2016 (3) TMI 180 - HC - Income Tax

Recovery proceedings - When tax payable and when assessee deemed in default - remedy under Section 220 - Held that - The scheme of the Act provides a specific remedy under Section 220 (6) and the same having not been invoked by the petitioner in the present case, does not entitle him to the protection as has been prayed for on the ground of mere pendency of the appeal or till the disposal of interim stay application. From the perusal of impugned notice dated 3.11.2015, we do find that the assessing authority has not considered the aspect of the pendency of appeal nor the grievance raised by the petitioner to this effect has been considered in accordance with law but at the same time it is found that the petitioner has not brought any material whatsoever to the knowledge of the assessing authority. Although the petitioner has also made a reference to some circulars issued by CBDT but the same are not filed before the Court nor before the assessing authority, therefore, the Court has no choice except to interpret the intention of legislation from its plain reading. In civil disputes Order XLI Rule 5 and 6 Code of Civil Procedure, 1908 specifically confer jurisdiction on the appellate court or the court passing the decree for stay of orders/decree appealed against or for imposing conditions to secure the ends of justice. The benefit of Section 144 CP.C. is also available to a litigant in all judicial proceedings, therefore, the exclusion of power of interim stay at the first appellate stage under Income Tax Act, 1961 has to be read in the manner provided for in Section 220 (6) of the Act but not otherwise. The provisions of Section 144 C.P.C. may not be applicable to the proceedings under the Income Tax Act, 1961 but the principles do apply. It is true that an appeal is the continuity of proceedings but the legislative intention of securing the interest of revenue by imposing just conditions at the first appellate stage, can also not be held to be arbitrary and reading a principle contrary to the intention of Section 220 (6) amounts to adding something in the appellate jurisdiction which the law neither expressly nor by implication does provide. In the circumstances of the case, we leave it open to the petitioner to approach the assessing officer under Section 220 (6) of the Act within a period of two weeks from today and in case any application is filed by the petitioner before the assessing officer, he shall pass necessary order after affording an opportunity to the petitioner within three months from the date of filing of any such application. Until decision on the application, filed if any, or until decision of the appeal itself within a period of three month, the recovery proceedings in relation to the assessment year 2012-2013 for the disputed amount shall remain in abeyance and the same shall abide by to the outcome of the appeal.

Summary

Issues:
1. Challenge to recovery notice issued by assessing officer for amount due for assessment year 2012-13.
2. Interpretation of Section 220(6) of the Income Tax Act, 1961 regarding recovery proceedings during pendency of appeal.
3. Applicability of case laws on granting stay of recovery proceedings during appeal.
4. Jurisdiction of appellate authority to grant interim stay under Section 246 or 246-A.
5. Legislative intention behind Section 220(6) and the role of assessing officer in recovery proceedings.

The judgment addressed the challenge to a recovery notice issued by the assessing officer for the amount due for the assessment year 2012-13. The petitioner contended that since an appeal against the assessment order was pending, the recovery proceedings should be stayed, citing Section 220(6) of the Income Tax Act, 1961. The court analyzed the provision of Section 220(6) which allows the assessing officer to treat the assessee as not in default during the appeal's pendency. It was highlighted that the appellate authority is not empowered to grant interim stay, and the assessee must approach the assessing officer under Section 220(6) for deferment of recovery proceedings.

The judgment referred to case laws emphasizing the necessity of staying recovery proceedings during the appeal or until the disposal of an interim stay application. The court discussed the jurisdiction of the appellate authority to grant interim stay under Section 246 or 246-A, contrasting it with the discretionary power vested in the assessing officer by Section 220(6). The legislative intention behind restricting the power of the appellate authority was underscored to ensure expeditious handling of appeals.

Moreover, the judgment analyzed the petitioner's argument that mere filing of an appeal should protect the assessee from default status, which was deemed incorrect. The court emphasized that the petitioner had not invoked Section 220(6) for interim stay, thereby not entitling him to the protection sought solely based on appeal pendency. The judgment also highlighted the absence of material presented to the assessing authority regarding the appeal's status, and the importance of following the legislative provisions to secure the revenue's interest.

Additionally, the judgment discussed the applicability of Civil Procedure Code provisions in judicial proceedings and the need to interpret Section 220(6) as provided in the Act. The court disagreed with the petitioner's proposition, citing various judgments and legislative intent. It was suggested that the CBDT could issue guidance to ensure a balanced approach between revenue recovery and the assessee's relief during appeal proceedings.

Conclusively, the court allowed the petitioner to approach the assessing officer under Section 220(6) within a specified period and directed the assessing officer to decide on any application within three months. Recovery proceedings were to remain in abeyance until a decision on the application or appeal, ensuring alignment with the outcome of the appeal.

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