Case Law Details
In the present case, as noted earlier, a provisional attachment has already been levied on 7 October 2011 under Section 281B by which the amount which was invested by the Assessee in mutual funds of SBI Mutual Funds was attached. The attachment was to the extent of Rs.36.54 Crores. That being the position evidently there would have been no basis for forming a reason to believe that if the period of 30 days was to be observed under Section 220(1), that would be detrimental to the Revenue.
Merely because the end of the financial year is approaching that cannot constitute a detriment to the Revenue. The detriment to the Revenue must be akin to a situation where the demand of the Revenue is liable to be defeated by an abuse of process by the Assessee. This is of course illustrative, for what is detrimental to the Revenue has to be determined on the facts of each case and an exhaustive catalogue of circumstances cannot be laid down. Consequently, we find that there is absolutely no justification for the Assessing Officer for making an order of demand directing the Assessee to deposit the entire demand by 16 March 2012. The action is highhanded and contrary to law.
The Revenue is adequately protected by the attachment which has been levied under Section 28 1B. Hence we dispose of the petition by directing that the provisional attachment under Section 281B shall continue to remain in force pending the disposal of the appeal before the Commissioner of Income Tax (Appeals). In order to enable the Assessee to adopt the remedy which may be available in law against the final order of the Commissioner of Income Tax (Appeals), we also direct that the attachment shall continue to remain in force for a period of eight weeks after disposal of the appeal by the Commissioner of Income Tax (Appeals). On the aforesaid condition, no further coercive steps shall be taken against the Petitioner for recovery of the demand, pending the appeal.
HIGH COURT OF BOMBAY
WRIT PETITION (Lodging) NO.765 OF 2012
Firoz Tin Factory and another.
versus
Assistant Commissioner of Income Tax
Date: MARCH 26, 2012.
ORAL JUDGMENT (Per DR.D.Y.Chandrachud, J.):
1 These proceedings arise out of the orders passed on 13 March 2012 by the first Respondent and on 19 March 2012 by the third Respondent calling upon the Petitioner to pay the entire demand in the amount of Rs.36,56,61,776/. The grievance of the Petitioner is that while the order of assessment was passed on 09 March 2012 under Section 143(3) r/w Section 147 of the Income Tax Act, 1961, the Petitioner was directed to pay the entire demand within a period of one week of the order of assessment.
2 The Petitioner filed an application before the first Respondent under Section 220(6) on 12 March 2012. That application was rejected on the ground that the application for stay did not fall within the guidelines framed in instruction No.1914 issued by the CBDT. In a subsequent letter dated 15 March 2012 addressed to the Commissioner of Income Tax the Petitioner recorded that there was no reason to require the Petitioner to pay the entire amount within a period of seven days of the order of assessment though the normal period under Section 220(1) is 30 days from the service of notice. The Petitioner recorded that there was no detriment to the interests of the Revenue as the ACIT has already levied a provisional attachment under the provisions of Section 281B on 7 October 2011. The Commissioner of Income Tax has dismissed the application for stay and a communication has been issued to the Petitioner on 19 March 2012. It has been stated that the Petitioner has not been able to produce documents/ evidence to substantiate its claim as in the letter dated 15 March 2012.
3 The Petitioner challenges the rejection of the application for stay in these proceedings under Article 226 of the Constitution. During the course of hearing, learned counsel appearing for the Revenue, who was instructed by the Assessing Officer present in the Court, states that the provisional attachment which was levied under Section 281B on 7 October 2011 covers mutual funds of a total value of Rs.36.54 Crores. That attachment which has been levied would adequately protect the interests of the Revenue.
4 Learned counsel appearing for the Revenue states, on instructions, that no steps would be taken for withdrawal of the aforesaid amount pending the decision of the Commissioner of Income Tax (Appeals). Learned counsel appearing for the Assessee, however, points out that on 19 March 2012 a letter was addressed to SBI Mutual Funds by the Assessing Officer under Section 226(3) to forthwith pay the amount held in the mutual funds.
5 Under the provisions of Section 220(1) it has been stipulated that any amount other than by way of advance tax specified as payable in a notice of demand under Section 156 shall be paid within thirty days of the service of a notice. The proviso to Subsection (1) stipulates that where the Assessing Officer has any reason to believe that it would be detrimental to the interests of the Revenue if the full period of 30 days is allowed, he may direct, with the previous approval of the Joint Commissioner, that the sums specified in the notice of demand shall be paid within a period of less than 30 days. The proviso to Subsection (1) of Section 220 is in the nature of an exception to the general requirement under the substantive part that an amount which is required to be paid in pursuance of a notice of demand has to be paid within 30 days of the service of notice. The exception which has been carved out by Parliament comes into operation if the Assessing Officer has reason to believe that it would be detrimental to the interests of the Revenue if a full period of 30 days is allowed. This exception has been structured by a further requirement of the previous approval of the Joint Commissioner. The exercise of the power to reduce the period under the proviso to Sub¬section (1) cannot be exercised casually and without due application of mind. The question as to whether it would be detrimental to the interests of the Revenue to allow the full period of 30 days has to be addressed. The Assessing Officer must, in the first instance, have reason to believe that the interests of the Revenue would be detrimentally affected by allowing a period of 30 days as stipulated in the statute. The Joint Commissioner whose approval is sought before the Assessing Officer reduces the period must similarly apply his mind to the issue of detriment to the Revenue. While granting his approval the Joint Commissioner must record reasons. Those reasons as well as the approval which has been granted by the Joint Commissioner must be made available to the Assessee where a copy of the reasons is sought from the Assessing Officer.
6 In the present case, as noted earlier, a provisional attachment has already been levied on 7 October 2011 under Section 281B by which the amount which was invested by the Assessee in mutual funds of SBI Mutual Funds was attached. The attachment was to the extent of Rs.36.54 Crores. That being the position evidently there would have been no basis for forming a reason to believe that if the period of 30 days was to be observed under Section 220(1), that would be detrimental to the Revenue. Merely because the end of the financial year is approaching that cannot constitute a detriment to the Revenue. The detriment to the Revenue must be akin to a situation where the demand of the Revenue is liable to be defeated by an abuse of process by the Assessee. This is of course illustrative, for what is detrimental to the Revenue has to be determined on the facts of each case and an exhaustive catalogue of circumstances cannot be laid down. Consequently, we find that there is absolutely no justification for the Assessing Officer for making an order of demand directing the Assessee to deposit the entire demand by 16 March 2012. The action is highhanded and contrary to law.
7 The Revenue is adequately protected by the attachment which has been levied under Section 28 1B. Hence we dispose of the petition by directing that the provisional attachment under Section 281B shall continue to remain in force pending the disposal of the appeal before the Commissioner of Income Tax (Appeals). In order to enable the Assessee to adopt the remedy which may be available in law against the final order of the Commissioner of Income Tax (Appeals), we also direct that the attachment shall continue to remain in force for a period of eight weeks after disposal of the appeal by the Commissioner of Income Tax (Appeals). On the aforesaid condition, no further coercive steps shall be taken against the Petitioner for recovery of the demand, pending the appeal.
8 The Petition is, accordingly, disposed of. There shall be no order as to costs.
