2018 (1) TMI 750 - HC - Income Tax

Application for stay under Section 254(2A) - Held that - It is axiomatic that the extraordinary writ jurisdiction of issuing prerogative writs would not be exercised when the conduct of the petitioner is not clean. A petitioner seeking an extra ordinary relief from the Court is not only expected to come with clean hands but so keep it, till the disposal of the petition. In the above facts we are of the view that the conduct of the petitioner during the pendency of the petition disentitles it to any relief under Article 226 of the Constitution of India. Therefore we dismiss the petition. Prima facie a civil contempt under Section 2 (b) of the Contempt of Courts Act 1971. Further the above communication dated 21 December 2017 (particularly the underlined portion) prima facie misrepresenting the order of the Court, interferes or tend to interfere with the due course of judicial proceedings and / or interfere with the administration of justice. Therefore, prima facie a criminal contempt under Section 2 (c) (ii) and (iii) of the Contempt of Courts Act, 1971. We thus take suo moto notice of contempt and direct the Registry to issue two notices under the Contempt of Courts Act, 1971 read with Appellate Side Rules one for Civil Contempt and the other for Criminal Contempt to Mr. Sadashiv Mokashi the Tax Recovery Officer, (Central) Pune returnable after 8 weeks on 5 March 2018 to show cause why action for civil and criminal contempt under the Contempt of Courts Act, 1971 should not be taken.

Issues Involved:
1. Challenge to the order of the Income Tax Appellate Tribunal regarding the stay of recovery demand.
2. Petitioner's inability to deposit the required amount and subsequent request for relief.
3. Alleged misrepresentation and withdrawal of funds by the petitioner.
4. Contempt proceedings against the petitioner and the Tax Recovery Officer.

Issue-wise Detailed Analysis:

1. Challenge to the order of the Income Tax Appellate Tribunal regarding the stay of recovery demand:
The petitioner challenged the Tribunal's order dated 10th November 2017, which granted a stay on the recovery of ?142.98 Crores on the condition that the petitioner deposits ?18 Crores in three installments. The Tribunal also granted an out-of-turn hearing on 18th January 2018, subject to the payment of ?18 Crores. Failure to comply with this condition would result in the stay being vacated and the appeals being heard in the normal course.

2. Petitioner's inability to deposit the required amount and subsequent request for relief:
The petitioner initially sought ad-interim relief from depositing ?18 Crores, stating they were unable to deposit any amount. This request was denied on 28th November 2017. Later, due to the threat of a strike by teaching staff for non-payment of salaries, the petitioner sought variation of the order. The court directed the petitioner to serve notice to the Respondent-Revenue and placed the petition for consideration on 19th December 2017.

3. Alleged misrepresentation and withdrawal of funds by the petitioner:
On 19th December 2017, the petitioner filed an affidavit indicating an amount of ?81 Crores payable to staff and expected ?9.27 Crores from the Social Welfare Department. The petitioner intended to use ?8 Crores to pay staff and keep ?1.27 Crores for essential expenses. The petitioner's counsel informed the court that the Revenue would not withdraw the expected ?9.27 Crores from the attached accounts. However, no formal order was passed. Subsequently, the petitioner misrepresented that the court had given oral directions allowing the withdrawal of funds. The petitioner withdrew ?9.18 Crores from the attached accounts without any court order, which was deemed an attempt to overreach the court.

4. Contempt proceedings against the petitioner and the Tax Recovery Officer:
The court found that the petitioner's conduct, including the misrepresentation in letters dated 20th and 21st December 2017, amounted to willful disobedience of the court's order and prima facie constituted civil and criminal contempt under Sections 2(b) and 2(c)(ii) and (iii) of the Contempt of Courts Act, 1971. The court also found that the Tax Recovery Officer's letter dated 21st December 2017 misrepresented the court's order and prima facie amounted to civil and criminal contempt. The court directed the issuance of notices for contempt to both the petitioner and the Tax Recovery Officer, returnable on 5th March 2018.

Conclusion:
The petition was dismissed due to the petitioner's misconduct and misrepresentation. The court took suo moto notice of contempt and directed the issuance of notices for civil and criminal contempt to both the petitioner and the Tax Recovery Officer. The court appreciated the senior counsel for bringing the facts to its notice.

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