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TMI Blog2019 (7) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ise, approximately 34 lakh. We reduce the requirement of depositing the disputed tax dues to enable the writ-applicant to enjoy stay pending the appeal before the appellate authority to 10%. We are informed that the writ applicant has so far deposited ₹ 5 lakh. We clarify that this would, however, be on a further condition that the writ-applicant shall offer immovable security for the remaining 10% to the satisfaction of the assessing authority. The order passed by the authority concerned stands modified accordingly. - R/SPECIAL CIVIL APPLICATION NO. 9825 of 2019 - - - Dated:- 24-6-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Petitioner (s) : MR H. R. PRAJAPATI For The Respondent (s) : MR VARUN K. PATEL AND NOTICE SERVED BY DS (5) ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs : ( a) Your Lordships be pleased to issue a writ of mandamus or any other appropriate writ, order and/or directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Tavra, Taluka and District Bharuch, bearing Block/ Survey No.97 for ₹ 3,79,92,500=00. The writ-applicant purchased the said property from one Shri Melabhai Naglabhai. Upon verification of the details of the bank account of Shri Melabhai Naglabhai as well as of one M/s.Reva Enterprise from whom the writ-applicant claims to have obtained the unsecured loan and also from one Narendrabhai Parmar from whom he claims to have obtained the unsecured loan of ₹ 2,50,00,000=00, the transactions were found to be sham and bogus. Ultimately, the Assessing Officer added the amount of ₹ 3,79,92,500=00 to the total income of the writ-applicant under the head 'Income from other sources' in accordance with the provisions of Section 56(2) of the Act. The last part of the order of assessment reads thus : In view of the above, it is clear that in actual there is no liability is in existence payable by the assessee to Shri Melabhai Vasava i.e. seller and Shri Narendrasinh Parmar and assessee has received the said property without any consideration. This clearly shows that the assessee has not incurred any cost for the purchase of land but by way of ado ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t u/s.234A, 234B, 234C of the Act as applicable. Give credit for prepaid taxes and issue demand notice/challan/refund order, as the case may be. Entered in D CR for statistical purpose. Issue penalty notice u/s.271(1)(c) of the Act for concealing the particulars of income. 4. A notice of demand dated 29th December 2018 came to be served upon the writ-applicant under Section 156 of the Act. Against the order of assessment dated 29th December 2018 passed by the respondent no.2, the writ-applicant preferred appeal before the respondent no.1 in the prescribed form. The writ-applicant thereafter also preferred an application dated 28th January 2019 addressed to the respondent no.2 with a prayer to grant stay against the demand raised by the respondent no.2 pursuant to the order passed under Section 143(3) of the Act. While praying for stay of demand raised pursuant to the order under Section 143(3) of the Act, the writ-applicant contended that the case was one of high pitched assessment. The writapplicant also pointed out his poor financial condition. The writapplicant submitted before the Income Tax Officer that even the deposit of 20% of the total amount was beyond h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he demand by 28th March 2019. The order reads thus : 3. I have carefully considered the stay application of the assessee, argument of the A.R. and report of the A.O. On perusal of the assessment order, it is observed that the assessment in this case was finalised after marshalling all relevant facts, providing ample opportunities of being heard and the addition was made on sound grounds. As seen from the assessment order, the transactions entered into by the assessee for acquisition of property is not a normal transaction and the consideration paid by the assessee for the same has been transferred back to the lending parties by way of circular movement of funds, which is not a normal phenomenon. In this case, what appears to be apparent is not found to be real by the AO. In fact, the assesee has received the land without paying any actual consideration. The view taken by the AO is therefore found to be not devoid of merits. Further, as the far a the contentions of he assessee regarding applicability of section 56(2) of the Act is concerned, it is quite evident from the facts of the case that the registered sale deed was executed during FY 2015-16 relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the above. 9. Being dissatisfied with the order dated 26th March 2019 referred to above, the writ-applicant has come up with this petition. 10. The principal argument of Mr.Prajapati, the learned counsel appearing for the writ-applicant is that this being a case of high pitched assessment, the writ-applicant should not be asked to deposit 20% of the total amount as it is beyond his financial capacity and there is no such statutory provision in the Act empowering the authority to ask the writ-applicant to deposit 20% of the total amount for the purpose of entertaining the appeal. Mr.Prajapati submitted that the appeal against the order of assessment merits consideration on various legal grounds. If the writ-applicant is unable to deposit the amount of 20%, then his appeal would not be entertained and coercive steps may be taken for the recovery of the requisite amount. In such circumstances referred to above, Mr.Prajapati prays that there being merit in this petition the same may be allowed and the writ-applicant may be exempted from depositing 20% of the total amount and his appeal may be ordered to be heard on merits. 