Smt. Dagny De Souza vs Income Tax Officer

We have heard the Learned Counsel appearing for the Petitioner and the Learned Counsel appearing for the Respondent.

Considering the narrow controversy involved in the petition we have taken up the petition for final hearing.

The Learned Counsel appearing for the Petitioner tenders an application for amendment. The Application is granted. Amendment to be carried out within one week.

The Petitioner filed a return of income u/s 139 of the income tax Act, 1961. Notice u/s 142(1) and Section 143(2) of the said Act of 1961 was issued to the Petitioner. On 29th December, 2009, the Assistant Commissioner of income tax passed an order of assessment u/s 143(3) of the said Act of 1961. The notice of demand u/s 156 of the said Act of 1961 was issued to the Petitioner. The Petitioner has preferred an appeal before the Commissioner of income tax (Appeals) against the order of assessment. On 22nd January, 2010, the Petitioner filed an application before the Assistant Commissioner of income tax u/s 220(6) of the said Act. A prayer was made by the Petitioner in the said application that it may be treated that the Petitioner is not in default in respect of the amount in dispute in the appeal. A communication was issued by the Assistant Commissioner of income tax on 2nd February, 2010 to the Petitioner in which it was stated that the demand has already fallen due and therefore, after making the payment of the amount demanded, the Petitioner should produce a copy of the challan by 9th February, 2010. It was stated in the letter that filing of an appeal before the Commissioner of income tax (Appeals) or application of stay with higher authorities (unless the application for stay is granted) is not a sufficient reason for not making the payment of demand. It is further stated that by letter 15th April, 2010 issued by the Assistant Commissioner of income tax addressed to the Petitioner, the Petitioner was called to pay the entire amount by 22nd April, 2010, as the Petitioner''s request for stay of demand had been rejected. The Petitioner was informed that if the payment was not made, the Petitioner will be treated as "Assessee in default" and that further recovery proceedings including coercive measures will be initiated against the Petitioner. The said communication records that the request made by the Petitioner for granting of stay of demand has been already rejected.

On 18th June, 2010 notices u/s 226(3) of the said Act of 1961 were issued by the Assistant Commissioner of income tax. It must be stated here that letter dated 22nd April, 2010 sent by the Petitioner to the Assessing Officer notes that the request for stay of demand has been already rejected, as stated in letter dated 15th April, 2010 sent by the Assistant Commissioner of income tax. The contention of the Petitioner is that notice dated 18th June, 2010 issued by the Assistant Commissioner of income tax in purported exercise of powers u/s 226(3) of the said Act of 1961 is illegal. The submission of the Learned Counsel appearing for the Petitioner is that order passed on application u/s 220(6) has not been made available to the Petitioner. He submitted that the order on the said application is in breach of principles of natural justice. He further submitted that as the rejection of application u/s 220(6) of the said Act of 1961 is illegal, the exercise of powers u/s 226(3) is also illegal.

The learned Counsel appearing for the Respondent pointed out that the application u/s 220(6) made by the Petitioner has been rejected and the same is reflected from communications dated 22nd February, 2010 and 15th April, 2010. The Learned Counsel further submitted that though the Petitioner is aware of the rejection of the said application, he has not taken any steps. The Learned Counsel further pointed out that the appeal preferred by the Petitioner before the Commissioner (Appeals) is pending and it is for the Petitioner to seek relief of stay in the appeal.

We have given careful consideration to the submissions made. A copy of the order allegedly passed on application made by the Petitioner u/s 220(6) of the said Act of 1961 has not been produced before us. The communication dated 22nd February, 2010 issued by the Respondent does not refer to any such application made by the Petitioner, though the application appears to have been filed on 22nd January, 2010. There is a reference in the communication dated 15th April, 2010 issued by the Respondent that the request for stay has been already rejected. It appears that there is no specific order passed on application dated 22nd January, 2010 made by the Petitioner. Therefore, it is not possible to know the grounds on which the said application has been allegedly rejected. In the circumstances, the order, if any, passed on the said application will have to be set aside and the Respondent will have to be directed to decide the appreciation afresh in accordance to law, by passing a speaking order. Till such application is decided, we will have to direct that no further steps should be taken on the basis of notices u/s 226(3) of the said Act of 1961. We make it clear that we are not making any adjudication on merits of the demand and the merits of the application made by the Petitioner.

We dispose the writ petition by issuing the following directions:

(a) Order, if any, passed by the Respondent on the application made by the Petitioner u/s 220(6) of the said Act of 1961 is set aside. The said application shall be decided afresh by the Respondent in accordance with law. The application shall be decided within a period of two weeks from today by passing a speaking order.

(b) All contentions as regards merits of the said application are kept open.

(c) For a period of two weeks from today, the notices u/s 226(3) of the said Act of 1961 issued on 18th June, 2010 shall not be acted upon. In the event order passed on application u/s 220(6) of the said Act of 1961 is adverse to the Petitioner, the said notice dated 18th June, 2010 shall not be acted upon for a period of one week from the date of communication of the order to the Petitioner.

(d) Petition is disposed of accordingly.