Madhya Pradesh H.C : The applications for stay of demand under Section 220 (6) of the Income Tax Act has been disposed of by the learned Additional Commissioner, Range-3, Indore

High Court Of Madhya Pradesh (Indore Bench)

Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd. vs. ACIT & Anr.

S.C.Sharma & Rajeev Kumar Dubey, JJ.

Section 220 (6)

Asst. Year 2011-12, 2012-13

WP-7779-2016

12th January, 2017

Counsel appeared:

Sarvesh Shrivastava for the Petitioner.

ORDER:

Partlies through their counsel.

Regard being had to the similitude in the controversy involved in the present cases, the writ petitions were analogously heard and by a common order, they are being disposed of by this Court. Facts of the Writ Petition No.7779/2016 are narrated hereunder.

Present petition has been filed by M.P. Audyogik Kendra Vikas Nigam Limited against the order 08.11.2016 by which the applications for stay of demand under Section 220 (6) of the Income Tax Act has been disposed of by the learned Additional Commissioner, Range-3, Indore.

Facts of the case reveal that petitioner is a company registered under the Companies Act and has developed the industrial area at Pithampur. An assessment order was passed on 19.09.2016

Petitioner has placed reliance upon the CBDT circulars dated 21.08.1996, 06.03.1998, 16.01.1999 and his contention is that as appeal has been preferred by the petitioner, the condition of pre-deposit be waived.

On the other hand, learned counsel appearing for the Income Tax Department has drawn attention of this Court towards the order dated 02.03.2015 passed in W.P. No.1380/2015 in respect of similar issue. The Division Bench of this Court has directed the present petitioner to deposit Rs.5.8 Crores within a period of 4 weeks therein.

The order passed by the Division Bench reads as under: Writ Petition No.1380/2015
02.03.2015 Shri Manoj Munshi, advocate for the petitioner.

Shri R.L. Jain, learned Senior Counsel with Ms. Veena Mandlik, advocate for the respondent. Heard.
2. By this writ petition under Article 226 of the Constitution of India, the petitioner, who is Development Institute engaged in the Industrial Infrastructure Development of the State of Madhya Pradesh, is praying to stay the demand of income tax, interest and penalty for the assessment years 2003-04 to 2010-11 till final disposal of the pending appeals by the Income Tax Appellate Tribunal, Indore in respect of tax & interest and by the Appellate Authority in respect of the penalty and restrain the respondent from taking any coercive steps for recovery of demand pursuant to the demand letter dated 13.01.2015 (Annexure P/1) till the Income Tax Appellate Tribunal hears and decides the appeal on the ground that the Income Tax Appellate Tribunal, Bench at Indore is not functioning.

3. Learned counsel for the petitioner submits that the demand has arisen pursuant to the lease premium liability by considering the same as revenue receipt instead of accepting it as tax liability of the assessee. The petitioner anD assessee is a State Government undertaking, which is engaged in the activity of development of industrial facilities on the land received from the Government of Madhya Pradesh. He further submitted that as per the statement of tax liability, amounting to Rs.55,19,95,445/-, the assessee has paid Rs.37,14,35,837/- and the balance amount, which is payable, comes to Rs.18,05,59,608/-, which includes tax and interest. He further submitted that all tax assessment cases are pending before the Income Tax Appellate Tribunal, Indore and all penalty cases are pending before the Commissioner of Income Tax (Appeals). As per Annexure P/1 dated 13.01.2015, Assistant Commissioner of Income Tax vide letter dated 29.12.2014 requested the petitioner to make payment of 50% of outstanding demand and at least 25% thereof by 31.12.2014, but the said outstanding demand has not been paid so far. The amount of Rs.5.8 crores is outstanding against the demand raised as per assessment orders for the assessment years (2003-04 to 2010-11) and the amount of Rs.10.8 crores is outstanding against the penalty demand raised during financial years 201314, which is disputed by the petitioner in first appeal. The authority directed the

4. Learned counsel for the petitioner submits that the petitioner has prima facie a strong case in its favour with respect to the nature of one time lease premium and in past, prior to assessment year 2003-04, the respondent has considered the lease premium as capital receipts and did not demand any income tax thereon. Further the payment of tax shall adversely affect the operations of the petitioner and development work shall suffer and therefore, prayed that the respondent be directed not to take any coercive action till all the appeals are decided by the Income Tax Appellate Tribunal, including the appeal against pending, which is pending before the Commissioner of Income Tax (Appeals).

5. In reply, Shri R.L. Jain, learned Senior Counsel for the respondent has submitted that as per Annexure P/1 dated 13.01.2015, the respondent Department has stayed the demand till 31.12.2014 and directed the petitioner to make payment of 50% of the outstanding demand, but till today, no payment has been made, and therefore, they have no option but to resort to take coercive action, as per law, which may include attachment of bank account.

6. On due consideration of the submissions of the learned counsel for the parties and considering the fact that the appeals against the assessment orders for the assessment years 2003-04 to 2010-11 are pending before the Income Tax Appellate Tribunal, Indore and at present the Bench of ITAT at Indore is not functioning, we direct the learned President of the Income Tax Appellate Tribunal, Mumbai to decide the application dated 22.01.2015 (Annexure P/7) filed by the petitioner for constitution of ITAT Bench in Indore for hearing stay application filed under Rule 35A of the Income Tax Appellate Tribunal Rules, 1963 or fix the case before another Bench, as per Rules and decide the stay application expeditiously within a period of three months from the date of filing of the certified copy of this order. In the meanwhile, on depositing Rs.5.8 crores within a period of four weeks from today, no coercive measures for recovery of the demand, including attachment of bank account, will be taken till the stay application is decided; failing which, the interim protection granted to the petitioner shall automatically stand vacated without any further reference to the Court.
7. With the aforesaid, the writ petition is disposed of.

In light of the aforesaid, there appears no justification in taking a different view as taken by the Division Bench. Learned Additional Commissioner, Income Tax while deciding the application for stay of demand under Section 220 (6) of Income Tax Act has directed the assessee to pay the entire demand in respect of additions in respect of land premium in five equal installments starting from the month of November, 2016 and the payment has to be done by 15.03.2017.

So far as other payment’s relating to other issues are concerned, the assessee has been directed to pay 15% of the said demand in five equal installments starting from the month of of November, 2016 and total 15% amount has to be paid upto 05.03.2017.

Section 220(6) of the Income Tax Act reads as under:

Section 220(6) Where an assessee has presented an appeal under section 246, [or section 246A], the [Assessing Officer] may, in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in

In the considered opinion of this Court, the Additional Commissioner, Income Tax, Range-3 has rightly exercised his discretion and passed the impugned order. The impugned order does not suffer from any illegality or perversity and the appeal has to be decided on merits, therefore, without commenting upon the subject matter of the appeal, so far as the order dated 08.11.2016 is concerned, no interference is warranted in the matter.

The admission is declined. This order shall govern the other connected writ petitions in which similar orders have been passed by the learned Additional Commissioner, Income Tax, Range-3.

[Citation : 407 ITR 271]