M/s. Gorlas Infrastructure Pvt Ltd. V. Pr. Commissioner of Incometax-2 and another

WP/3831/2021

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M/s. Gorlas Infrastructure Pvt. Ltd. filed a writ petition against the Principal Commissioner of Income Tax-2 and the Commissioner of Income-tax (Appeals)-2, challenging the order that required them to pay 20% of the tax demand in installments as a condition for stay of the tax demand. The petitioner argued that the tax demand was excessively high and that their financial situation worsened due to the COVID-19 pandemic, which should have been considered for an absolute stay. The court, however, upheld the conditional stay payment requirement, citing the petitioner's failure to comply with previous orders and the lack of demonstrated financial hardship.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 692321 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 26-04-2021
• Assessment Year: misc
• Other Referred Cases: Prl. Commissioner of Income Tax S and others vs. M/s. L.G. Electronics India Private Limited
• Laws Referred To: Income Tax Act, 1961, Article 226 of the Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B SARMA; K MAMATA
• Assessee Lawyers: DUNDU MANMOHAN
• Keywords: CBDT instructions; Financial stringency; High-pitched assessment; Stay of demand; Writ of Certiorari; Writ of Mandamus
• Section: 148; 143(1); 139(1); 246A; 220(6); 220(3)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original J urisdiction) MONDAY, THE TWENTY SIXTH DAY OF APRIL TWO THOUSAND AND TWENTY ONE PRESENT THE HON'BLE SRI JUSTICE M.S. RAMACHANDRA RAO AND THE HON'BLE SRI JUSTICE T. VINOD KUMAR Between: M/s. Gorlas lnfrastructure Pvt. Ltd., Rep. by Mohd. Afzal (Authorised Representative), Shop No.87, Ground Floor, Bearing Municipal no. 11-705, Pipe line Road, Fathenagar Village, GHMC, Kukatpally Circle, Ransa Reddy District, Hyderabad - UO?.?33i,r,O*=* AND 1 . Pr. Commissioner of lncometax-2, Signature Towers, Sy.No.6(P) of Kondapur, Sy.37(P) of Kothaguda Opp. Botanical Gardens, Serlingampally (M), R.R.District, Hyderabad, Telangana, 500084. 2. Commissioner of lncome-tax(Appeals)-2, Signature Towers, Sy.No.6(P) of Kondapur, Sy.37(P) of Kothaguda Opp. Botanical Gardens, Serlingampally (lV), R.R.District, Hyderabad, Telangana, 500084. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction, more particularly one in the nature of Writ of I ,4andamus/Certiorari to set aside/quash the mechanical order bearing F.No.Pr.ClT-2/ Hyd/Stayi2O2O-21 , d1.0310212021 passed by the 1st respondent, by declaring it as Bad in Law and consequently direct him to consider the application dt. 2810712020 afresh, in line with the CBDT lnstruction No.95 dt.21l08/ 1 969. lA NO: 1 OF 2021 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of all further proceedings, pursuant to the order passed by the 1st Respondent, vide order bearing F. No. Pr.ClT-2lHyd/Stay/2020 -21, dl. 031 0212021 for the A.Y.201 4-1 5, till the disposal of the first appeal, in the interests of Justice, as otherwise the Petitioner would be put to irreparable loss and injury. Counsel for the Petitioner: SRl. DUNDU MANMOHAN Counsel for the Respondent No.1: SRI B. NARASIMHA SARMA Counsel for the Respondent No.2: M/s. K. MAMATA The Court made the following: ORDER ,/' WRIT PETITION NO: 3831 OF 2021 WRIT PETITION NO.3831 of 2O2L ORDER :[per Ho n'ble Si Justice T. Vinod Kumar) In this Writ Petition, the petitioner is assailing the correctness of the order passed by the 1\"t respondent in F.No.Pr.ClT-2 /HydlK/2O2O-21 dated 03.O2.2O2t, in the application filed seeking stav of demand of tax. 2. The petitioner contends that for the Asst. year 2014-15, it had filed return of income u/s. 139(1) of the Incomer Tax Act, 1961 (for short the ActJ admitting income of Rs. 1,76,654/- and the same was processed on 27.11.2014 under Section 143(i) of the Act; that the assessing authorit5r has issued notice under Section 148 of the Act, proposing to revise the income admitted, by making an addition of Rs.575 crores; no reasons were assigned for reopening; as a result of the addition, a high pitched assessment which is 30409 times higher than the income declared has been made on the petitioner; and the petitioner has been issued r.l,ith a demand notice dt. 27.12.2019 in a sum of Rs. 418.12 crores. 