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TMI Blog2015 (10) TMI 1903X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of the same, in the opinion of this court, no case has been made out for entertaining a writ petition against the assessment order framed under section 143(3) of the Act. Besides, the question as to whether the activities carried out by the petitioner fall within the ambit of the proviso to section 2(15) of the Act, is a mixed question of fact and law and, hence, when there is a statutory remedy available and which has been resorted to by the petitioner under the provisions of the Act, this court would be loathe to interfere in exercise of its extraordinary powers under Article 226 of the Constitution. In the opinion of this court, the decision of the Supreme Court in the case of Commissioner of Income Tax v. Chhabil Dass Agarwal, (2013 (8) TMI 458 - SUPREME COURT) referred to hereinabove would be squarely applicable to the facts of the present case and hence, this court is not inclined to entertain the petition qua the relief challenging the impugned assessment order. Whether the petitioner is entitled to any relief under section 220(6) of the Act - Held that:- On a plain reading of the orders passed by the respondents No.1 to 3 under section 220(6) of the Act, it is manifes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that the court is inclined to take in the matter, the matter was taken up for final hearing and is disposed of by this judgment. 2. The petitioner is an urban development authority performing functions under the provisions of the Gujarat Town Planning and Urban Development Act, 1976 and the rules framed thereunder. By an order dated 14.2.2007 passed by the Commissioner of Income Tax-II, Surat the petitioner was granted registration under section 12A of the Income Tax Act with effect from 1.4.2002. Subsequently, for assessment years 2009-10, 2010-11 and 2011-12, the matters were taken up for scrutiny and assessment orders came to be passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) computing the income of the petitioner as Nil . In respect of assessment year 2012-13, the petitioner filed return of income declaring its income as Nil on 28.9.2012. The matter was taken up for scrutiny and by the impugned order dated 24.3.2015, the Assessing Officer assessed the total income of the petitioner as ₹ 48,22,54,670/- and raised a demand of ₹ 20,41,52,870/-. Against the impugned order, the petitioner preferred a statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from such activity. The attention of the court was invited to the scheme of the Gujarat Town Planning and Urban Development Act, 1976 with special reference to the provisions of sections 3, 12, 13, 22, 23, 25, 27, 35, 40(3)(jj), 44, 49 to 52, 65, 91, 91A, 99, 100, 101, 101(4a), 107 and 110 thereof to point out that the fees etc. recovered by the petitioner were in connection with its statutory duties and not in the course of any trade, business or commerce. It was submitted that for the purpose of examining whether the petitioner falls within the ambit of section 2(15) of the Act, one has to look to the statutory scheme of the Town Planning Act to find out whether the activities carried out by the petitioner amount to trade, commerce or business. According to the learned counsel, in the light of the statutory duties cast upon the petitioner, by no stretch of imagination can the same be considered to be trade, commerce or business. Referring to the impugned assessment order dated 24.3.2015, it was pointed out that the Assessing Officer has considered that the assessee being an urban development authority charges various types of fees from the public for providing certain amenities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing whether any activity is trade, commerce or business - particularly if generating surplus is wholly incidental to the principal activities of the trust; which is otherwise for general public utility, and therefore, of charitable nature. The court after considering the object of the appellant therein noted that the objects were of general public utility and would squarely fall under section 2(15) of the Act. The court further noted that profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of the trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business. It was submitted that the above decision would be squarely applicable to the facts of the present case and that the impugned order of assessment which is contrary to the law laid down in the above decision, therefore, cannot be sustained. 3.1 Reliance was also placed upon the decision of the Delhi High Court in the case of Bureau of Indian Standards v. Director General of Income Tax (Exemptions), (2013) 358 ITR 78 (Delhi), wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority is also required to be taken into consideration, inasmuch as, the order dated 24.3.2015 was served upon the petitioner on 8.4.2015 and demand notice was served on 23.4.2015. It was submitted that pursuant to the application made by the petitioner under section 220(6) of the Act, the first respondent without duly considering the relevant factors had directed the petitioner to pay the entire demand in six monthly installments. Referring to the order dated 26.5.2015, it was submitted that the same is a totally non-reasoned order which does not take into consideration any factor relevant for the purpose of deciding the stay application. Reliance was placed upon the decision of this court in the case of Hitech Outsourcing Services v. Income Tax Officer, 2015 LawSuit (Guj) 88, wherein the court noted that in the order under section 220 (6) impugned therein, reasons were not mentioned for prima facie consideration of the merit or even on the aspect of balance of convenience. Nothing was recorded in the order as to why the ground of bank guarantee for grant of stay was taken into consideration. The court was of the considered view that the order can be said to be non-speaking orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner be stayed. 4. Vehemently opposing the petition, Mr. M. R. Bhatt, Senior Advocate, learned counsel for the respondents raised a preliminary objection to the very maintainability of the petition by submitting that the assessee has already availed of the statutory remedy of appeal before the Commissioner (Appeals) and hence, this petition under Article 226 challenging the order of assessment is not maintainable. It was argued that merely because the assessee is a statutory authority, is no reason to jettison the alternative remedy. Referring to the relief prayed for vide paragraph 9 (a) of quashing the assessment order, it was submitted that such relief is not warranted in the facts and circumstances of the case and that the perception of the Assessing Officer in the facts and circumstances of the case would not justify jettisoning the appellate remedy. In support of his submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Commissioner of Income Tax v. Chhabil Dass Agarwal, (2013) 357 ITR 357, wherein the assessee instead of exhausting the statutory remedy available under the Act, that is, the statutory appeal before the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not fall within any of the exceptions carved out by the Supreme Court and that there being an efficacious remedy available to the petitioner, which, in any case has already been invoked, there is no warrant for entertaining the present petition against the impugned order of assessment. 