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TMI Blog2006 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... n 220(1) if it is allowed full time for payment. - reasons stated by the first respondent in the impugned proceedings for coming to the conclusion that if the full period of 30 days time is allowed to the petitioner, it will be detrimental to the Revenue are not material or relevant to the belief required by the section. - impugned proceedings issued by the respondents are unsustainable and liable to be quashed. X X X X Extracts X X X X X X X X Extracts X X X X ..... after giving an opportunity as required by law. The petitioner has also stated in the letter that it has not accepted the order dated March 2, 2006 made by the first and the second respondents and the petitioner shall not be treated as an assessee in default. According to the petitioner, the said request was made in terms of section 220 of the Income-tax Act. It is the further case of the petitioner that on receipt of the aforesaid letter, the first respondent addressed a letter to the petitioner on March 7, 2006, rejecting the request made by the petitioner for not treating the petitioner as an assessee in default. In the said order the first respondent directed the petitioner to pay the demand in accordance with the notice of demand viz., within 30 days from the date of service. Immediately thereafter, the first respondent suo motu, addressed another letter on March 13, 2006, directing the petitioner to pay the entire demand within a period of 2 days and the said letter was served on the petitioner on March 14, 2006, in the afternoon and the petitioner was directed to pay the entire disputed demand on or before 5.00 pm on March 15, 2006, instead of the 30 days period allowed ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if the assessee is likely to alienate its asset or leave the country or act with a view to defeat the interests of the Revenue and such interests are likely to be jeopardised by any overt act that could be done by the assessee and no such allegation or even a whisper to that effect is made against the petitioner in the impugned proceedings. A detailed common counter affidavit has been filed by the respondents. In paragraph No. 3, it is stated as follows: "It is submitted that the second respondent is placing strong reliance on the decision of the Special Bench (Calcutta) of the Income-tax Appellate Tribunal in the case of Shaw Scott Distilleries P Ltd. v. Asst. CIT [2002] 255 ITR (AT) 14. The decision of the Special Bench is on identical issue as in the case of the assessee. This decision remains unchallenged before any court and thus has a pervading effect. In view of the law laid down in the decision, the assessee was not eligible to claim deduction under section 80-IB and the Commissioner therefore, held in his order under section 263 that the deduction claimed by the assessee was wrongly allowed by the Assessing Officer. The assessee was, therefore, asked to pay the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Bench of the Tribunal, the petitioner cannot be said to have a prima facie case, unless the order of the Special Bench is reversed by the High Court or the Supreme Court. As things stand as on this date, the issue is covered against the petitioner by the order of the Special Bench cited above. It is the further contention of the respondents that the impugned orders have been passed only in the exceptional circumstances and the first respondent has passed valid and speaking orders, after giving sufficient reasons, which formed the basis for passing such orders. On the abovesaid grounds, the respondents seek the dismissal of these writ petitions. Learned senior counsel appearing for the petitioner invited my attention to section 220(1) of the Income-tax Act and its proviso. Section 220(1) of the Income-tax Act, reads as follows: "220.(1) Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within thirty days of the service of the notice at the place and to the person mentioned in the notice: Provided that, where the Assessing Officer has any reason to believe that it will be detrimental to Revenue if the ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... useful to extract the relevant part of the impugned proceedings and in paragraph 2 of the impugned proceedings it is stated as follows: "... In view of the binding nature of the decision of the Special Bench of the Tribunal, the assessee has no chance of success in challenge of the order of the Commissioner of Income-tax at least up to the Tribunal. Therefore, the circumstances necessitate that the assessee should not be allowed full time of 30 days as provided under section 220(1) for making payment of the demand raised. It is therefore detrimental to the Revenue to allow such full time for payment." In paragraph No. 3 of the impugned proceedings, it is stated as follows: "Besides, any collection of demand or any other taxes etc. during the relevant financial year is only in furtherance of mobilisation of revenue committed to Parliament during the Budget exercise. Every year collection of taxes, etc. under the Income-tax Act is thus also part of the public policy. The circumstances of the present case also show that it is not in consonance with the public policy to permit full period of thirty days for allowing the assessee to make payment of the demand raised." The words "rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt ought to have seen that the petitioner not only files returns in time and pays taxes regularly, but even for the current year the advance tax has been paid regularly and the final instalment has also been paid on the due date. These facts have been totally ignored by the first respondent in making the aforesaid impugned order. In fact there is no arrears of tax due by the petitioner as on today or the date on which the impugned orders were made, (d) ... that the first respondent was acting solely in retaliation to the submissions made by the petitioner that the order was not made in accordance with law." But these averments have not been specifically denied in the counter affidavit filed by the respondents. In paragraph 11 of the counter affidavit it is stated that "there is no financial difficulty on the part of the petitioner at present". In paragraph 16 of the counter affidavit it is stated that "there is no provision under section 220(1) to consider the history or background of the petitioner before passing that order and the petitioners are admittedly rich enough to meet the demand at any point of time". In paragraph 17 of the counter affidavit it is stated as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years 2003-04 and 2004-05. The first respondent instead of justifying the grounds based on which he has reached the reason to believe has wrongly cast the burden on the assessee to show as to how the interests of the Revenue would not suffer in terms of the provisions of section 220(1) if it is allowed full time for payment. I am satisfied that the so called reasons stated by the first respondent in the impugned proceedings for coming to the conclusion that if the full period of 30 days time is allowed to the petitioner, it will be detrimental to the Revenue are not material or relevant to the belief required by the section. Therefore, I am of the considered view that the impugned proceedings issued by the respondents are unsustainable and liable to be quashed. Accordingly, the impugned proceedings are set aside. But however, the notice of demand dated March 2, 2006, issued under section 156 of the Act allowing 30 days time to the petitioner in respect of the assessment year 2001-02 shall stand. In respect of the assessment years 2003-04 and 2004-05, the petitioner shall have 30 days time from March 3, 2006, to pay the amounts covered by the respective demands. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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