HAREKRUSHNA PATRA V. PRINCIPAL COMMISSIONER OF INCOME TAX, SAMBALPUR

WP(C)/10050/2023

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The case involves Harekrushna Patra, the petitioner, challenging the decision of the Principal Commissioner of Income Tax, Sambalpur, which required a 20% deposit of the outstanding tax demand as a condition for staying the demand until the appeal was decided. The petitioner argued that his financial constraints were not adequately considered, and referenced a Supreme Court decision suggesting that the 20% deposit requirement could be reduced based on individual circumstances. The Income Tax department contended that the decision was made with due consideration and was not strictly bound by the CBDT circular. The High Court, acknowledging the possibility of discretion in the deposit amount, remanded the case for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 747656 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 04-04-2023
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax and Ors. Vs. LG Electronics India (P) Ltd.
• Laws Referred To: CBDT circular
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S S MAHAPATRA
• Assessee Lawyers: R P KAR
• Keywords: Appeal; Financial Constraint; Income Tax; Stay on demand; Principal Commissioner of Income Tax, Sambalpur
• Section: 20% deposit as condition-precedent for stay

Judgement Text

" IN THE HIGH COURT OF ORISSA AT CUTTACK WP(C) No.10050 of 2023 Harekrushna Patra ..……. Petitioner Mr. R.P. Kar, Adv. -Versus- Principal Commissioner of … …… Opp. Parties Income Tax, Sambalpur & Others. Mr. S.S. Mahapatra, Senior Standing Counsel for Income Tax Department. CORAM: JUSTICE S. TALAPATRA JUSTICE SAVITRI RATHO ORDER 04.04.2023 Order No. 01. 1. This matter is taken up through Hybrid Arrangement (Virtual/Physical Mode). 2. Heard Mr. R.P. Kar, learned counsel appearing for the petitioner. 3. By means of this writ petition, the decision of the Principal Commissioner of Income Tax, Sambalpur contained in the communication dated 20.02.2023, Annexure-5 to the writ petition, has been challenged. 2 3. It has been observed in the said decision that during the course of the hearing on 28.11.2022 before the then Principal Commissioner of Income Tax, Sambalpur, the assessee referred to his financial constraint and requested for staying realisation of the demand for the outstanding till disposal of the appeal by CIT(A). 4. The assessee in support of his contention had submitted some records stating that he is not in a condition to pay the outstanding demand. 5. Having considered the plea of hardship, it has been directed that as a condition-precedent 20% of the demand, which comes to Rs.5,59,537/-, shall be paid by the assessee in the manner provided in the said communication dated 20.02.2023. Payment of the amount has been allowed to be paid in three instalments. The last instalment is scheduled to be paid on 25.04.2023. 6. Mr. Kar, learned counsel has stoutly submitted that the materials which were placed to show the financial constraint were not appreciated in the manner in which those should have been appreciated. According to Mr. Kar, learned counsel, there is reason to believe that the CBDT circular which postulates the payment of 20% of the demand as the condition precedent for granting stay, in order to file the appeal before the superior authority has been adhered to mechanically. 3 7. Mr. Kar, learned counsel, has urged this court to interfere with the said decision for reducing the said amount as determined by the Principal Commissioner of Income Tax, Sambalpur. In this regard Mr. Kar, learned counsel has placed a decision of the apex court in Principal Commissioner of Income Tax and Ors. Vs. LG Electronics India (P) Ltd. [Order dated 20.07.2018 delivered in Civil Appeal No.6850 of 2018]. In that order, the apex court has observed that the administrative circular will not operate as a fetter on the CIT, since he is a quasi-judicial authority. It has been further observed that it will be open to the authorities, on the facts of the individual cases, to grant deposit orders of a lesser amount than 20 per cent, pending appeal. 8. Mr. S.S. Mohapatra, learned Senior Standing Counsel for the Income Tax department has, having appeared on advance notice, has submitted that this court should loathe in exercising its plenary jurisdiction under Article 226 in interfering such order. The order as challenged in this writ petition is not unreasonable and the discretion that has been exercised by the Principal Commissioner of Income Tax, Sambalpur cannot be held to be without due consideration. 9. It has been also mentioned by Mr. Mohapatra, learned Senior Standing Counsel for the IT department that no reference has been made to the CBDT Circular as referred by the petitioner. Hence, the said decision/order has to be considered as the order passed by the 4 Principal Commissioner of Income Tax, Sambalpur on exercise of discretion only, not fettered by the said circular. 10. Mr. Mohapatra, learned Senior Standing Counsel has further submitted that the apex court’s decision has no relevance in the context of in the present case. 11. Be that as it may, we are not certain that whether the Principal Commissioner of Income Tax, Sambalpur was aware that he can exercise the discretion without following the CBDT circular which postulates the minimum 20% of deposit as condition-precedent for staying the demand till an appeal against the order of assessment is decided on merit or otherwise. 12. In the fitness of things, we remand the matter for re- consideration of the quantum of the deposit, as condition-precedent for granting stay against the demand for fling the appeal by the Principal Commissioner of Income Tax, Sambalpur. During reconsideration, the Principal Commissioner of Income Tax, Sambalpur shall consider the aspect that he can ask for a deposit, lesser than 20% as prescribed by the CBDT circular after considering the hardship of the assessee. 13. In the above terms, this writ petition stands disposed of. 14. Before parting with the records, we would direct the petitioner to make an application seeking reconsideration of the decision of the 5 Principal Commissioner of Income Tax, Sambalpur as reflected in the communication dated 20.02.2023 Annexure-5 to the writ petition, in terms of this order along with a copy of this order. 15. The petitioner shall file such application within a period of 10 days from today. 16. During the said 10 days, no coercive action shall be taken against the petitioner. 17. It is expected that the Principal Commissioner of Income Tax, Sambalpur shall take a decision with expedition on the application which is to be filed by the petitioner, in compliance of this order. 18. Urgent certified copy be granted as per rules. (S. Talapatra) Judge (Savitri Ratho) Judge Rati Ranjan Nayak "