2022 (8) TMI 267 - HC - Income Tax

Stay the recovery proceedings u/s 220(6) - HELD THAT - This intra-court appeal arises from the order of the learned Judge passed in the writ petition, which was filed by the appellant challenging the order of assessment passed by the second respondent. By the order impugned herein, the learned Judge has observed that the assessment order was passed based on the records that were available and furnished to the Income Tax Department to the assessee and hence, there was no merit to entertain the writ petition. Holding so, the learned Judge has directed the appellant to work out the remedy before the appellate authority by filing statutory appeal along with miscellaneous application to stay the recovery proceedings under section 220(6) of the Income Tax Act, 1961. This court is of the view that the subject matter in issue involves factual matrix and the same cannot be decided by the writ court. Therefore, the learned Judge has rightly dismissed the writ petition and directed the appellant to file statutory appeal before the appellate authority, which does not require any interference. This court, without going into the merits of the case, issues the following directions, in the light of the aforesaid decision of the Hon'ble Supreme Court in in Indus Towers Ltd. 2022 (5) TMI 122 - SUPREME COURT (i) The appellant / assessee is directed to pay 10% of the total demand within a period of eight weeks from the date of receipt of a copy of this judgment, failing which, it is open to the authority concerned to proceed further, in the manner known to law. (ii) The time limit for filing a statutory appeal by the appellant / assessee, if not filed earlier, is 30 days from the date of receipt of a copy of this judgment. (iii) On filing of such appeal and complying with the condition of payment, the appellate authority shall dispose of the appeal on merits and in accordance with law, after providing sufficient opportunity to the appellant / assessee enabling them to place their supportive materials as well as all the contentions, within a period of eight weeks, therefrom.

Issues:
1. Jurisdiction to reopen assessment under section 148 of the Income Tax Act.
2. Violation of principles of natural justice in passing the assessment order.
3. Failure to provide reasons for reopening the assessment.
4. Dismissal of the writ petition by the learned Judge.
5. Appellant's request to quash the impugned order.
6. Appeal against the order of assessment passed by the second respondent.
7. Direction for the appellant to file a statutory appeal.
8. Protection of appellant's interest against recovery proceedings.
9. Directions issued by the court based on the Supreme Court judgment in Indus Towers Ltd. v. Assistant Commissioner of Income Tax.

Analysis:

1. The appellant contended that the assessment order passed by the second respondent, adding a significant amount to the tax demand without issuing a show cause notice or requesting details on the cost of acquisition of the property, was arbitrary and violated natural justice principles. Additionally, the jurisdiction to reopen the assessment under section 148 of the Income Tax Act was questioned, citing the limitation period of four years from the end of the assessment year. The appellant argued that the reasons for reopening the assessment were not provided, contrary to the mandatory procedure outlined in the GKN Driveshafts case.

2. The learned Judge dismissed the writ petition filed by the appellant, directing them to pursue a statutory appeal before the appellate authority. The court found that the assessment order was based on available records furnished to the appellant, leading to the conclusion that there was no merit in entertaining the writ petition. The appellant was advised to address the issue through the statutory appeal process and seek relief under section 220(6) of the Income Tax Act to stay recovery proceedings.

3. The court emphasized that the factual complexity of the case required resolution through the appellate authority rather than the writ court. It was deemed appropriate for the appellant to proceed with a statutory appeal, as directed by the learned Judge, without the need for court intervention. The court upheld the decision to dismiss the writ petition and guided the appellant towards the proper legal remedy.

4. In consideration of the appellant's concerns regarding recovery proceedings, the court referred to the Indus Towers Ltd. case and issued specific directions. The appellant was instructed to pay 10% of the total demand within eight weeks and file a statutory appeal within 30 days. The appellate authority was tasked with expeditiously addressing the appeal, providing ample opportunity for the appellant to present their case and supporting evidence within a specified timeframe.

5. Ultimately, the court disposed of the writ appeal with the outlined directions, ensuring the protection of the appellant's interests during the ongoing legal process. The judgment aligned with the principles set forth in the Supreme Court decision, emphasizing compliance with procedural requirements and the opportunity for the appellant to seek redress through the statutory appeal mechanism.

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