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TMI Blog2013 (11) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... petition in the High Court and the matter of stay of demand is subjudice before the Hon'ble High Court therefore the judicial propriety and discipline demand that this Tribunal should not venture into the subject matter which is subjudice before the Hon'ble High Court - Partly allowed in favour of assessee. - Stay Application No. 293/Mum/2013 (Arising out of ITA No.6678/M/2013) - - - Dated:- 25-11-2013 - Shri Vijay Pal Rao, JM And Shri N. K. Billaiya, AM,JJ. For the Petitioner : Shri S. E. Dastur Shri Nishant Thakkar For the Respondent : Shri B. P. K. Panda ORDER Per Vijay Pal Rao, JM By way of this Stay Application the assessee is seeking stay against the demand of Rs. 159,84,03,717 arising from the assessment u/s 143(3) of Income Tax Act for the assessment year 2010-11. 2 We have heard the Mr. S. E. Dastur, Ld. Senior Counsel for the assessment as well as Mr. B. P. K. Panda, Ld. D.R and carefully perused the relevant record. The Ld. Senior Counsel has submitted that the impugned order of the CIT(A) has been received by the assessee on 16.11.2013 and the assessee has filed the appeal before this Tribunal on 18.11.2013 which is the next working day. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Collector to encash the bank guarantees before expiry of the statutory period of three months and in particular when the petitioners has specifically informed that the Stay Application is fixed for hearing. Accordingly, the Hon'ble High Court directed the respondents to pay entire amount recovered by encashing bank guarantees to the petitioner. The Ld. Senior Counsel then referred the decision in case of Mahindra Mahindra Ltd. Vs Assessing Officer (supra) and submitted that the Income Tax Department should follow the parameters while passing the orders on Stay Application filed in pending appeals to the first appellate authority as laid down in the case of KEC International Ltd. Vs B. R. Balakrishnan and others 59 ELT 505. After considering the inappropriate action of the taxing authority the Hon'ble High Court has observed that the entire action of the respondent nos. 1 2 shocks our judicial conscience. Rule of law has been given a total go-bye and wilfully ignored. The Income Tax Authorities has acted in a high handed manner and the action is prima facie ab-initio-void. After observing the serious lapse on the part of the taxing authority the Hon'ble High Court has dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment Authority and submitted that in the identical fact the Hon'ble High Court has held that mere selling some product at a profit will not ipso facto hit the assessee by applying proviso to Section 2(15) and deny exemption available u/s 11 when there is no material on record which may suggest that the assessee was conducted its affairs on commercial lines with motive to earn profit and has deviated from its objects. He has also relied upon the decision of Hon'ble Delhi High Court in case of Bureau of Indian Standards Vs Director General of Income Tax (Exemptions) in Writ Petition No. W.P.(C) 1755/2012 as well as in case of M/s GSI India Vs Director General of Income Tax (Exemption) in Writ Petition No. 7797/2009 and submitted that in these case a similar issue was decided by the Hon'ble High Court in favour of the assessee. Thus, the Ld. Senior Counsel has submitted that the assessee has very strong prima facie case in its favour and therefore the stay of recovery be granted. 4. On the other hand, the Ld. D.R has submitted that the recovery proceedings in this case were pending from the year 2010 as the Stay Application filed by the assessee was disposed off by the A.O wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d this fact has not been contraverted by the Revenue therefore the remedy with the assessee to file the appeal against the impugned order of the CIT(A) is available only after receipt of the impugned order but in the mean time the A.O has effected the recovery of outstanding sum of Rs. 159,84,03,720/- by taking action u/s 226(3) on 18.11.2013 itself. Thus, it is clear that the assessee was not afforded a minimum reasonable time to take remedial steps under the law against the impugned order of the CIT(A). Even the assessee has filed the appeal against the impugned order without any wastage of time on the very next working day but the A.O without waiting the hearing and outcome of the Stay Application has taken the coercive action of recovery of the entire outstanding amount from the bank of the assessee as per Section 226(3) of the Income Tax Act. The Hon'ble High Court in case of Mahindra Mahindra Ltd. Vs Union of India (supra) has opined in para 4 as under: "4. In our opinion, it was highly improper on the part of the Collector and Assistant Collector to encash the bank guarantees before expiry of the statutory period of three months and in particular when petitioners had spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to move a higher forum, if so advised. Coercive steps may, however, be adopted where the authority has reason to believe that the assessee may defeat the demand, in which case brief reasons may be indicated. 2. The application, if any, moned by the assessee should he disposed of after hearing the assessee and bearing in mind the guidelines in KEC international Ltd. (supra); 3. If the Assessing Officer has taken a view contrary to what has been held in the preceding previous years without there being a material change in facts or law, that is a relevant consideration in deciding the application for stay; 4. When a bank account has been attached, before withdrawing the amount, reasonable prior notice should be furnished to the assessee to enable the assessee to make a representation or seek recourse to a remedy in law; 5. In exercising the powers of stay. the Income Tax Officer should not act as a mere tax gatherer but as a quasi judicial authority vested with the public duty of protecting the interest of the Revenue while the same time balancing the need to mitigate hardship to the assessee. Though the assessing officer has made an assessment, he must objectivel ..... 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