High Court Of Delhi
CIT vs. DLF Universal Ltd.
Sections 221, 260A
Asst. yrs. 1992-93, 1993-94
Madan B. Lokur & Dr. S. Muralidhar, JJ.
IT Appeal No. 492 of 2007
6th September, 2007
Counsel Appeared :
Mrs. P.L. Bansal, for the Appellant : P.N. Monga with Manu Monga, for the Respondent
JUDGMENT
By the court :
The Revenue is aggrieved by an order dt. 13th July, 2006 passed by the Tribunal, Delhi Bench ‘E’ in ITA No. 4984 and 4985/Del/2003 relevant for the asst. yrs. 1992-93 and 1993-94.
Broadly, the issue that is involved in this appeal is whether the Revenue could have imposed a penalty on the assessee under the provisions of s. 221 of the IT Act,1961 (‘the Act’) even though two applications filed by the assessee for stay of recovery of tax were pending before the AO. The Tribunal has come to the conclusion that it was not permissible for the AO to have imposed a penalty without disposing of the stay applications pending before him.
On 23rd May, 2007, we had directed learned counsel for the Revenue to produce the original file containing the order if any passed on the stay applications pending before the AO. Today, learned counsel for the Revenue informs us that the original record is not available and, therefore, she is not able to say whether the stay applications were pending or disposed of by the AO.
The fact that two applications for stay were filed by the assessee, one on 24th April, 2002 and the other on 21st Feb., 2003 is not disputed because the contents of these applications have been quoted by the Tribunal ITA No.492/2007 p. 2 of 5 in detail in its impugned order. The Tribunal has also noted that it was not disputed that both these applications were not disposed of by the AO. We, therefore, proceed on that basis.
In the applications for stay that were filed by the assessee, it was pointed out that it had filed rectification applications in respect of several other assessment years and that it was also entitled to refund of tax in respect of some of those assessment years. According to the assessee, if the refund had been granted and if the rectification had been allowed, the assessee may not have had to pay any tax at all.
We would have thought that in view of these averments, the AO should have decided the stay applications filed by the assessee. However, he instead passed a penalty order under s. 221 of the Act which was served on the assessee on 21st March, 2003. The AO levied a penalty of Rs. 26 lakhs for the asst. yr. 1992-93 and Rs. 35 lakhs for the asst. yr. 1993-94.
The Tribunal has observed that the AO was not justified in imposing the penalties without first disposing of the stay applications of the assessee. It has also been observed by the Tribunal that the conduct of the assessee does not appear to be contumacious so as to justify the imposition of penalty. Accordingly, the Tribunal cancelled the penalty imposed upon the assessee.
We are of the view that there is no error that has been committed by the Tribunal. It goes without saying that the AO should have at least applied his mind to the stay applications filed by the assessee before taking any steps prejudicial to the interests of the assessee. The AO is a quasi judicial authority and should have acted in accordance with law rather than keeping only the interest of the Revenue in mind without bothering about the interest of the assessee. Even if, as contended by learned counsel for the Revenue, no rectification application was filed for the assessment year in question by the assessee, the fact remains that had the AO considered the stay applications, which admittedly were he may not have initiated any penalty proceedings.
9. We find that no substantial question of law arises from the order passed by the Tribunal. The appeal isdismissed with costs of Rs. 5,000 which will be deposited by cheque by the Revenue with the Delhi High Court Legal Services Committee within four weeks from today. List for compliance on 10th Oct., 2007.
[Citation : 297 ITR 342]
