Maheshwari Agro Industries v. UOI

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2012 TaxPub(DT) 0739 (Raj-HC) : (2012) 044 (I) ITCL 0289 : (2012) 346 ITR 0375 : (2012) 246 CTR 0113 : (2012) 206 TAXMAN 0375 : (2012) 065 DTR 0129 INCOME TAX ACT, 19561 --Appeal (CIT(A))--Power vis-a-vis inherent power Granting of stay of disputed demand--The petitioner-assessee, engaged in the business of manufacturing and trading of oils, for assessment year 2008-09, as a partnership firm filed its return of income through e-filing system on 30-9-2008 declaring the income of Rs. 3,48,140. Initially, the case was processed under section 143(1) on 22-4-2009 on refund. However, the case of the assessee was selected for scrutiny, since a survey was conducted on 18-3-2007 at the business place of the petitioner under section 133A, his case was fixed for assessment upon scrutiny, and accordingly, a notice under section 143(2) was issued to him. The assessee produced relevant record and books of account before the assessing authority and the assessing authority ultimately passed the impugned assessment order Annex-1 for the said assessment year 2008-09 on 20-12-2010 and making additions in the declared income of Rs. 3,48,140, the total income assessed by the Assessing Authority was to the tune of Rs. 1,44,42,320. The interest under the provisions of sections 234A, 234B, 234C, 244A(3) and 234D was charged separately, and also penalty proceedings under section 271(1)(c) for concealment of income were initiated separately. The main addition of Rs. 1,21,17,057 appears to be on account of trading additions on the ground that rejecting regular Books of Account of the assessee under section 145(3), the ITO applied the G.P. rate of 20.20%, which the assessee declared in the assessment year 2006-07 and the same G.P. rate was applied for the present assessment year 2008-09 also; even though the assessee has declared G.P. rate of only 9.79% in the present assessment year. The comparative G.P. rates based on turnover of the assessee for three assessment years was noticed by the assessing authority in the impugned order itself. As against the turnover of Rs. 58,36,980 in the assessment year 2006-07, in which the G.P. rate of 20.20% was declared, the assessee declared G.P. rate of 9.79% on the ten fold increased turnover in assessment year 2008-09 on Rs. 5.46 crores. In the middle year assessment year 2007-08, on the turnover of Rs. 1.89 crore, the G.P. rate of 9.90% was declared. It is not in dispute that the assessee was liable to tax audit also, as per provisions of section 44AB and such audit reports were also produced before the assessing authority. Drawing the inference of concealment of income on the basis of such difference in G.P. rates, the assessing authority applying the higher G.P. rate of 20.20%, the assessing authority made the addition of Rs. 1.21 crore and assessed the assessee's declared of Rs. 3,48,140 at Rs. 1.44 crores. This resulted in issuance of the impugned demand for recovery to the tune of Rs. 58 lacs vide Annex-5 dt. 21-1-2011 after some rectification of the arithmetical errors by the assessing authority. The petitioner-assessee preferred first appeal under section 246A of the Act before the CIT(A) against the said assessment order dt. 24-12-2010 on 31-12-2010 vide Annex-2 and shortly thereafter filed an application before the CIT(A) vide Annex-3 alleging therein that the demand created by the ITO is arbitrary and since he is pressing hard for recovery and may take coercive steps for such recovery, the appeal may be heard as early as possible. The assessee also appears to have filed an application for rectification of the order under section 154 vide Annex-4 upon which Annex-5 order for rectification was passed by the ITO. The formal notice for demand vide Annex-6 was issued to the assessee on 21-1-2011 for Rs. 58,48,697. The petitioner-assessee filed also an application under section 220(3) and 220(6) for stay of entire disputed demand before the assessing authority ITO himself on 20-1-2011 and raised various grounds for seeking the stay of entire disputed demand in the said application relying upon several case laws. The said application came to be rejected by the Assessing Authority vide order Annex 8 dt. 28-1-2011. It appears that the ITO thereafter initiated coercive process by undertaking garnishee proceedings under section 226 (3), and in this regard, a notice was sent to bankers of the petitioner-assessee vide Annex-9 dt. 2-2-2011, addressed to Branch