2011 (3) TMI 1021 - HC - Income Tax

Stay petition - liability to pay the tax u/s 143(3) and the interest thereon u/s 234B and 234C - whether petitioner is a developer constructing residential houses or a contractor - Held that - Direct the second respondent to dispose of the appeal, dated 19.1.2011, without directing the petitioner to pay 50% of the demand made by the assessing authority, as submitted by the counsel appearing for the first respondent, within a period of eight weeks from the date of receipt of a copy of this order.

Summary

Issues: Petitioner's liability to pay tax under Section 143(3) of the Income Tax Act, 1961, challenge to assessment order, stay petition for recovery of disputed demand, direction to dispose of stay petition, cooperation during appellate hearings, initiation of recovery proceedings.

Analysis:

The main issue in this case was the petitioner's liability to pay tax as assessed by the first respondent under Section 143(3) of the Income Tax Act, 1961. The petitioner, a developer constructing residential houses, contended that they were not a contractor as claimed by the assessing authority. The petitioner challenged the assessment order by filing an appeal before the second respondent on 19.1.2011, along with a stay petition to prevent the recovery of the disputed demand and to avoid being treated as an assessee in default.

The learned counsel for the respondents argued that the second respondent should be directed to dispose of the stay petition within a specified period, subject to the petitioner paying 50% of the total demand made by the assessing authority. However, the court, considering the submissions and averments made, directed the second respondent to dispose of the appeal without requiring the petitioner to pay 50% of the demand. The court ordered the disposal of the appeal within eight weeks from the date of the order, emphasizing the petitioner's cooperation during the appellate hearings. It was also clarified that no recovery proceedings should be initiated against the petitioner regarding the disputed amount of tax and interest until the appeal was disposed of by the second respondent.

In conclusion, the High Court ordered the writ petition in favor of the petitioner, with no costs imposed. The connected miscellaneous petition was closed as well. The judgment highlighted the importance of fair proceedings and protection of the petitioner's rights during the appeal process, ensuring no undue burden was placed on the petitioner pending the final decision on the disputed tax and interest amount.