2018 (2) TMI 879 - HC - Income Tax

Power of High court to grant interim relief to the appellant - Held that It is an undisputed fact that the demands in relation to the above referred two assessment years are outstanding. The applicant, however, has shown willingness to deposit the entire amount on such terms and conditions as may be deemed fit by this court. Moreover, under the relevant provisions of the Act, the revenue is entitled to statutory rate of interest on any delay in making such payment. Therefore, some delay in making payment of the outstanding amount would not cause much prejudice to the revenue. The implementation, operation and execution of the common order passed by the Tribunal for assessment years 2011-12 and 2012-13 is hereby stayed subject to the following conditions (a) The applicant shall pay the entire outstanding tax demand in relation to assessment years 2011-12 and 201213 in four equal monthly installments; (b) Insofar as the first installment is concerned, the applicant shall deposit a sum of ₹ 10,00,000 (Rupees ten lakh) within a period of one week from today and the balance amount shall be paid on or before 25th February, 2018; the second installment shall be paid on or before 25th March, 2018; the third installment shall be paid on or before 25th April, 2018 and the fourth and last installment shall be paid on or before 25th May, 2018. (c) A partner of the applicant shall file an undertaking before this court, undertaking to abide by the terms and conditions imposed by this court under this order; (d) Under no circumstances any extension shall be granted in payment of such installments; AND (e) In case there is any default in payment of any installment as stipulated hereinabove, the interim relief shall stand vacated.

Issues Involved:
1. Stay of implementation, operation, and execution of the Income Tax Appellate Tribunal's order.
2. Applicant's readiness to pay tax dues in installments.
3. Court's power to grant interim relief.
4. Balance of convenience and irreparable injury.
5. Opposition by the respondent based on previous failures and public interest.

Issue-wise Detailed Analysis:

1. Stay of Implementation, Operation, and Execution of the Tribunal's Order:
The applicant sought a stay on the implementation, operation, and execution of the Tribunal's order dated 13.06.2017 for the assessment years 2011-12 and 2012-13. The appeals were admitted on a substantial question of law, and the property of the applicant was to be auctioned by the revenue.

2. Applicant's Readiness to Pay Tax Dues in Installments:
The applicant expressed willingness to pay the entire tax dues in installments within a timeframe deemed fit by the court. The applicant's counsel argued that since the appeals were admitted on a substantial question of law, a prima facie case existed. The balance of convenience favored the applicant as the property was already attached by the revenue, and irreparable injury would occur if the property was sold in the auction.

3. Court's Power to Grant Interim Relief:
The applicant's counsel referenced subsection (7) of section 260A of the Income Tax Act, 1961, which applies the provisions of the Code of Civil Procedure, 1908, to appeals in the High Court. The court has ample powers to grant interim relief based on three principles: prima facie case, balance of convenience, and irreparable injury.

4. Balance of Convenience and Irreparable Injury:
The applicant argued that the balance of convenience lay in their favor as the property was already attached, and they were willing to pay the entire amount within the stipulated time. Irreparable injury would occur if the property was sold, as it would be impossible to restore it if the applicant succeeded in the appeals.

5. Opposition by the Respondent Based on Previous Failures and Public Interest:
The respondent's counsel opposed the applications, citing the applicant's failures before the Assessing Officer, Commissioner of Income Tax (Appeals), and the Tribunal. The respondent argued that granting interim relief would deprive the revenue of recovering tax dues, causing immense prejudice to the exchequer. The respondent referenced several Supreme Court decisions emphasizing the reluctance of courts to grant stays against tax recovery due to the potential harm to public revenue and interest.

Court's Decision:
The court acknowledged the applicant's willingness to pay the outstanding demand in installments and noted that the property was already attached, securing the revenue's interest. The court found that irreparable injury would occur if the property was auctioned and the applicant later succeeded in the appeals. The court considered the balance of convenience, irreparable injury, and public interest, ultimately deciding to grant interim relief.

Order:
The court stayed the implementation, operation, and execution of the Tribunal's order subject to the following conditions:
- The applicant must pay the entire outstanding tax demand in four equal monthly installments.
- The first installment of ?10,00,000 must be paid within one week, with subsequent installments due by the 25th of each month until May 2018.
- A partner of the applicant must file an undertaking to abide by the court's terms.
- No extensions will be granted for installment payments.
- Any default in payment will vacate the interim relief.

The applications were allowed, and the rule was made absolute, with no order as to costs.

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