirmity warranting interference of this Court. The writ petition fails and the same is dismissed. 4. It is made clear that any observation made in this order shall not be construed as an expression of opinion on merits of the controversy. (M.M.Kumar)

Judge (Alok Singh ) 26.3.2012 Judge okg

More judgments on Section 154

All 8,676 judgments and leading authorities on Section 154 →

Recent GST High Court judgments

Search GST case law →