Bombay HC Cautions Income Tax Department for bludgeoning Shirdi Trust, Orders CBDT to Conduct Probe [Read Judgment]

In Shri Saibaba Sansthan Trust (Shirdi) vs. CIT (A), the Bombay High Court set aside the order passed by the Commissioner of Income Tax (Appeals) against the Shirdi Trust.

The Bench also directed the CBDT to investigate the allegation made by the petitioner regarding the conduct of the CIT (A) and CIT (E).

In this case, the petitioner had filed an appeal to the CIT(A) from the order dated 31st December 2017 against the DCIT(E). the petitioner had also filed an application for stay of the order dated 31st December 2017 to the CIT(A) seeking the exercise of its inherent powers, as the order was contrary to the binding decisions of the Tribunal. On 14th March 2018, Petitioner received a communication from the Office of CIT(A) that the hearing of the appeal is fixed on 20th March 2018 at 11.30 a.m. Petitioner attended the hearing and made the submission and at the conclusion of the hearing, an order sheet was also signed, indicating that the hearing of the appeal was completed. In spite of the aforesaid conclusion of the hearing of the appeal, the CIT(A) sought to hear the petitioner on its stay application leading to the order dated 23 March 2018 directing a conditional stay on certain amounts being paid to the Revenue. On 22nd March 2018, Petitioner’s CA received a call from the office of the Commissioner of Income Tax [Exemption](CIT[E]), directing the Petitioner to deposit at least Rs.20 Crores before 31st March 2018. Further, the office of CIT[Exemption] informed the Petitioner that failing to deposit the amount of at least Rs.20Crores would lead not only to the attachment of the Petitioner’s bank accounts but also reopening of the Assessment for the past two Assessment Years. This conduct of the officers of the Revenue made the petitioner to file a petition before the Bombay High Court.

The Counsel for the Revenue argued that mere commencement of the final hearing of the appeal would not prevent/prohibit the CIT(A) from taking up the stay application and passing an order on the stay application. It is his submission that, on consideration of the appeal, the CIT(A) was of the view that the disposal of the appeal would take some time and, therefore, in the meantime, grant of the unconditional stay would not be justified.

The division Bench comprising of Justice Sandeep Shinde and Justice MS Sanklecha observed “In our view, once the hearing on the appeal is concluded then the stay application as filed becomes infructuous as the appeal itself would stand disposed of by an appropriate order of the CIT(A). The submission on behalf of the Revenue that mere commencement of the final hearing of the appeal by the CIT(A) will not prevent him from taking up the stay application and passing an order thereon is in the present facts without merit. This is particularly so as on consideration of the appeal, the CIT(A) was of the view that the disposal of the appeal would take some time and, therefore, in the meantime, grant of unconditional stay would not be justified, then, it would find mention in the order dated 23rd March 2018 on the stay application. We find that the order dated 23rd March 2018 does not indicate why the disposal of appeal would take time. It appears that the entire exercise of taking up stay application, even after the appeal was heard, was only done so as to collect some revenue before 31st March 2018. Therefore, this appears to be a blatant attempt to retrace his steps by the CIT(A) only to collect revenue before 31st March 2018.”