M/S JANAHITHA CREDIT CO-OPERATIVE SOCIETY LIMITED vs. THE INCOME TAX OFFICER WARD 6(2)(3)

WP/44621/2015HC KarnatakaKAHC01006849201517 November 2015Bench: RAM MOHAN REDDY4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tax Recovery Officer's order granting a partial stay and directing installment payments was not arbitrary or illegal. The court rejected the petitioner's argument that Section 225(1) allows for a blanket stay of the entire demand.

What were the facts?

The petitioner, a credit co-operative society, faced an income tax demand of over ₹31 lakhs. They appealed to the CIT(A) and sought a stay of the demand from the Tax Recovery Officer. The Tax Recovery Officer directed payment of 50% of the demand in installments and stayed the balance until the appeal was decided.

What were the issues?

Whether Section 225(1) of the Income Tax Act empowers the Tax Recovery Officer to grant a complete stay of demand, and if the partial stay granted was justified.

Which sections of the Income-tax Act were involved?

Section 225,Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF NOVEMBER 2015 BEFORE THE HON’BLE MR. JUSTICE RAM MOHAN REDDY WRIT PETITION NO. 44621 OF 2015 (T-IT)

BETWEEN:

M/S JANAHITHA CREDIT CO-OPERATIVE SOCIETY LIMITED NO.53, 10TH CROSS, 2ND MAIN ROAD, WOC ROAD, 2ND STAGE, MAHALAKSHMIPURAM, BANGALORE-560086. REPRESENTED BY ITS SECRETARY SRI. M.P. RANGANATHAPPA, AGED ABOUT 55 YEARS, S/O LATE M.S.PUTTAKAMAIAH. ... PETITIONER

(By Sri. BALRAM R RAO, ADV.,)

AND

THE INCOME TAX OFFICER WARD 6(2)(3) 3RD FLOOR, JEEVAN SAMPIGE, NO.1/1, SAMPIGE ROAD, BANGALORE-560003.

THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE 6(2), 3RD FLOOR, JEEVAN SAMPIGE, NO.1/1, SAMPIGE ROAD, BANGALORE-560003.

THE COMMISSIONER OF INCOME TAX (APPEALS)-VI BANGALORE, 3RD FLOOR, HMT BHAVAN,

59, BELLARY ROAD, GANGANGAR, BANGALORE-560032.

THE COMMISSIONER INCOME TAX-BANGALORE R NO.A-123, CENTRAL REVENUE BUILDING, NO.1 QUEENS ROAD, BANGALORE-560001. ... RESPONDENTS

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE INTERIM ORDER DTD.1.10.2015 PASSED BY THE R-2 VIDE ANNEX-E. DIRECT THE R-3 TO DISPOSE OF THE APPEAL IN ITA.NO.79/CIT[A]-6/2015-16. DIRECT THE R-1 NOT TO ENFORCE THE PAYMENT OF THE OUTSTANDING DEMAND CONSEQUENT TO THE ASSESSMENT ORDER DTD.18.3.2015 PASSED UNDER SECTION 143[3] OF THE INCOME TAX ACT 1961 IN ANNEX-A UNTIL THE DISPOSAL OF THE APPEAL IN ITA.NO.79/CIT[A]-6/2015-16.

THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:

O R D E R

Petitioner having suffered an order under Section 143(3) for the assessment year 2012-13 raising demand for `31,69,230/-, preferred an appeal before the Commissioner for Income Tax (Appeals)-6, Bengaluru, and filed an application dated. 09.09.2015 invoking Section 225 of the Income Tax Act, 1961, before the Tax Recovery Officer for stay of the aforesaid demand, which when considered by the Joint Commissioner of Income

Tax, Range-6(2), Bengaluru, by order dated 01.10.2015, Annexure-E, directed the petitioner to pay 50% of the total of demand i.e., `15,84,600/- in installments and directed stay of the demand for the balance i.e., `15,84,600/- until 15.03.2016 or disposal of the appeal before the CIT(A), whichever is earlier. Petitioner aggrieved by the order, Annexure-E, has presented this petition to quash the said order and to direct the CIT (A) to dispose of the appeals at the earliest, in addition to a direction to the Assessing Officer not to enforce the payment of the outstanding demand consequent to the Assessment Order dated 18.03.2015 until disposal of the appeal.

Although learned counsel for petitioner submits that Section 225(1) invests a jurisdiction in the Tax Recovery Officer to grant a blanket stay of the entire demand the submission is noticed only to be rejected.

For better understanding of Section 225(1), it is useful to extract the said provision, which reads thus:

“225(1) It shall be lawful for the Tax Recovery Officer to grant time for the payment of any tax and when he does so, he shall stay the proceedings for the recovery of such tax until the expiry of the time so granted.”

The order, Annexure-E cannot be said to be either arbitrary or illegal calling for interference in exercise of supervisory jurisdiction under Article 227 of the Constitution. In the facts and circumstances, no exception can be taken to the order impugned. Petition devoid of merit is rejected.

Sd/- JUDGE

kcm

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