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II. Direct Taxes Case Laws:
1. Bhupendra Murji Shah Vs. DCIT, W.P. No. 2157&2160, Date of Pronouncement: 11.09.2018, Bombay High Court
Issue:
Whether AO is justified in insisting on payment of 20% of the
demand based on CBDT's instruction dated 29.02.2016 during the pendency
of appeal before the CIT(A)and this approach may defeat & frustrate
the right of the assessee to seek protection against collection and
recovery pending appeal?
Answer: No
Brief Facts:
The assessee filed an appeal before the CIT (Appeals) challenging the
demand raised in assessment order.The assessee also filed an
application for stay of demand during pendency of appeal. The Deputy
Commissioner rejected assessee's stay application and communicated to
assessee that it should pay 20% of the outstanding amount failing which
collection and recovery would continue.
Held:
Once it is an appealable order and the appeal has been filed, it is
pending, then, the appellant should have been given either an
opportunity to seek a stay during the pendency of the appeal, which
power is also conferred admittedly in the Commissioner or Deputy
Commissioner should have held the demand in abeyance as prayed by
theassessee. He does neither, but proceeds to communicate to theassessee
that his application for stay is dismissed.
If the
demand is under dispute and is subject to the appellate proceedings,
then, the right of appeal vested in the assessee by virtue of the
statute should not be rendered illusory and nugatory. That right can
very well be defeated by such communication from the revenue/department
as is impugned herein. That would mean that if the amount as directed by
the impugned communication being not brought in, the assessee may not
have an opportunity to even argue his appeal on merits or that appeal
will become infructuous, if the demand is enforced and executed during
its pendency. In that event, the right to seek protection against
collection and recovery pending appeal by making an application for stay
would also be defeated and frustrated. Such can never be the mandate of
law.
In the
circumstances, the petition is disposed of with directions that the
Appellate Authority shall conclude the hearing of the appeal as
expeditiously as possible and during pendency of these appeals, the
assessee shall not be called upon to make payment of any sum, much less
to the extent of 20 per cent under the Assessment Order/Confirmed Demand
or claim to be outstanding by the revenue.
The appeal is in favour of the assessee and against the revenue.
(Please click here for judgment)
2. CIT Vs. Aquatic Remedies Pvt. Ltd., I.T.A. No. 904 of 2016, Date of order: 25.07.2018, Bombay High Court
Issue:
Whether the notice issued is out of jurisdiction if
permission/sanction to issue notice to re-open the assessmentis not
sought from the designated/ priscribed authoritybut from the other
superior authority?
Held: Yes
Brief facts:
The assessee is engaged in the business of pharmaceutical products.
The Ld. AO has issued a notice u/s 148 of the Income Tax Act, 1961 to
reopen the assessment for the A.Y. 2004-05. The assessee challenged the
issuance of the reopening notice on the ground that the permission/
sanction for issuing of the notice had to be obtained from the Addl. CIT
u/s 151 (2) of the Act whereas the sanction has been obtained from the
CIT and hence, the notice was without jurisdiction.The Ld. AO did not
accept the assessee’s contention &passed the reassessment order u/s
143(3) r.w.s.147 of the Act.The hon’ble CIT (A)dismissed the appeal of
the assessee.Being aggrieved, the assessee filed an appeal before
hon’ble ITAT.The hon’ble ITAT reversed the order of CIT(A).The
department filed an appeal before the Hon’ble High Court.
Held:
It was held that u/s 151(2) of the Act, the sanctioning/ permission
to issue notice u/s 148 of the Act has to be issued by the Addl. CIT.
The Ld. AO had not sought the approval of the Designated Officer but of
the CIT. It is clear from the Form that the CIT had granted permission
to initiate re-opening proceedings against the assessee. There was no
final sanction granted by the Addl. CIT for issuing the notice to
re-open the assessment. The approval which has been granted is not by
the Addl. CIT but by the CIT.There is no statutory provision under which
a power to be exercised by an officer has been excercised by a superior
officer. When the statute mandates the satisfaction of a particular
manner, it has to be done in that manner. Therefore, powers which are
conferred upon a particular authority have to be exercised by that
authority and the satisfaction which the statute mandates of a distinct
authority cannot be substituted by the satisfaction of another.
Accordingly, the order was quashed and the notice issued was out of
jurisdiction.
Hence, the appeal was held in favour of theassessee and against thedepartment.
Case cited:Ghanshyam K. Khabrani V/s Assistant Commissioner of Income Tax, 346 ITR 443, Bombay- HC
(Please click here for judgment)
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