CPT V24P7-Art1 (Content).pmd - Taxmann

Two recent instances of such practices have
been provided in this article.
2. COURT DECISIONS
2.1 Case of Firoz Tin Factory v. Asstt. CIT
2.1.1 Entire demand directed to be paid within 7
days only - In Firoz Tin Factory v. Asstt. CIT
[W.P. No. 765 of 2012, dated 26-3-2012], a
demand of ` 36,56,61,776 was raised and the
assessee was directed to pay the entire demand
within a period of 7 days (curtailing the
prescribed period of 30 days for payment of
demand, without mentioning any cogent reasons
for doing so). On such action of the AO, the
High Court has observed: “there was absolutely
no justification for the AO making an order of
demand within a period of one week from the date
of the assessment order”. Such observations are
indicative of the unreasonable steps resorted
to for the realization of even unmerited demands.
2.1.2 Provisional attachment under section 281B
taken - In this case action by way of provisional
attachment under section 281B has already
been taken, attaching the amount invested by
the assessee in mutual funds, which was almost
equal to the demand raised.
2.1.3 The Bombay High Court orders no coercive
steps to be taken - Even on these facts the
assessees’ request for stay of demand till the
disposal of appeal by the CIT(A) was rejected.
Hence, the assessee had to file a writ petition
before the Bombay High Court for relief. The
HC passed an order that no coercive steps
shall be taken against the petitioner for the
recovery of the demand pending the disposal
of the appeal before the CIT(A) and also for
a further period of eight weeks after the disposal
of appeal by the CIT(A). Such an order could
as well have been passed by the departmental
authorities instead of making the assessee to
move the High Court and make the Court to
spend time on such issues which otherwise
could have been used for some more important
cases.
2.2 Second case of City & Industrial Development
Corpn. of Maharashtra Ltd. v. Asstt. CIT [2012]
343 ITR 102 (Bom.)
2.2.1 The High Court had to intervene and grant
stay of demand - In this case also, stay of demand
during the pendency of the appeal before the
CIT(A) was not granted by the administrative
authorities even when taxes due to revenue were
secure and the HC had to issue direction to the
appellate authority (CIT[A]) to expedite the disposal
of appeal and for the intervening period, the
Court granted stay for the recovery of demand.
3. ISSUE FOR CONSIDERATION
3.1 Why the Departmental authorities are
unhelpful? - The foregoing discussion raises
the issue as to why the Departmental authorities
should be rigid/conservative/unhelpful to the
taxpayers in the matter of grant of stay of
demand in cases where the taxpayers dispute
the extra demand raised by the AO as unjustified.
The legal position in this regard for stay upto
the 1st appeal stage has been clearly spelled
in section 220(6) of the Act which reads as
under:
“Section 220(6): Where an assessee has
presented an appeal under section 246,
the Assessing Officer may, in his discretion
and subject to such conditions as he may
think fit to impose in the circumstances
of the case, treat the assessee as not being
in default in respect of the amount in
dispute in the appeal, even though the
time for payment has expired, as long as
such appeal remains undisposed of”.
3.2 Why requests for stay of demands are
summarily rejected? - Regretfully, the officers
of the IT Department on the administration
and appeal side generally neglect this wholesome
provision meant for relief to taxpayers. Requests
for stay of demands are either summarily rejected
or even neglected and such applications remain
pending for a long-time and the coercive actions
prescribed under the Act are pressed against
the taxpayers!
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 19
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