3. It is also contended that aggrieved by the order passed by the assessing authority, the petitioner has preferred an appeal to the 2nd respondent being the 1st appellate authoritl/ on 13.01.2020 under Section 246A of the Act; and the said appeal is pending. 4. The petitioner further contends that pending consideration of appeal, the petitioner approached the 1st respondent on 1O.O2.2O2O requesting the stay of collection of demand of tax; and not to treat the petitioner as assessee-in-default under Section i THE HON'BLE SRI JUSTICE M.S. RAMACHANDRA RAO AND THE HON'BLE SRI JUSTICE T. VINOD KUMAR 220(3) and (6) of the Act, till such time rhe appeal is decided by rhe 2,t,1 respondent. 5. It is the contention of the petitioner that the 1\"t respondent disposed of the said request in a mechanical manner; directing payment ol 2ooh of outstanding balance demand in 10 equal installments starting 15.03.2020, without taking note of the financial difficulty of the petitioner; and the said direction of the 1st respondent was communicated to the petitioner by the assessing officer on 09 .O3 .2O2O. 6. As the petitioner was afforded with short time of one week to make the payment of 1\"t instalment out of the ten equal installments granted, the same could not be complied with; and, thcreafter the petitioner's activities got affected due to Covid 19 pandemic. 7. [t is contended that due to Covid 19 pandemic the petitioner busincss got affected; the petitioner approached the lst respondent once again, vide his request letter dated 28.07.2O2O, and sought lor reconsideration of the order passed earlier granting conditional stay; and that the 1\"t respondent disposed of the said stay application by the impugned proceeding dated O3.O2.2O2I without taking note of the submissions made and also the financiai position of the petitioner subsequent to Covid 19 pandemic; that the l\"t respondent has rejected the request of the petitioner by stating that - \"rto blanket staA can be giuen. Ihe assessee to pay 20vo of the total demand in eight instalments at the (11 Rs. 10 crores per month startitg from February, 2021 and the 1\"t instalment 3 to be paid bg 10.02.2021 and the balance instalments should. be paid on or before 10th of euery succeeding month, failing u.thich the stay uill automatically stand uacated and the Assessing Offtcer/ Tax Recouery Offi\"cer shalt be at tibertg to enforce collection tuithout further notice\" iJ. It is the contention of the petitioner that, despite the grant of absolute stay in raised in view of CBDT petitioner making appropriate cases instructions No.95 dated 21.08. i969 and further instruction No. 1914 dated 28.07.2020, the direction to pay 2Oo/o is arbitrary, erroneous and illegal; that the appeal filed before the 2\"d respondent was taken up for hearing in July, 2O2O and no orders thereon have been passed till date; and that non-exercise of power conferred on the 1\"t respondent for grant of absolute stay is contrary to the law laid down by the Apex Court in prl. Commisstoner of Income Tax S and others u. M/s. L.G. Electronics htdta Piuate Limitedt. 9. We have given our anxious consideration to the submissions made on behalf of the petitioner. 10. Firstly, the CBDT instructions No.95 dated 2 I .0g. 1969 on which reliance is placed to contend that absolute stay should be granted, is no more in force and stands superseded by instruction no. 1914 dated 28.OT.2O2O. Secondly, by the CBDT instruction No.1914 dated. 28.07.2020, the authorities under the Act are conferred power to grant stay pending appeal before the appellate out a case for of the demand '1zora1 ra scc ++z 4 forum under the Act; and it is stated therein that the authority in order to protect the interests of revenue can grant stay by directing payment of 2Ook of the demand. 