Sabarmati Gas Ltd. vs Commissioner of Income Tax Gandhinagar and Another

M.R. Shah, J.—By way of this petition under Article 226 of the Constitution of India the petitioner has prayed for an appropriate relief to quash and set aside the impugned notice dated 19/08/2013 (Annexure-A) issued by the Commissioner of Income Tax, Gandhinagar. Heard Shri S.N. Soparkar, learned Senior Advocate appearing on behalf of the petitioner and Shri Sudhir Mehta, learned advocate appearing on behalf of the respondents. It is not in dispute that in exercise of powers u/s 220(6) of the Income Tax Act the Deputy Commissioner of Income Tax, Gandhinagar Circle, Gandhinagar, who at the relevant time was the In charge Assessing Officer, passed the following order;

Considering the facts of the case, your application for stay of demand has been considered on the following terms and conditions,

(i) The demand, which in your opinion would be reduced if order u/s 154 even to be passed in your favour were kept in abeyance 50% of the demand, is kept in abeyance, till such time your petition is considered by this office. The quantum and basis should be conveyed to this office and your self co-operate in early disposal of application u/s 154 filed by you, until the decision of first appeal or January 2014 whichever is earlier.

(ii) Out of the remaining demand, the balance 50% of the demand is to be paid in six equal instalments starting from August 2013.

(iii) Any refund arising or likely to arise will be adjusted against the outstanding demand.

(iv) Interest u/s 220(2) of the Act is liable to be charged and other provisions shall apply.

(v) You shall co-operate with the CIT(A) in early with the disposal of proceedings and shall not seek unnecessary adjournments.

(vi) Any violation with any of the above conditions would result in the stay of demand being automatically revoked.

(vii) The above decision may be reviewed at the discretion of the undersigned at any time.

It appears that despite the above, the Commissioner sent the impugned notice to the petitioner-assessee dated 19/08/2013 directing the petitioner to make the payment of 50% of the disputed demand immediately to avoid coercive measures from the Department. It is required to be noted that as such the Assessing Officer while passing the order u/s 220(6) of the Income Tax Act already stayed the recovery of 50% of the demand until the decision of the First Appeal or till January, 2014, whichever is earlier and granted six equal instalments from August, 2013 with respect to the balance 50% of the demand.

In the facts and circumstances of the case and when the Assessing Officer passed an order u/s 200(6) of the Income Tax Act, the parties are required to abide by the same, however, subject to challenging the same by the petitioner-assessee, in case the petitioner-assessee is aggrieved by any of the condition of the order passed u/s 220(6) of the Income Tax Act and/or to pray for extension of stay in case the appeal is not heard, if it is permissible under the law.

At this stage, Shri S.N. Soparkar, learned Senior Advocate appearing on behalf of the petitioner, under instructions, has stated at the bar that 50% of the disputed demand (excluding the addition made by the Assessing Officer on three counts, which are held to be in favour of the petitioner-assessee for the previous year) i.e. 50% of Rs. 2.24 Crores i.e. Rs. 1.12 Crores shall be paid on or before 31/01/2014. He has also stated at the bar that liberty be reserved in favour of the petitioner either to approach appropriate authority for extension of stay with respect to rest of the amount in case the appeal is not heard on or before January, 2014 and/or to challenge the order dated 19/08/2013 in so far as the order in terms of paragraph 4(i) granting stay of the balance 50% up to the decision of the First Appeal or January, 2014, whichever is earlier is concerned.

In view of the above and in the peculiar facts and circumstances of the case, we dispose of the present Special Civil Application by directing the petitioner to pay Rs. 1.12 Crores on or before 31/01/2014 by equal instalments (as agreed by the learned Senior Advocate appearing on behalf of the petitioner recorded hereinabove and even as per the order dated 19/08/2013 passed by the Assessing Officer u/s 220(6) of the Income Tax Act). On deposit of the aforesaid amount of Rs. 1.12 Crores, the order of demand with respect to the remaining amount shall be stayed till 31/01/2014. However, liberty is reserved in favour of the petitioner to approach the appropriate authority for extension of stay, which has been granted up to 31/01/2014 with respect to the balance amount and/or to challenge the order dated 19/08/2013 in so far as granting stay of recovery of the balance amount till the decision of the First Appeal or January, 2014, whichever is earlier and as and when such proceedings are initiated the same be considered in accordance with law and on its own merits. With this, the present Special Civil Application is disposed of.