CM No. 5279/2008 (Stay)
1. Allowed, subject to all just exceptions.
2. CM stands disposed of. W.P.(C) 2737/2008
4. Learned Counsel for the respondents accepts notice and seeks sometime to file a counter-affidavit. She may do so within one week. Rejoinder, if any, thereto be filed within a week thereafter.
5. List on 10th April, 2008.
CM No. 5278/2008 (Stay)
7. Learned Counsel for the respondents accepts notice and seeks sometime to file a reply. She may do so within one week. Rejoinder, if any, thereto be filed within a week thereafter.
8. According to learned Counsel for the petitioner, a return had been filed for the asst. yr. 2004-05 on 29th Aug., 2004. The return of income was for an amount of Rs. 3,84,710.
As against the return of income for Rs. 3.84 lakhs, an assessment order was passed by the AO under Section 143(3) of the IT Act, 1961 (for short the Act’) on 28th Dec, 2006 wherein the income of the assessee was determined at Rs. 6,29,12,450. Learned Counsel for the assessee informs us that the assessment has been made at 150 times the returned income. On the basis of the assessed income, a demand of Rs. 2,74,58,226 has been raised against the assessee for the asst. yr. 2004-05.
9. Against the assessment order, the petitioner has preferred an appeal which is still pending disposal before the Commissioner of Income-tax (Appeals) [CIT (A)].
10. On 31st Jan., 2007, the petitioner moved an application for stay before the AO under Section 220(6) of the Act in which it was prayed that the demand be not enforced till disposal of the appeal before the CIT(A). It is submitted that no decision has yet been communicated on the stay application.
11. Learned Counsel also submits that on several occasions, non-statutory representations have been made by the petitioner to the CIT as well as to the Chief CIT and eventually a letter dt. 27th Dec, 2007 was received by the petitioner requiring it to deposit an amount of Rs. 80 lakhs in four equal instalments on or before 31st March, 2008. This letter, which appears on p. 74 of the paper book, has been complied with and the amount of Rs. 80 lakhs has since been deposited by the petitioner.
12. According to learned Counsel for the petitioner for an earlier assessment year, that is, 2003-04, a similar assessment was made against which an appeal was filed by the petitioner to the CIT(A) and that appeal has also been recently decided and the appeal has been preferred against that to the Tribunal. According to learned Counsel for the petitioner, some demands have been confirmed by the CIT(A) and the amount of Rs. 80 lakhs deposited by the petitioner has been appropriated against the demand for the asst. yr. 2003-04.
13. Learned Counsel further submits that there is a further outstanding demand for the asst. yr. 2003-04. However, we are not concerned with whatever has happened in respect of the asst. yr. 2003-04 because that is not the subject-matter of this writ petition.
14. Insofar as the asst. yr. 2004-2005 is concerned, the broad fact is that a huge demand has been made against the petitioner and the petitioner has filed an application for stay of that demand under Section 220(6) of the Act on 31st Jan., 2007 but apparently no decision has been communicated on this petition.
15. Learned Counsel for the petitioner has drawn our attention to Instruction No. 96, dt. 21st Aug., 1969 issued by the CBDT in which it is mentioned (p. 17 of the paper book) that where the assessment is substantially higher than the returned income, say twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeal, provided there is no lapse on the part of the assessee. It is submitted by learned Counsel that in this case the assessed income is almost 150 times the returned income and, therefore, Instruction No. 96, dt. 21st Aug., 1969 would automatically come into play and the petitioner is entitled to have the demand raised against him kept in abeyance till the decision of the appeal by the CIT(A) in respect of the asst. yr. 2004-05.
16. Be that as it may, we do not think it appropriate to express any opinion at this stage except to note the fact that the stay petition filed by the petitioner on 31st Jan., 2007 is still pending disposal for more than a year.
17. Under the circumstances and keeping in view the contents of instruction No. 96, dt. 21st Aug., 1969, it would be appropriate that no recovery is made against the petitioner nor any coercive steps are taken against the petitioner for enforcing the demand for the asst. yr. 2004-05 until further orders. List the matter on 10th April, 2008.
18. At this stage, learned Counsel for the Revenue has drawn our attention to a letter dt. 6th Dec, 2007 issued by the Chief CIT (p. 91 of the paper book), which refers to an application filed by the petitioner for stay of demand and de-attachment of account for the asst. yrs. 2003-04 and 2004-05. It is mentioned in the letter that the petition given by the petitioner on 26th Nov., 2007 for stay of recovery of arrears of demand and release of bank account has been rejected. It has also been mentioned in the letter that the AO has given several opportunities to the petitioner by letters dt. 29th May, 2007 and 16th Nov., 2007 before rejecting the petition.
19. Under these circumstances, we are of the view that it would be necessary to see the original record since there appears to be some uncertainty about the correct facts.
20. Learned Counsel for the Revenue says that she will produce the original record on 10th April, 2008. Until that date, no coercive steps be taken against the petitioner for recovery of any demand in respect of the asst. yr. 2004-05.