(Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorarified Mandamus to call for the records in communication T.R.No.161-V/2012-13/TRO-III, dated 7.2.2013 relating to Assessment Year 2008-2009 on the file of the third respondent and quash the same and further direct the third respondent from initiating or continuing with any proceedings for recovery of the disputed demand pursuant to order of assessment passed by the first respondent, dated 27.12.2010 in GIR.No./PAN 835-V/AAEFV5234F in respect of assessment year 2008-09.)
1. The petitioner calls in question the communication of the third respondent in T.R.No.161-V/2012-13/TRO-III, dated 7.2.2013 relating to assessment year 2008-2009, seeking to quash the same and to forbear the third respondent from initiating or continuing with any proceedings for recovery of the disputed demand, pursuant to the order of assessment passed by the first respondent in GIR.No./PAN 835-V/AAEFV5234F in respect of assessment year 2008-2009.
2. Short facts leading to the filing of the Writ Petition are as follows:
(a) The petitioner is a Company incorporated in terms of the Companies Act, 1956, maintains regular books of accounts and is an assessee under the provisions of the Income Tax Act, 1961 (for short, 'the I.T. Act'). They have filed the Returns of income regularly within the statutory period set out and the assessments are being completed by the Income Tax Department. The petitioner-Company is engaged in the manufacture and export of coffee, pots, jugs and kitchen/household items made of stainless steel. The petitioner set up a 100% export oriented unit under the EXIM Policy in force by obtaining necessary permission from the Development Commissioner, MEPZ-SEZ, Chennai on 20.5.2004. The Unit was fully functional from 1.6.2004 onwards after completion of construction, necessary customs bonding and installation and commissioning of machinery. The Unit was entitled to relief under Section 10-B of the I.T. Act that provided for a deduction of 100% of the profits earned from the activity of manufacture and export.
(b) The petitioner filed Return in respect of the assessment year 2008-2009 declaring the income. The assessment proceedings were taken up for hearing and by order dated 27.12.2010, the first respondent-assessing officer disallowed the claim of relief under Section 10-B of the I.T. Act, also disallowed the amount in respect of sale of scraps for the reason that the TDS was not collected at source under Section 206 of the I.T. Act and further, an amount was added on the ground that charges towards job work and clearing agents were not subjected to tax deduction at source. Accordingly, the tax was demanded with interest.
(c) Aggrieved by the said assessment order, dated 27.12.2010, passed by the first respondent, the petitioner filed an appeal before the second respondent, along with a stay petition, which are pending for disposal. While the appeal and stay petition are pending, the third respondent issued the impugned notice of demand, dated 7.2.2013, calling upon the petitioner to pay the demanded amount within 15 days from the date of receipt of the notice, failing which, recovery action would be initiated. Hence, the petitioner has filed this Writ Petition for the above relief.
3. Learned counsel for the petitioner contended that aggrieved by the assessment order, the petitioner filed appeal before the second respondent-appellate authority along with stay petition praying to stay the collection of the disputed demand, and the said stay petition has not yet been disposed of and it is still pending, and hence, he prayed this Court for issuing a direction to the second respondent to dispose of the stay petition and in the meantime, he prayed this Court for staying the recovery proceedings.
4. On the other hand, learned SCGSC appearing for the respondents submitted that instead of filing appeal before the second respondent, the petitioner-assessee should have filed the appeal before the concerned administrative Commissioner of Income Tax and hence, it is not permissible for the second respondent to dispose of the appeal and only by the order of this Court, the second respondent-appellate authority could take up the stay petition.
5. It is the cardinal principle that the power of stay is not ordinarily to be exercised in a routine way or as a matter of course, in view of the special nature of Taxation and Revenue laws. Only when a strong prima-facie case is made out and when there is balance of convenience, the Tribunal/appellate authority will consider whether or not to grant stay of the recovery proceedings and the stay will be granted only in deserving and appropriate cases, where the Tribunal/appellate authority is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal before it.
6. In the present case, it is informed by the learned counsel appearing for the parties that the recovery proceedings would be initiated, as impugned notice of demand is issued and the stay petition has not yet been disposed of by the second respondent-appellate authority.
7. Considering the facts and circumstances of the case and the submissions made by the learned counsel appearin
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g for the parties, the Writ Petition is disposed of, with a direction to the second respondent-appellate authority to dispose of the said stay petition, on merits and in accordance with law, within a period of four weeks from the date of receipt of a copy of this order. Till such time the order is passed by the second respondent in the stay petition, the parties shall maintain status-quo as on today. It is needless to state that the petitioner shall co-operate in the disposal of the stay petition before the second respondent without seeking any adjournment. No costs. The Miscellaneous Petition is closed.