Srinivasa Engineering Constructions Company Vs ITO (Andhra Pradesh High Court)
The writ petition challenged the action of the income tax authorities in initiating recovery proceedings for Assessment Years 2006-07 and 2011-12 while the petitioner’s statutory appeal remained pending. The petitioner, a construction and contract works firm, stated that its business operations had been discontinued from 2011 and that no return was filed for Assessment Year 2011-12. Following a notice issued under Section 148 of the Income Tax Act, 1961, the petitioner filed its return on 22.10.2018 disputing the reopening of the assessment. The Assessing Officer thereafter completed the assessment on 20.12.2018 under Section 143(3) read with Section 147.
Aggrieved by the assessment order, the petitioner filed a statutory appeal in Form-35 on 23.01.2019 and also submitted written arguments before the appellate authority. The Principal Commissioner of Income Tax granted stay of recovery until 30.06.2022 or till disposal of the appeal, whichever was earlier, and the stay was subsequently extended up to 31.03.2023. The petitioner also filed a further stay application before the appellate authority.
The petitioner contended that despite the appeal remaining pending, the first respondent issued a recovery notice dated 29.06.2026 demanding payment of outstanding tax and also issued notices to the firm’s partners. It was argued that coercive recovery during the pendency of the appeal would defeat the purpose of the statutory remedy and cause serious prejudice.
The Revenue did not dispute the factual position but submitted that the petitioner ought to have pursued the appeal before the appellate authority instead of filing the writ petition.
The High Court observed that the appeal had remained pending since 2019 and that no reasons were forthcoming for the delay in its disposal. The Court directed the appellate authority to take up and dispose of the appeal in accordance with law within four months from the date of receipt of the order. It further directed that no coercive recovery action shall be initiated pursuant to the assessment orders under challenge until the appeal is disposed of. The writ petition was accordingly disposed of without any order as to costs, and pending miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
Seeking to declare the action of respondent No.1 in initiating the recovery proceedings for assessment years 2006-07 and 2011-12, during the pendency of appeal as unjust, arbitrary and contrary to provisions of Income Tax Act, the present writ petition is filed.
2. Heard Mr. Manmohan Dundu, learned counsel for the petitioners and Mr. Y.N. Vivekananda, learned Senior Standing Counsel for Income Tax Department. With their consent, the writ petition is being disposed of, at the stage of admission.
3. Learned counsel for the petitioners inter alia submits that the petitioners firm was engaged in business of execution of construction and contract works, and its operations were discontinued from the year 2011, thereby, return of Income Tax was not filed for assessment year 2011-12. He submits that Assessing Officer issued notice under Section 148 of Income Tax Act, 1961 alleging that assessee failed to file income tax returns, that in response to the said notice, petitioner filed its return of income tax on 22.10.2018 and disputed very basis of re-opening. He submits that without considering the submissions made by the petitioner firm, the Assessing Officer completed the assessment on 20.12.2018 under Section 143(3) r/w. Section 147 of Income Tax Act.
4. Learned counsel submits that aggrieved by the order of assessment, petitioner-firm filed statutory appeal in Form-35 on 23.01.2019 and subsequently written submissions before the 2nd respondent were also filed. He further submits that on 16.03.2022, Principal Commissioner of Income Tax granted stay of payment till 30.06.2022 or till the disposal of the first appeal whichever is earlier. He submits that though the petitioner is ready to proceed with the appeal, for one reason or the other, the same was not disposed of. He also submits that the 1st respondent under the guise that no stay is in operation, has issued notice on 29.06.2026 calling upon the petitioner to pay outstanding tax and also issued separate notices to the partners of the petitioner firm. He submits that during the pendency of the appeal if coercive action is taken, the very purpose of filing appeal would be defeated and unless the interest of the petitioner is protected during the pendency of the appeal, it will suffer serious prejudice and great hardship.
5. Learned Standing Counsel for the respondents, on the other hand, while not disputing the factual position, however, submits that the petitioners instead of pursuing the appeal before the appellate authority, filed the present writ petition and the same cannot be entertained.
6. Considered the submissions made and perused the material on record.
7. Be that as it may. It is not in dispute that the petitioner filed the appeal against the order of the Assessing Officer as long as back in the year 2019. It is also not in dispute that stay was granted until 30.06.2022 or till the disposal of the appeal, whichever is earlier. It appears that subsequently, the stay was extended upto 31.03.2023 and the petitioner filed application before the appellate authority seeking stay.
8. Be that as it may. While no reasons are forthcoming as to delay in disposal of the appeal, keeping in view that the appeal was filed long back, we deem it appropriate to dispose of the writ petition, providing that the 2nd respondent shall take up the appeal filed by the petitioner and dispose it of, in accordance with Law, as expeditiously as possible, within a period of four (4) months, from the date of receipt of copy of this Order.
9. Till the disposal of the appeal, the respondent authorities shall not initiate any coercive action for recovery of amounts, pursuant to the assessment orders, which are under appeal.
10. Accordingly, the writ petition is disposed of. There shall be no order as to costs. Miscellaneous petitions, if any, shall stand closed.
