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Saturday, February 19, 2011

High Court stay directing Income Tax Office to desist proceedings against two local companies to continue

I.T.O. SEEKS FOUR MORE WEEKS TO FILE COUNTER-AFFIDAVIT TO LOCAL ENTREPRENEUR’S CHALLENGE TO ITS JURISDICTION
SUBASH RAI
GANGTOK, 18 Feb: The stay order of the High Court of Sikkim, directing the Income Tax Office to desist from any further proceedings against two local enterprises, Teesta Rangit Pvt Ltd and Envision Pvt Ltd [which had been “surveyed” by the ITO on 23 December 2010], will continue until further orders. This continuation was ordered by the High Court on 16 Feb when the petition filed by Teesta Rangit Pvt Ltd had come up for its second hearing.
The respondents in the case, the ITO, sought four weeks time to file a counter affidavit, which was granted by the Court and another four weeks granted to the petitioner to file the rejoinder. The case has been listed for its next hearing on 18 May 2011.

Teesta Rangit Pvt Ltd and Envision Pvt Ltd, it may be recalled, had secured an interim stay order from the High Court on 24 January. The interim stay was issued on a writ petition filed by the Director of the two companies, Naresh Subba, against the IT Office on 21 January. This, in follow-up to the 35-hour “survey” carried out by the Income Tax Office, Siliguri, at the offices of the two companies on 23 Dec 2010 in the absence of Mr. Subba.
Mr. Subba has asserted that he was taking this stand with the larger interest of the Sikkimese, especially the future generation of entrepreneurs, in mind.
“The issue of Central Income Tax and how it applies to companies registered under the Sikkim Companies Registration Act and owned by Sikkim Subjects, who are exempted from Income Tax, has still not been clearly explained. This being a Central matter, is for the authorities there to explain to the satisfaction and understanding of local entrepreneurs. Being an entrepreneur myself, I can vouch that this area has been left vague,” Mr. Subba had explained after winning the stay order last month.
He has stressed that now that the matter has been taken to the Court, the “vagueness” in respect of companies registered in Sikkim and owned by Sikkim Subjects, will be addressed and a clearer explanation presented in the public domain.
He has also complained against the manner in which IT “survey” was carried out, how the two companies were “misinformed and misdirected” and also the manner in which the IT officials seized books and documents of the company, including Mr. Subba’s personal records.
He has also challenged the damaging statements ascribed to IT officials following the survey at his establishments and also questioned the ITO’s jurisdiction to have undertaken such a survey.
The ITO’s over-exuberance is also manifested by the fact that the “survey” was carried out before the 30-day period given to company to file its returns by the ITO, Sikkim Circle, had lapsed.

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