Recovery of difference of tax to be kept in abeyance during pendency by first appeal before cit(a) when demand of tax is more than twice the admitted tax liability

HIGH COURT OF RAJASTHAN

S.B. Civil Writ Petition No. 12153 of 2012

Virender Singh Shekhawat.................................................................Appellant.
v.
Income-tax Officer, Suratgarh ...........................................................Respondent

DR. VINEET KOTHARI, J.

Date :FEBRUARY 8, 2013

Appearances

Suresh Ojha for the Petitioner.

Section 251 of the Income tax Act, 1961—Appeals (Commissioner)—
Recovery of difference of tax to be kept in abeyance during pendency by first appeal before cit(a) when demand of tax is more than twice the admitted tax liability

facts

Assessee is a practicing advocate in Department. A.O. made certain additions in the declared income of the assessee and raised additional tax demand upon him which was more than twice the admitted tax liability. Being aggrieved, assessee went on appeal before CIT(A). CIT(A) merely stayed 60% of disputed demand and asked the assessee to make payment of 40% of demand. Being aggrieved, assessee filed a writ petition before the High Court.

held

Court issued show cause notice to A.O. and directed him to remain present before Court on next hearing. In the meanwhile the recovery of disputed demand shall remain stayed and the bank account of the assessee if attached in this regard shall be released forthwith. In the result, writ filed by the assessee was allowed.

ORDER

1. The learned counsel for the petitioner submitted that despite this Court's judgment in the case of Maharana Shri Bhagwat Singhji of Mewar v. ITAT[1997] 223 ITR 192 (Raj.) and Maheshwari Agro Industries v. Union of India [2012] 206 Taxman 375/17 taxmann.com 68 (Raj.) cited before the learned Commissioner of Income-tax, Bikaner and also the Assessing Authority wherein it has been held that if demand of tax raised by the Assessing Authority is more than twice the admitted tax liability, then recovery of difference of tax has to be kept in abeyance during pendency by first appeal before the CIT (Appeals) as per the CBDT instructions which are binding on the authorities both these authorities by the impugned orders have merely stayed 50/60% of the disputed demand and have asked the petitioner a practising income tax practioner in the same department to make the payment of 40% of the disputed demand Rs. 4,07,400/- in the two instalments.

2. The learned counsel for the petitioner submitted that the impugned additions of income in the hands of a practising advocate are absolutely uncalled for and unjustified and said addiitons were made in the declared income of the practising advocate in the Department out of vengeance and mala fide reasons on the part of the Assessing Aurthority and therefore the impugned assessment order as well as interim stay orders with the aforesaid conditions of deposit of 40% of the disputed demand are liable to be quashed. The matter require consideration.

3. Issue show cause notice to the respondents copy of this order may also sent to the respondents along with the notice.

4. Rule is made returnable within three weeks "Dasti Direct services permitted.

5. Counsel to file proof of service on the respondents and not merely proof of despatch of notices before the next date positively in the alternative affidavit of the counsel/party of compliance to the extent made be filed.

6. The respondents are expected to file reply to the writ petition also before the next date.

7. In the meanwhile the recovery of disputed demand from the petitioner shall remain stayed and the bank account of the petitioner if attached in this regard shall be raleased forthgwith.

8. Mr. M.K. Singh Income tax Officer Suratgarh who passed the impugned order is directed to remain present before the Court on the next day of hearing.

[2013] 216 TAXMAN 236 (RAJ)