11. It cannot be stated that by the CBDT instruction No. 1914, in all cases a condition precedent to direct payment of 2oo/o of Lhe demand for grant of stay having been prescribed. Hou'ever, while considering the application for grant of stay, the authority is required to consider three essential parameters namely; (i) existence of pima facie case, (ii) financial stringencg, and (iii) balonce of conuenience. .Based on consideration of the above, in the facts of each case, the authority can direct payment of even lesser amount. 12. Though, it is contended before us that even a direction to pay the 17o of the demand raised by the assessing officer would causc undue hardship and irreparable loss to the peLitioner, ancl that the authorities have not been able to recover any part of the demand raised on the petitioner, because of it's financial stringency, the said submission does not appeal to this Court, as mere failure of the authorities to recover any amount cannot be considered as financial stringency of the petitioner. 13. The 1\"t respondent, having regard to the facts of the case and the material placed on record, granted conditionai stay, which the petitioner failed to comply with at the first instance; and even thereafter the l strespondent,by considering the request of the petitioner, granted further time for making the conditional payment to commence from 1Os February, 202 1 . Thus, the 5 pctitioner failed to comply either order dt. O 1.03.2020 or order dt. 03.o2.2021 74. Though, it is sought to be contended by the petitioner that the lst respondent ought to have granted absolute stay, the said submission lacks bonafides. The same is evident from the application made by the petitioner on 2a.O7.2O2O for reconsideration of the earlier decision wherein, as an alternate prayer, it sought the following reiief : \"therefore, the Hon'ble Principal Commissioner is pleaded to kindlg postpone the pogment of the l.t instalment out of ten instalments of 20% of total demand to 15.01.2021 instead of 1s.03.2020.' The 1\"t respondent, having considered the request of the petitioner, granted time to make conditional payment in installments commencing from 1O.O2.2O21, beyond the period indicated by the petitioner. Even this the petitioner failed to comply with and only as an after thought filed the present Writ Petition on 15.02.2021, after having committed default in payment ol rhe revised 1st installment due on IO.O2.2O21.. 15. Since, the 1st respondent has passed the rmpugned order dated 03.02.2021 by taking all the facts into consideration, including the request of the petitioner as noted above by way of reconsideration of its earlier order of March, 2O2O, and the said order passed by the 1st respondent is in exercise of discretionary po /ers, this court is of the view that no valid ground has been made out for interference with it. 6 16. Therefore, the writ petition is de void of merits. Accordingly, the Writ Petition is dismissed at admission stage. L7. As, it is contended that the 2\"d respondent heard the appeal filed by the petitioner in July, 2020, and no orders are passed as yet, we direct the 2nd respondent to dispose off the appeal expeditiously, if not already disposed, preferably within a periocl of four weeks from the date of receipt of copy of this order. 18. Miscellaneous petitions if any, stand closed in the light of this order. No order as to costs. //TRUE COPY' Sd/-T.KRISHNA KUMAR ASSrsrANr -iezo* SECTION OFFICER Towers. Sv.No.6(P) of ns. Serlinq'amPallY (M) To, 5. Two CD CoPies CHR 'ffi 3\",T13;lSifJiI?.'\"\"&tL#8X;:86'::qE:Y!\"\" , BrE{'rilUilq!:fl,. nl.i#i:b%?\"r 3 One CC to Sri B, Narasi i 6ilE ;E i; M-i.-K. Mimata, Advocate [oPUC] I HIGH COURT DATED:2610412021 ORDER W.P.No.3831 of 2021 DISMISSING THE WRIT PETITION WITHOUT COSTS \"t STATE o a. ( a-: o q) 02 lu { ?$?1 .A )D b "