Manager, ICICI Bank for attachment of bank account of the petitioner-assessee. Similar notices were also sent to other bankers of the petitioner-firm and also to the Rajasthan Financial Corporation. It appears that the petitioner also approached the CIT vide Annex-14 dt. 3-2-2011 in the matter on administrative side; and thereafter the present writ petition appears to have been filed in this Court on 9-2-2011. With the additional affidavit, the petitioner has also produced copy of order, dt. 17-2-2011 passed by CIT-I, Jodhpur directing the assessee to pay Rs. 30 lakhs in three instalments (Rs. 10 lakhs each), payable on or before 25-2-2011, 12-3-2011 and 25-3-2011 respectively; and the demand of balance amount of Rs. 28,46,637 was stayed till the disposal of the first appeal or 30-9-2011, whichever is earlier. The assessee appears to have failed in making this payment of instalments also and the learned counsel for the petitioner informed the Court that in March, 2011, a sum of Rs. 5 lacs against the disputed demand was paid by the petitioner-assessee. He further submitted that vide communication dt. 22-2-2011 even the order passed by the CIT(A) on 17-2-2011 has been withdrawn. The communication dt. 22-2-2011 Annex-18 has been produced along-with additional affidavit, which the petitioner filed on 1-3-2011. The respondent-Income Tax Department has filed reply to the writ petition and has justified the impugned orders passed in the present matter. *Held:* This court would stay the recovery of entire balance amount from the petitioner-assessee, while directing the CIT(A) to dispose of the pending appeal of the assessee within a period of six months from today. The attachment of bank accounts of the petitioner-assessee already attached by the respondent-Assessing Authority are also be lifted and the assessee will be free to operate its bank accounts. Since the CIT(A) also has inherent and implied powers to grant stay, the assessee-petitioner may also file stay application before the CIT(A), who may also consider such stay application on its own merits upon the relevant factors as enumerated above viz. prima facie case, balance of convenience, irreparable injury, nature of demand and hardship likely to be caused to the assessee, liquidity available to the assessee, etc. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0739 (Raj-HC) : (2012) 044 (I) ITCL 0289 : (2012) 346 ITR 0375 : (2012) 246 CTR 0113 : (2012) 206 TAXMAN 0375 : (2012) 065 DTR 0129

INCOME TAX ACT, 19561

--Appeal (CIT(A))--Power vis-a-vis inherent power Granting of stay of disputed demand--The petitioner-assessee, engaged in the business of manufacturing and trading of oils, for assessment year 2008-09, as a partnership firm filed its return of income through e-filing system on 30-9-2008 declaring the income of Rs. 3,48,140. Initially, the case was processed under section 143(1) on 22-4-2009 on refund. However, the case of the assessee was selected for scrutiny, since a survey was conducted on 18-3-2007 at the business place of the petitioner under section 133A, his case was fixed for assessment upon scrutiny, and accordingly, a notice under section 143(2) was issued to him. The assessee produced relevant record and books of account before the assessing authority and the assessing authority ultimately passed the impugned assessment order Annex-1 for the said assessment year 2008-09 on 20-12-2010 and making additions in the declared income of Rs. 3,48,140, the total income assessed by the Assessing Authority was to the tune of Rs. 1,44,42,320. The interest under the provisions of sections 234A, 234B, 234C, 244A(3) and 234D was charged separately, and also penalty proceedings under section 271(1)(c) for concealment of income were initiated separately. The main addition of Rs. 1,21,17,057 appears to be on account of trading additions on the ground that rejecting regular Books of Account of the assessee under section 145(3), the ITO applied the G.P. rate of 20.20%, which the assessee declared in the assessment year 2006-07 and the same G.P. rate was applied for the present assessment year 2008-09 also; even though the assessee has declared G.P. rate of only 9.79% in the present assessment year. The comparative G.P. rates based on turnover of the assessee for three assessment years was noticed by the assessing authority in the impugned order itself. As against the turnover of Rs. 58,36,980 in the assessment year 2006-07, in which the G.P. rate of 20.20% was declared, the assessee declared G.P. rate of 9.79% on