11. Mr.Praj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or this Deputy Commissioner should have held the demand in abeyance as prayed by the petitioner/assessee. He does neither, but proceeds to communicate to the petitioner/ assessee that his application for stay is dismissed. The petitioner/ assessee should pay 20% of the outstanding amount as prescribed in some Circulars of the Revenue and particularly, dated 29th February 2016 and produce the challan and seek stay of demand again, failing which collection and recovery will continue. 5. We are not concerned here with the Circular of the Central Board of Direct Taxes. We are not concerned here also with the power conferred in the Assessing Officer of collection and recovery by coercive means. All that we are worried about is the understanding of this Deputy Commissioner of a demand, which is pending or an amount, which is due and payable as tax. If that demand is under dispute and is subject to the appellate proceedings, then, the right of appeal vested in the petitioner/assessee by virtue of the Statute should not be rendered illusory and nugatory. That right can very well be defeated by such communication from the Revenue/Department as is impugned before us. That w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid transaction is a sham transaction done by the assessee in connivance with Shri Melabhai Vasava, the seller and Shri Narendrasinh Parmar. The assessing officer also found that there are series of transactions of unsecured loan between the aforesaid parties including the seller and the assessee, which are not genuine and sham transaction. The assessing officer then, concluded that the assessee has received the said property without paying any consideration to the seller by adopting the colorable device. The assessing officer after recording aforesaid findings in detail, made addition under section 56(2)(vii)(b)(i) of the Act of ₹ 3,87,92,500/- in the assessment order dated 29.12.2018 (Annexure A, page 15). The assessing officer then, issue demand notice under section 156 of the Act dated 29.12.2018 (Annexure-B, page 23) against the assessee for a sum of ₹ 1,73,29,162/- pursuant to the said assessment order. The petitioner-assessee has thereafter preferred an appeal (Annexure-D, page 29) before the Commissioner of Income Tax II (Appeals), Baroda against the said assessment order. Pending the aforesaid appeal before the CIT(A), the petitioner-assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onthly installment of ₹ 5,00,000/- each instead of ₹ 1,00,000/-. The petitioner-assessee had thereafter, paid first installment of ₹ 5,00,000/- each instead of ₹ 1,00,000/-. The petitioner-assessee had thereafter, paid first installment of ₹ 5,00,000/-. However, before the second installment of ₹ 5,00,000/- was due and payable, the petitionerassessee has filed present petition challenging the said order of the PCIT dated 26.3.2019 as also the orders of assessing officer dated 11.2.019 and 10.5.2019. It is submitted that the petitioner-assessee having agreed to pay 20% of the total demand in installments has accepted the aforesaid orders in principle. It is, therefore, not open for the petitioner-assessee to file the present petition challenging the aforesaid orders of the respondent. It is further submitted that in the present petition, the assessee has alleged the case of financial difficulty in paying the outstanding demand against him. It is however, submitted that the assessee has completely failed to prove his case of financial difficulties with supporting evidence either before the assessing officer or the PCIT or before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee as a pre-condition for stay of demand disputed before CIT(A), the following modified guidelines are being issued in partial modification of Instruction No.1914: ( A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) hereunder. ( B) In a situation where, ( a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.), or ( b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deposited for an assessee to enjoy stay pending appeal. The circular provides the guidelines to enable the Assessing Officers and Commissioners to exercise such discretionary powers more uniformly. 16. Ordinarily, the court would be slow in interfering with such discretionary exercise of powers by the authority concerned. However, in the present case, the total tax demand is quite high. The issues are at the first appeal stage. Even 20% of the disputed tax dues would run into few lakhs of rupees. To be precise, approximately 34 lakh. 17. In the overall view of the matter, we reduce the requirement of depositing the disputed tax dues to enable the writ-applicant to enjoy stay pending the appeal before the appellate authority to 10%. We are informed that the writapplicant has so far deposited ₹ 5 lakh. We clarify that this would, however, be on a further condition that the writ-applicant shall offer immovable security for the remaining 10% to the satisfaction of the assessing authority. The order passed by the authority concerned stands modified accordingly. 18. Both these conditions shall be satisfied latest by 31st July 2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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