9911796707
TMI Blog1991 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... 1991, and June 7, 1991, respectively, during the pendency of this petition. The facts giving rise to this petition, briefly stated, are as follows: The petitioner is said to be carrying on a business in gold and silver ornaments as well as pawning and repairing old ornaments deriving income from business in gold and silver ornaments and also by making new ornaments. A search under section 132(1) of the Act was conducted from November 26, 1987, to November 30, 1987, at the residence and business premises of the assessee and, during this search, ornaments and jewellery was seized by the tax authorities which included jewellery, pawned ornaments and old ornaments which were received for repairs as well as those which were prepared. During the search, the petitioner declared an income of Rs. 12 lakhs and the tax was paid. After elaborate proceedings under section 132(5) of the Act, an order was passed on March 28, 1988, estimating the amount of tax on income so estimated, determining the amount of interest payable and the amount of penalty imposable and specifying the amount that would be recovered to satisfy the existing liability. The petitioner-assessee was assessed for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Therefore, the Income-tax Officer should give reasons for dismissing an application made by an assessee for invoking his discretion and should also hear the assessee." ( emphasis supplied) The Assessing Officer, respondent No. 1, is seeking to encash the bank guarantees worth Rs. 25 lakhs even though the appeal against the demand is still not decided and in the circumstances and according to the petitioner, the amount under the guarantees cannot be claimed as due by way of loss of revenue while the assessee's appeal is still pending. The petitioner has, therefore, sought quashing of the order annexure P-9 dated July 10, 1991 of respondent No. 1 rejecting the petitioner's application under section 220(6) of the Act for stay of demand for the assessment year 1987-88 and has also prayed for restraining respondent No. 1 from enforcing the demand and the bank guarantees until decision of the appeal. The petitioner also filed 1. A. No. 4781 of 1991 along with this petition seeking an ad interim order for restraining respondent No. 1 from recovering the tax demand under appeal and from encashing the bank guarantees during the pendency of this petition. This court upon hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative remedy. The broad lines of the general principles on which the court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual acts which must govern the proper exercise of the discretion of the court and in a matter which is thus pre-eminently one of discretion, it, is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the court. It has been submitted on behalf of the petitioner that the Assessing Officer, respondent No. 1, has acted in violation of the principles of natural justice in rejecting the assessee's application under section 220(6) of the Act without hearing the petitioner. It has also been submitted that the petitioner having furnished the necessary bank guarantees to secure payment of the amount equivalent to the assets released to the petitioner under the second proviso to section 132(5) of the Act, the insistence of respondent No. 1 to enforce the bank guarantees even before the determination of the tax amount due from the petitioner is unreasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 1991. By another letter (annexure R-5) dated April 5, 1991, the assessee was also asked to furnish an undertaking in writing that the amount to the extent of the value of the assets to be released would be deposited in Government account within three months from the date of release of the assets. In order to get the release of the assets, the assessee gave his consent showing his readiness to deposit the amount within three months from the date of release of the assets as per annexure R-6 dated April 8, 1991. The assets equivalent to the amount of the guarantee furnished were thus released to the assessee. But since the assessee has not deposited the cash amount within three months from the date of release of assets, respondent No. 1 is insisting on enforcement of the bank guarantees to realise the cash equivalent of the value of the assets released. Learned counsel for the petitioner-assessee has contended that the determination of the tax amount is pending in appeal before the Commissioner of Income-tax (Appeals) in respect of the assessment year 1987-88 and, similarly, in respect of the assessment year 1986-87, final determination is pending in second appeal before the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enforcement of the bank guarantee. The decision of the Supreme Court in General Electric Technical Service Company Inc. v. Punj Sons (P.) Ltd. [1991] 3 JT 360 (SC) ; AIR 1991 SC 1994, has been cited in support of this submission. The bank guarantees furnished by the petitioner-assessee in the instant case provide for the banks undertaking to pay to the Government the amount named in the bank guarantee against any loss of revenue and the undertaking is in the following words: "We, Syndicate Bank, Ujjain, do hereby undertake to pay amount due, payable under this guarantee without any interest, merely on demand from the Government stating that the amount claimed is due by way of loss of revenue." It has been submitted on behalf of the petitioner-assessee that it cannot be said that the Government has suffered loss of revenue in respect of the assessment years 1986-87 and 1987-88 which are pending in appeals for decision before the respective appellate authorities and, in respect of undetermined liability for the assessment year 1988-89, the regular assessment is yet to be completed. The amount of tax payable is yet to be finalised in appeal. Having heard learned counsel fo ..... 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