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INTHEHIGHCOURTOFJUDICATUREATBOMBAY O.O.C.J. WRITPETITIONNO.653OF2012 NishithMadanlalDesai. ...Petitioner. Vs. CommissionerofIncomeTax11&Ors. ...Respondents. .... Mr.Firoz Andhyarujina, Senior Advocate with Mr.Sameer G.Dalal andMr.KarthikRanganathanforthePetitioner. Mr.SureshKumarwithMs.SuchitraKamblefortheRespondents. ..... CORAM:DR.D.Y.CHANDRACHUDAND M.S.SANKLECHA,JJ. March15,2012. P.C.: Rule,byconsentreturnableforthwith.Withtheconsent ofCounselandattheirrequest,thePetitionistakenupforhearing andfinaldisposal.

2.

ThePetitionerfiledhisreturnofincomeforAssessment

Year200910declaringatotalincomeofRs.19.41crores. Inthe orderofassessment,theAdditionalCommissionerofIncomeTax assessed the total income of the Petitioner at Rs.22.43 crores, resultinginademandofRs.2,00,48,630/. ThePetitionerfileda

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rectification application under Section 154 on 5 January 2012. Upon rectification, the demandhasbeenscaleddown fromRs.2 crorestoRs.1.30 crores. Thereafter,uponasecondrectification applicationdated30January2012,thedemandhasbeenfurther scaleddowntoRs.1.18crores.ArefundwasduetothePetitioner forAssessmentYear201011approximatelyintheamountofRs.78 lakhs.ThePetitionerhasfiledanappealbeforetheCommissioner of Income Tax (Appeals) against the order of assessment. An applicationforstaywasmovedbeforetheCommissionerofIncome Tax(Appeals).Byhisimpugnedorderdated27February2012,the Commissioner of Income Tax11 has directed that the refund of Rs.78 lakhs which has been determined to be payable for AssessmentYear201011shallbeadjustedagainsttheoutstanding demand of Rs.1.18 crores for Assessment Year 200910. The PetitionerhasbeencalledupontopaythebalanceofRs.41lakhs onorbefore10March2012.TheCommissionerofIncomeTax11 hasnotedthatconsideringthefinancialstatusandaffairsofthe Petitionerthepaymentofsuchanamountisnotlikelytocauseany financialhardship.Simultaneously,on27February2012anorder hasbeenpassedbytheAssessingOfficer,adjustingtherefundof

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Rs.78lakhsagainstthedemandofRs.1.18crores. Consequently, thePetitionerhasbeencalledupontopayanamountofRs.40.54 lakhsby10March2012.

3.

Counsel appearing on behalf of the Petitioner submits

thattheCIT(Appeals)hasfailedtotakeduenoteofthesubmission whichhasbeenmaderegardingtheadditionsmade. Ithasbeen statedthatprimarilytheadditionshavebeenmadebytheAssessing Officeronthreecounts:(i)InterestpaidtoHDFCBank;(ii)The annuallettingvalueofhouseproperty;and(iii)Salespromotion expenses. As regards (i), it has been stated that interest was allowedbytheAssessingOfficerforsevenpreviousyearsupona scrutiny assessment. As regards (ii), the Municipal certificate of valuationproducedbytheassesseewasacceptedbytheAssessing Officerforpreviousyears. However,fortheyearinquestion,the addition which has been made would result in an increase by 3700%intheannuallettingvalue. Asregards(iii),ithasbeen stated that the expenses which were incurred in the amount of Rs.1.20 crores were towards legitimate professional expenditure, includingtowardsinternationalconferences,institutionofachair

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inconjunctionwiththeInternationalFiscalAssociation(IFA)and totheGovernmentLawCollegeatMumbai.Inthesecircumstances, it was submitted that the action of the Revenue is completely arbitrary. Ontheotherhand,Counselappearingonbehalfofthe Revenue submitted that the refund of Assessment Year 201011 wasadjustedagainstthetaxdemandforAssessmentYear200910 afterdueintimationunderSection245.

ThepowerwhichisvestedintheAssessingOfficerunder

Section220(6)andforthatmatterthatwhichisconferreduponthe CIT(Appeals)tograntastayofdemandisajudicialpower.Itis necessaryforboth theAssessingOfficeraswellastheAppellate AuthoritiesconstitutedundertheIncomeTaxAct,1961,tohave dueregardtothefactthattheirfunctionisnotmerelytoactastax gatherers,butequallyasquasijudicialauthorities,theyoweaduty offairnesstotheassessee. Thisseemstobelostsightofinthe mannerinwhichtheauthorityhasactedinthepresentcase.The parameters for the exercise ofthejurisdiction tograntastayof demand has been set out in several judgments of this Court,

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including in KEC International vs. B.R.Balakrishnan.1 In the present case, the assessee returned an income of approximately Rs.19 crores. In the original order of assessment, there was a demandofRs.2crores,whichwasscaleddownuponrectification toRs.1.30croresinitiallyandthereafter,toRs.1.18crores. The assessee in the present case is a professional. The submissions whichhavebeenmade onbehalfoftheassesseeinregardtothe three issues noted above, require to be considered in appeal. Havingregardtothisposition,theCommissionerofIncomeTax,in ourview,oughttohavedevotedamorecarefulconsiderationto theissueastowhetherastayofdemandwaswarranted. Ofthe total demand of Rs.1.18crores,anamountofRs.78lakhshas beenadjustedagainsttherefundwhichbecamedueandpayable against the demand for Assessment Year 201011. Since the refundhasalreadybeenadjusted,andthebalanceofthedemand was Rs.40.54lakhs, we areof theviewthat the endsof justicewouldrequirethatthereshouldbeastayontherecoveryof balanceuntilthedisposaloftheappealbeforetheCIT(Appeals). At this stage, since the amountof Rs.78 lakhs has already

1 251 ITR 158

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beenadjusted,wearenotissuinganydirectioninrespectofthat amount, but we direct that the CIT (Appeals) shall expedite the disposaloftheappealandendeavourtodosowithinaperiodof threemonthsfromtoday.Inthesecircumstances,wemaketherule absolute by modifying the order passed by the Commissioner of IncomeTax11on27February2012bystayingtherecoveryofthe balanceamountofRs.40.54lakhspendingdisposaloftheappeal.

Thereshallbenoorderastocosts.

(Dr.D.Y.Chandrachud,J.)

(M.S.Sanklecha,J.)

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