BUNCH MICROTECHNOLOGIES PRIVATE LIMITED V. INCOME TAX OFFICER WARD 5 (1) DELHI AND ANR.

W.P.(C)/535/2024

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The case involves Bunch Microtechnologies Private Limited, the petitioner, challenging the orders of the Income Tax Officer Ward 5 (1), Delhi, which denied a stay on the demand due to the petitioner's failure to deposit 20% of the outstanding demand as required under Section 220(6) of the Income Tax Act, 1961. The petitioner also contested the rejection of their review application. The court referenced the decision in LG Electronics India Pvt. Ltd vs. Pr. Commissioner of Income Tax & Ors., which emphasized that administrative circulars should not curtail the quasi-judicial discretion of the authorities. The Supreme Court affirmed this view, allowing authorities to grant deposit orders of a lesser amount than 20% based on individual case facts.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 765034 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 15-01-2024
• Assessment Year: misc
• Other Referred Cases: LG Electronics India Pvt. Ltd vs. Pr. Commissioner of Income Tax & Ors., Principal Commissioner of Income Tax and Ors. vs. LG Electronics India Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KUNAL SHARM A; ZEHRA KHAN; SHUBENDRU BHATTACHARYA
• Assessee Lawyers: DEEPAK CHOPRA; ANKUL GOYAL
• Keywords: Income Tax; Pre-deposit; Quasi-judicial authority; Stay of demand
• Section: 220(6)

Judgement Text

"$~75 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 535/2024, CM APPL. 2362/2024 BUNCH MICROTECHNOLOGIES PRIVATE LIMITED ..... Petitioner Through: Mr. Deepak Chopra, Mr. Ankul Goyal, Advs. versus INCOME TAX OFFICER WARD 5 (1) DELHI AND ANR. ..... Respondent Through: Mr. Kunal Sharma, Sr. SC with Ms. Zehra Khan, Jr. Standing Counsel, Mr. Shubendru Bhattacharya, Advs. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV O R D E R % 15.01.2024 1. This writ petition is directed against the order dated 13 December 2023 in terms of which the application under Section 220(6) of the Income Tax Act, 1961 [“Act”] has come to be rejected with the first respondent taking the view that since the writ petitioner had failed to make a pre-deposit of 20% of the outstanding demand, a stay of the demand would not be warranted. The petitioner has also challenged the order dated 8 January 2024 wherein the application filed for review of the order dated 13 December 2023 was rejected by the second respondent. 2. The aforesaid view is premised on a reading of OM No. 404/72/93-ITCC dated 31 July 2017 issued by the Central Board of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/05/2024 at 12:13:48 Direct Taxes [“CBDT”] with respect to Instruction No. 1914 dated 21 March 1996 and which the respondents appear to read as mandating a pre deposit of 20% of the outstanding demand before the powers conferred by Section 220(6) of the Act could be exercised. 3. The aforesaid view would clearly not sustain bearing in mind the following position in law which was enunciated by the Division Bench of the Court in LG Electronics India Pvt. Ltd vs. Pr. Commissioner of Income Tax & Ors. [ 2017 SCC OnLine Del 12760] “7. The impugned order clearly makes no reference to the central issue in the pending appeal or the grievance of the Petitioner regarding the order passed by the AO. The impugned order in short is without reasons and is therefore unsustainable in law. 8. For the above reasons, the impugned order is set aside and a direction is issued that the Petitioner's application will once again be heard by the PCIT on merits and without reference to the OM dated 31st July, 2017, which, on the face of it, appears to curtail his discretion. The PCIT will dispose of the application with a reasoned order not later than two weeks from the date of receipt of this order.” We note that the said decision has since then been affirmed by the Supreme Court in Principal Commissioner of Income Tax and Ors. vs. LG Electronics India Pvt. Ltd. [(2018) 18 SCC 447] wherein it was held: “2. Having heard Shri Vikramjit Banerjee, learned ASG appearing on behalf of the appellant, and giving credence to the fact that he has argued before us that the administrative circular will not operate as a fetter on the Commissioner since it is a quasi-judicial authority, we only need to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal.” 4. In view of the aforesaid, we find ourselves unable to sustain the impugned orders. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/05/2024 at 12:13:48 5. The writ petition is accordingly allowed. The impugned orders dated 13 December 2023 and 8 January 2024 are hereby set aside. The matter shall stand remitted to the first respondent who shall pass fresh orders bearing in mind the observations appearing hereinabove as well as the judgments rendered on the subject. 6. Pending application also stands disposed of. YASHWANT VARMA, J. PURUSHAINDRA KUMAR KAURAV, J. JANUARY 15, 2024 neha This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/05/2024 at 12:13:48 "