Commissioner Of Income-Tax vs Dlf Universal Ltd.
2007 Latest Caselaw 1656 Del

JUDGMENT

1. The Revenue is aggrieved by an order dated July 13, 2006, passed by the Income-tax Appellate Tribunal, Delhi Bench "E" in I.T.A. Nos. 4984 and 4985/Del/2003 relevant to the assessment years 1992-93 and 1993-94.

2. Broadly, the issue that is involved in this appeal is whether the Revenue could have imposed a penalty on the assessed under the provisions of Section 221 of the Income-tax Act, 1961 ("the Act"), even though two applications filed by the assessed for stay of recovery of tax were pending before the Assessing Officer. The Tribunal has come to the conclusion that it was not permissible for the Assessing Officer to have imposed a penalty without disposing of the stay applications pending before him.

3. On May 23, 2007, we had directed learned Counsel for the Revenue to produce the original file containing the order, if any, passed on the stay applications pending before the Assessing Officer. Today, learned Counsel for the Revenue informs us that the original record is not available and, therefore, she is not able to say whether the stay applications were pending or disposed of by the Assessing Officer.

4. The fact that two applications for stay were filed by the assessed, one on April 24, 2002, and the other on February 21, 2003, is not disputed because the contents of these applications have been quoted by the Tribunal in detail in its impugned order. The Tribunal has also noted that it was not disputed that both these applications were not disposed of by the Assessing Officer. We, therefore, proceed on that basis.

5. In the applications for stay that were filed by the assessed, it was pointed out that it had filed rectification applications in respect of several other assessment years and that it was also entitled to refund of tax in respect of some of those assessment years. According to the assessed, if the refund had been granted and if the rectification had been allowed, the assessed may not have had to pay any tax at all.

6. We would have thought that in view of these averments, the Assessing Officer should have decided the stay applications filed by the assessed. However, he instead passed a penalty order under Section 221 of the Act which was served on the assessed on March 21, 2003. The Assessing Officer levied a penalty of Rs. 26 lakhs for the assessment year 1992-93 and Rs. 35 lakhs for the assessment year 1993-94.

7. The Tribunal has observed that the Assessing Officer was not justified in imposing the penalties without first disposing of the stay applications of the assessed. It has also been observed the Tribunal that the conduct of the assessed does not appear to be contumacious so as to justify the imposition of penalty. Accordingly, the Tribunal cancelled the penalty imposed upon the assessed.

8. We are of the view that there is no error that has been committed by the Tribunal. It goes without saying that the Assessing Officer should have at least applied his mind to the stay applications filed by the assessed before taking any steps prejudicial to the interests of the assessed. The Assessing Officer is a quasi-judicial authority and should have acted in accordance with law rather than keeping only the interests of the Revenue in mind without bothering about the interests of the assessed. Even if, as contended by learned Counsel for the Revenue, no rectification application was filed for the assessment year in question by the assessed, the fact remains that had the Assessing Officer considered the stay applications, which admittedly were filed, he may not have initiated any penalty proceedings.

9. We find no substantial question of law arises from the order passed by the Tribunal. The appeal is dismissed with costs of Rs. 5,000 which will be deposited by cheque by the Revenue with the Delhi High Court Legal Services Committee within four weeks from today.

List for compliance on October 10, 2007.