WP766_20.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.766 OF 2020 KEM Hospital and Seth G. S. Medical College Employees Co-operative Credit Society Ltd. Petitioner Vs. Income Tax Officer - 20(3)(4) and others Respondents Mr. Kumar U. Kale a/w. Mr. D. H. Jain for Petitioner. Mr. Sham Walve a/w. Mr. Pritish Chatterji for Respondents. CORAM : UJJAL BHUYAN, MILIND N. JADHAV, JJ. DATE : MARCH 13, 2020 P.C. : Heard Mr. Kale, learned counsel for petitioner and Mr. Walve, learned standing counsel Revenue for respondents. 2. This petition has been filed under Article 226 of Constitution of India assailing legality and correctness of order dated 03.02.2020 passed by respondent No.1 rejecting application of petitioner for stay of demand as well as order dated 18.02.2020 passed by respondent No.2 similarly rejecting prayer for stay of demand made by petitioner. Further prayer made is to stay demand till disposal of appeal preferred by petitioner before Commissioner of Income Tax (Appeals) against order of assessment. 3. Be it stated that petitioner i.e., KEM Hospital and Seth GSM College Employees Co-operative Credit Society Limited is association of persons running co-operative credit society and providing credit to its members. For assessment year 2017-18, assessing officer i.e., Income Tax Officer-20 (3)(4), Mumbai (respondent No.1) passed assessment order dated 20.11.2019 holding that 1/5 Uploaded on - 16/03/2020 Downloaded on - 18/03/2020 10:50:56 WP766_20.doc petitioner is co-operative bank other than primary agricultural credit society or primary co-operative agricultural and rural development bank. Treating petitioner as co-operative bank, deduction claimed by petitioner under Section 80 P(2)(a)(i) of Income Tax Act, 1961 (briefly Act hereinafter) was declined by assessing officer and amount covered by said claim i.e., Rs.2,96,10,186.00 was added to total income of assessee. 4. Following passing of assessment order, respondent No.1 issued notice of demand to petitioner under Section 156 of Act on same day. 5. Aggrieved by order of assessment, petitioner preferred appeal before Commissioner of Income Tax (Appeals)-32, Mumbai, also referred to as first appellate authority, on 14.12.2019 for which 272033491141219 was provided as acknowledgment number. 6. While appeal of petitioner is pending, petitioner submitted application before respondent No.1 on 24.01.2020 with prayer that entire demand be stayed / kept in abeyance till disposal of appeal by first appellate authority. Contention of petitioner was that in earlier years, similar orders passed by assessing officer were interfered with by first appellate authority holding petitioner to be co-operative society and allowing deduction under Section 80-P as claimed by petitioner. Such orders of first appellate authority were affirmed by Income Tax Appellate Tribunal. Therefore, it was contended that there was no reason for assessing officer to take different view in assessment order under consideration ignoring binding decision of higher authorities for earlier years. Accordingly, prayer for stay of entire disputed demand was made. 7. Respondent No.1 by his order dated 03.02.2020 rejected prayer of petitioner by holding that mere filing of appeal is not 2/5 Uploaded on - 16/03/2020 Downloaded on - 18/03/2020 10:50:56 WP766_20.doc sufficient ground for stay of entire demand. Referring to Circular of Central Board of Direct Taxes (CBDT) dated 29.02.2016, petitioner was asked to pay 20% of demand and on such payment, it was mentioned that demand would be stayed. 8. Aggrieved by such rejection of prayer for stay, petitioner submitted another application for stay of demand dated 07.02.2010 before Principal Commissioner of Income Tax-20, Mumbai i.e., respondent No.2, highlighting fact that in case of petitioner itself higher authorities had held petitioner to be co-operative society for purpose of Section 80P of Act. Therefore, there was no reason for assessing officer to take different view in present assessment year. 9. By cryptic order dated 18.02.2020, respondent No.2 rejected stay application of petitioner while directing petitioner to deposit 20% of demand in which event balance demand would be stayed till decision of appeal by first appellate authority. 10. In course of hearing, learned counsel for petitioner has placed before us copy of CBDT Circular No.530 dated 06.03.1989 whereby it was clarified that when demand in dispute relates to issue that has been decided in favour of assessee in earlier year by appellate authority or Court in assessee s own case, assessee would not be treated as assessee in default in respect of amount attributable to such disputed point. This CBDT Circular was examined by this Court in ICICI Prudential Life Insurance Co. Ltd. Vs. Commissioner of Income Tax, 226 Taxman 74 wherein this Court referred to decision of Supreme Court in Union of India Vs. Kamlakshi Finance Corporation Limited, 55 Excise Law Times 483 wherein Supreme Court emphasized that in disposing of quasi- judicial issues, revenue officers are bound by decisions of appellate authorities. Judicial discipline requires that order of 3/5 Uploaded on - 16/03/2020 Downloaded on - 18/03/2020 10:50:56 WP766_20.doc higher appellate authorities should be followed unreservedly by subordinate authorities. mere fact that order of appellate authority is not acceptable , which itself is objectionable phrase, can be no ground for not allowing claim unless decision of appellate authority has been suspended by competent Court. Supreme Court emphasized that if such healthy rule of judicial discipline is not followed, it would result in undue harassment to asssessees and chaos in administration of tax laws. 11. On other hand Mr. Walve, learned standing counsel submits that respondent Nos.1 and 2 were justified in insisting upon payment of 20% of tax demand which is bare minimum for staying entire demand. Since appeal of petitioner is pending before first appellate authority, hearing of same may be expedited. 12. Submissions made have been considered. 13. After hearing learned counsel for parties and on due consideration, we feel that approach taken by both respondent Nos.1 and 2 in not accepting stay prayer of petitioner and instead directing petitioner to pay 20% of demand is not justified. two authorities did not address issues raised by petitioner, namely, that in his own case for earlier assessment years against orders passed by assessing officer on same issue, first appellate authority had held it to be co-operative society and entitled to deduction under Section 80P(2) of Act which was confirmed by Tribunal. It was not case of petitioner that only because it has filed appeal before first appellate authority, entire demand should be stayed. 14. We have also perused CBDT Circular No.530 dated 06.03.1989 and considered decision of this Court in ICICI Prudential Life Insurance Co. Ltd. (supra). 4/5 Uploaded on - 16/03/2020 Downloaded on - 18/03/2020 10:50:56 WP766_20.doc 15. On due consideration, we are of view that impugned demand notice dated 20.11.2019 issued by respondent No.1 for assessment year 2017-18 is liable to be stayed till disposal of appeal by first appellate authority. We also direct that first appellate authority may expedite hearing of appeal filed by petitioner on 14.12.2019. 16. Writ petition is accordingly allowed but there shall be no order as to costs. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab 5/5 Uploaded on - 16/03/2020 Downloaded on - 18/03/2020 10:50:56 KEM Hospital And Seth G. S. Medical College Employees Co-Operative Credit Society Ltd. v. Income-tax Officer-20(3)(4) And Other