the ten fold increased turnover in assessment year 2008-09 on Rs. 5.46 crores. In the middle year assessment year 2007-08, on the turnover of Rs. 1.89 crore, the G.P. rate of 9.90% was declared. It is not in dispute that the assessee was liable to tax audit also, as per provisions of section 44AB and such audit reports were also produced before the assessing authority. Drawing the inference of concealment of income on the basis of such difference in G.P. rates, the assessing authority applying the higher G.P. rate of 20.20%, the assessing authority made the addition of Rs. 1.21 crore and assessed the assessee's declared of Rs. 3,48,140 at Rs. 1.44 crores. This resulted in issuance of the impugned demand for recovery to the tune of Rs. 58 lacs vide Annex-5 dt. 21-1-2011 after some rectification of the arithmetical errors by the assessing authority. The petitioner-assessee preferred first appeal under section 246A of the Act before the CIT(A) against the said assessment order dt. 24-12-2010 on 31-12-2010 vide Annex-2 and shortly thereafter filed an application before the CIT(A) vide Annex-3 alleging therein that the demand created by the ITO is arbitrary and since he is pressing hard for recovery and may take coercive steps for such recovery, the appeal may be heard as early as possible. The assessee also appears to have filed an application for rectification of the order under section 154 vide Annex-4 upon which Annex-5 order for rectification was passed by the ITO. The formal notice for demand vide Annex-6 was issued to the assessee on 21-1-2011 for Rs. 58,48,697. The petitioner-assessee filed also an application under section 220(3) and 220(6) for stay of entire disputed demand before the assessing authority ITO himself on 20-1-2011 and raised various grounds for seeking the stay of entire disputed demand in the said application relying upon several case laws. The said application came to be rejected by the Assessing Authority vide order Annex 8 dt. 28-1-2011. It appears that the ITO thereafter initiated coercive process by undertaking garnishee proceedings under section 226 (3), and in this regard, a notice was sent to bankers of the petitioner-assessee vide Annex-9 dt. 2-2-2011, addressed to Branch Manager, ICICI Bank for attachment of bank account of the petitioner-assessee. Similar notices were also sent to other bankers of the petitioner-firm and also to the Rajasthan Financial Corporation. It appears that the petitioner also approached the CIT vide Annex-14 dt. 3-2-2011 in the matter on administrative side; and thereafter the present writ petition appears to have been filed in this Court on 9-2-2011. With the additional affidavit, the petitioner has also produced copy of order, dt. 17-2-2011 passed by CIT-I, Jodhpur directing the assessee to pay Rs. 30 lakhs in three instalments (Rs. 10 lakhs each), payable on or before 25-2-2011, 12-3-2011 and 25-3-2011 respectively; and the demand of balance amount of Rs. 28,46,637 was stayed till the disposal of the first appeal or 30-9-2011, whichever is earlier. The assessee appears to have failed in making this payment of instalments also and the learned counsel for the petitioner informed the Court that in March, 2011, a sum of Rs. 5 lacs against the disputed demand was paid by the petitioner-assessee. He further submitted that vide communication dt. 22-2-2011 even the order passed by the CIT(A) on 17-2-2011 has been withdrawn. The communication dt. 22-2-2011 Annex-18 has been produced along-with additional affidavit, which the petitioner filed on 1-3-2011. The respondent-Income Tax Department has filed reply to the writ petition and has justified the impugned orders passed in the present matter. Held: This court would stay the recovery of entire balance amount from the petitioner-assessee, while directing the CIT(A) to dispose of the pending appeal of the assessee within a period of six months from today. The attachment of bank accounts of the petitioner-assessee already attached by the respondent-Assessing Authority are also be lifted and the assessee will be free to operate its bank accounts. Since the CIT(A) also has inherent and implied powers to grant stay, the assessee-petitioner may also file stay application before the CIT(A), who may also consider such stay application on its own merits upon the relevant factors as enumerated above viz. prima facie case, balance of convenience, irreparable injury, nature of demand and hardship likely to be caused to the assessee, liquidity available to the assessee, etc.