4.1 On the merits of the case, it was submitted that there is no general exemption merely because an authority is carrying out statutory functions. It was submitted that the activities carried out by the statutory authority has to fall within the exemption provisions and merely because the authority is carrying out various statutory functions does not mean that it falls within the ambit of section 2(15) of the Act. It was submitted that whether the petitioner carries on trade, commerce or business is primarily a question of ascertaining facts and that even a solitary transaction can be in the nature of trade, commerce or business. Referring to the impugned order of assessment and more particularly paragraph 5.3 thereof, it was pointed out that the assessee is carrying on various activities in respect of which it charges fees from the beneficiaries, to submit that having regard to the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer has not considered the ratio of the decision of the Division Bench of this High Court in Director of Income Tax (Exemption) v. Sabarmati Gaushala Trust (supra) while passing the impugned assessment order which is, therefore required to be struck down as being contrary to the decision of the High Court and the petitioner should not be relegated to avail of the alternative remedy of appeal before the Commissioner (Appeals). 6. In the backdrop of the rival contentions advanced by the learned counsel for the respective parties, the first question that arises for consideration is as to whether on the facts and in the circumstances of this case, this court would entertain a writ petition challenging the assessment order framed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961. From the facts and contentions noted hereinabove, it is apparent that none of the exceptions laid down by the Supreme Court warranting interference by the High Court in exercise of powers under Article 226 of the Constitution have been made out in the facts of the present case. It is not the case of the petitioner that the impugned order has been passed in breach of the principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition before him and the authorised representative appeared before him and discussed the case. He has further observed that after discussion with the assessee s authorised representative and considering the issues involved, merits of the cases, financial condition of the assessee and extant instructions with regard to grant of stay of demand, the assessee is requested to pay the demand in equal quarterly installments of ₹ 3.5 crore each. The third respondent in the order dated 4.6.2015 has, as recorded in detail hereinabove, recorded that the authorised representative of the assessee agreed to pay installments. As noted earlier, the petitioner-assessee in the affidavit in rejoinder has taken a plea that no such consent had been given by the authorised representative and that is the normal practice of the officers to make such observations. These, in sum and substance are the contents of the orders passed by the respondents No.1 to 3 on the petitioner s applications under section 220(6) of the Act. 8. Section 220(6) of the Act provides that where an assessee has presented an appeal under section 246, the Assessing Officer may, in his discretion, and subject to such condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Commissioner of Income Tax (Assessment), (1997) 226 ITR 270, the petitioner had challenged the order made under section 220(6) of the Act by which it was held that the assessee may not be treated as in default within the meaning of section 220(6) in case the condition imposed under the order was fulfilled and no coercive measures as provided will be taken to recover the balance demand until the disposal of the appeal. The court after considering the facts of the case, found that there was absolutely no justification for imposing the condition to pay 20% of the outstanding demand under the order made by the Deputy Commissioner of Income Tax under section 220 (6) of the Act. 11. This court in the case of Hitech Outsourcing Services v. Income Tax Officer, (supra), has held that the authority is required to prima facie consider the merits and balance of convenience as also irreparable injury. Therefore, in order to decide whether the assessee has made out a prima facie case or not for grant of stay, the authority considering the application for grant of stay is required prima facie to look into the questions involved in the appeal and to consider the plea raised by the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted are narrated therein. One of which is if the demand in dispute has arisen because the Assessing Officer has adopted an interpretation of law in respect of which there exist conflicting decisions of one or more High Courts but not of the High Court under whose jurisdiction the Assessing Officer is working, or if the High Court having jurisdiction has adopted a contrary interpretation but the department has not accepted that judgment. Thus, while considering the application under section 220(6) the respondents were required to keep in mind the guidelines laid down by the CBDT and consider the question as to whether the assessee should be treated as an assessee not in default accordingly. However, all the three orders/communications under section 220(6) are bereft of any reasoning or any material to show application of mind to the aspects enumerated in the CBDT circular. True it is, that the circular also provides for grant of installments, however, that does not absolve the authorities from not examining the case in the light of the guidelines to examine as to whether blanket stay should be granted or whether the stay could be granted on condition of suitable security to safegua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prima facie case for grant of stay of the demand, subject to reasonable conditions. Under the circumstances, instead of remanding the matter to the respondent authorities, the court is of the view that the ends of justice would be met if the petitioner is directed to pay an amount equal to ten per cent of the demand raised by the respondents. Having regard to the facts and circumstances of the case and the quantum of the demand raised against the petitioner, the court is of the view that the Commissioner (Appeals) should be asked to dispose of the appeal within a stipulated time frame. 17. In the light of the above discussion, the petition partly succeeds and is, accordingly allowed to the following extent. It is ordered that the petitioner shall not be treated as an assessee in default as contemplated under section 220(6) of the Act, subject to the petitioner depositing ten per cent of the amount stated in the demand notice within a period of four weeks from today. The Commissioner (Appeals) shall dispose of the appeal preferred by the petitioner under section 246 of the Act within a period of four months from the date of receipt of a copy of this judgment. The petitioner sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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