BHUBANESWAR STOCK EXCHANGE Vs. UNION OF INDIA

JUDGEMENT

(1.) THE miscellaneous case and the two writ petitions have been filed by one and the same petitioner the Bhubaneswar Stock Exchange and as they are connected with each other, they are being disposed of by this common order and judgment.

(2.) THE relevant facts are that the Bhubaneswar Stock Exchange was taken over on 9th Jan., 2003 by the Administrator appointed by the Central Government under S. 11 of the Securities Contract (Regulations) Act, 1956. After taking over, the Administrator found that the Assistant Commissioner of Income-tax, Circle-1(I), Bhubaneswar (hereinafter referred to as "the Asstt. CIT") had issued notices to the petitioner under S. 148 of the IT Act, 1961 (for short, 'the Act') for the asst. yrs. 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01 and 2001-02 stating that its income had escaped assessment and pending assessment had provisionally attached the fixed deposits of the petitioner in different banks and in response thereto the petitioner had claimed that its income was exempt from tax under the Act. On 9th Jan., 2003, the Asstt. CIT issued show-cause notices to the petitioner for the said assessment years to show-cause as to why exemption as claimed by the petitioner should not be disallowed and why the entire income of the petitioner for the assessment years under reference should not be treated as taxable as per the provisions of the Act. On 28th Feb., 2003, the Asstt. CIT issued orders of provisional attachment of the fixed deposits of the petitioner in UTI Bank Ltd., Stayanagar, Bhubaneswar, Canfin Homes, Kharavela Nagar, Bhubaneswar, Vysya Bank, Ashok Nagar, Bhubaneswar, Canara Bank, Cuttack Road Branch, Bhubaneswar, Canara Bank, Bapuji Nagar, Bhubaneswar and Canara Bank, Sahid Nagar Branch, Bhubaneswar. In the said orders of provisional attachment it was stated that the assessment proceedings against the petitioner were pending for disposal and it was likely that substantial tax liability will be created on completion of the assessment and by the said provisional attachment orders, the aforesaid banks were prohibited and restrained from releasing the maturity proceeds of the fixed deposits and from allowing encashment from the said fixed deposits or any part thereof to any person. THEreafter the Asstt. CIT passed orders on 13th March, 2003 making assessments under S. 147/143(3) of the Act for the asst. yrs. 1996-97 to 2001-02. THE said assessments along with notice of demand under S. 156 of the Act were served on the petitioner.

(3.) FOR the aforesaid reasons, we quash the impugned order dt. 7th May, 2003 of the Asstt. CIT rejecting the application of the petitioner under sub-s. (6) of S. 220 of the Act and lay down the condition that the petitioner will not withdraw the amount of Rs. 4,71,05,427 kept in fixed deposit and may only operate the current accounts or any other account over and above the said amount till the appeals pending before the CIT(A) are disposed of. By our order dt. 4th July, 2003, we had directed that the CIT(A) will expedite hearing of the appeals against the assessment under S. 147 of the Act for the asst. yrs. 1996-97 to 2001-02. We now direct that the CIT(A) will finally dispose of the appeals of the petitioner by 28th Feb., 2004. In case the petitioner does not co-operate in the hearing of the appeals before the CIT(A), the petitioner will not be entitled to the benefit of para 2 of Circular No. 530 dt. 6th March, 1989 of the CBDT, as has been clarified in para 3 of the said circular itself and it will be open for the Department to move this Court for appropriate orders in that regard. As a consequence of the aforesaid order, the notices under S. 226(3) of the Act issued by the Asstt. CIT on or about 22nd May, 2003 for recovery of the amounts in dispute to the UTI Bank Ltd., Canfin Homes, Vysya Bank Ltd. and Canara Bank are also quashed.