IBS Software Private Limited V. The Union of India and The Assistant Commissioner of Income Tax, Circle 1 (1) and The Income Tax Appellate Tribunal

WP(C)/14207/2024

AI Insights

IBS Software Private Limited filed a writ petition challenging a notice issued by the Assistant Commissioner of Income Tax, directing the company to deposit a substantial amount assessed as tax, penalty, and interest. The company had already appealed the assessment order to the ITAT and deposited 20% of the assessed amount, seeking a stay on the remaining demand based on a CBDT circular. The Income Tax Department contended that the circular applied only to appeals before the Commissioner of Income Tax (Appeals) and not to the ITAT. The High Court found that the intent of the circular should protect the assessee in cases where the appeal lies solely with the ITAT, thus granting temporary relief to the petitioner.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 800636 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-04-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P G JAYASHANKAR; G KEERTHIVAS
• Assessee Lawyers: RAJAKANNAN; M GOPIKRISHNAN NAMBIAR; K MATHAI; JOSON MANAVALAN; KURYAN THOMAS; PAULOSE ABRAHAM
• Keywords: Assessment Order; CBDT Circular; Income Tax; Stay Petition; Writ petition
• Section: 143(3); 144C

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 5TH DAY OF APRIL 2024 / 16TH CHAITHRA, 1946 WP(C) NO. 14207 OF 2024 PETITIONER: IBS SOFTWARE PRIVATE LIMITED, 521-524 NILA, TECHNOPARK CAMPUS, THIRUVANANTHAPURAM , REPRESENTED BY ITS CHIEF FINANCIAL OFFICER - MR. ASHISH NANDA, PIN – 695581. BY ADVS. SRI. RAJA KANNAN SRI. M. GOPIKRISHNAN NAMBIAR SRI. K. JOHN MATHAI SRI. JOSON MANAVALAN SRI. KURYAN THOMAS SRI. PAULOSE C. ABRAHAM RESPONDENTS: 1 THE UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN – 110004. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), 2. AAYAKAR BHAWAN, KAWADIAR P. O., THIRUVANANTHAPURAM, PIN – 695003. 3 THE INCOME TAX APPELLATE TRIBUNAL, FIRST FLOOR, KENDRIYA BHAVAN, KAKKANAD, KOCHI REPRESENTED BY ITS ASSISTANT REGISTRAR, PIN – 682037. BY ADVS. SRI. P. G. JAYASHANKAR - SC SRI. G. KEERTHIVAS - SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 14207 OF 2024 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No. 14207 of 2024 ------------------------- Dated this the 5th day of April, 2024 JUDGMENT 1. The present writ petition has been filed impugning Exhibit P-9 notice issued by the 2nd respondent directing the petitioner to deposit entire assessed tax, penalty, interest etc., which comes to Rs. 21,21,12,860/-. 2. The petitioner has filed Exhibit P-2 appeal before the Income Tax Appellate Tribunal (ITAT) against the assessment order in Exhibit P-1, along with the stay petition in Exhibit P-8. 3. The assessment order has been finalised under the provisions of Section 143(3) read with Section 144C of the Income Tax Act, 1961. Against the assessment order finalised under Section 144C, the appeal lies only before the ITC and not before the Commissioner of Income Tax (Appeals) [CIT(A)]. 4. Learned Counsel for the petitioner submits that CBDT Circular No. 1914/1993 and para 4 of the OM with F. No. 404/72/93-ITCC dated 29.02.2016, which is amended in the year 2017, if an assessee deposits 20% of the assessed tax, till the decision of the appeal before the 1st appellate authority, the remaining amount should not WP(C) NO. 14207 OF 2024 3 be enforced. 5. Mr. G. Keerthivas, learned Counsel for the Income Tax Department, however, submits that the above Circular is applicable only in case of the appeals filed before the CIT(A) and it is not applicable in respect of the appeals which are filed before the ITAT and, therefore, the petitioner, an assessee cannot contend that since he has deposited 20% of the assessed tax, penalty, interest etc., the remaining amount should not be realised as there is no interim order passed by the ITAT. 6. I have considered the submissions. The intent of the Circular is to grant protection to an assessee from further recovery till his stay petition is considered by the appellate authority, if the assessee deposits 20% of the assessed tax, penalty, interest etc. In the present case, the appeal against the assessment order lies only before the ITAT. Therefore, I am of the considered view that, considering the intent of the Circular No. 1914/1993 read with OM dated 29.02.2016 (amended in the year 2017), the Circular be applicable in the case the appeal against the assessment order lies only before the ITAT. 7. In view thereof, the present writ petition is disposed of with direction to the 3rd respondent ITAT to consider and decide the stay WP(C) NO. 14207 OF 2024 4 petition in Exhibit P-8 filed by the petitioner along with the appeal in Exhibit P-2 expeditiously, preferably within a period of two months. For a period of two months, the impugned notice in Exhibit P-9 shall not be given effect to. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 14207 OF 2024 5 APPENDIX OF WP(C) 14207/2024 PETITIONER’S EXHIBITS Exhibit P1 THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 24.02.2022, ALONG WITH COMPUTATION SHEET AND DEMAND NOTICE (BOTH EVEN DATED) PASSED BY THE 2ND RESPONDENT UNDER SECTION 143(3) READ WITH SECTION 144C (13) OF THE ACT FOR THE A.Y 2017-18 Exhibit P2 THE TRUE COPY OF THE APPEAL MEMORANDUM (WITHOUT ANNEXURES) DATED 24.03.2022 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT, CHALLENGING EXT.P1 ORDER Exhibit P3 THE TRUE COPY OF THE CHALLAN NO. 11803 DATED 24.03.2022, EVIDENCING THE PAYMENT OF RS. 4,25,00,000/-, TOWARDS 20% OF THE DEMAND AS PER EXT.P1 ORDER Exhibit P4 THE TRUE COPY OF THE LETTER (WITHOUT ANNEXURES) DATED 25.03.2022 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P5 THE TRUE COPY OF THE LETTER (WITHOUT ANNEXURES) DATED 11.03.2024 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P6 THE TRUE COPY OF THE LETTER DATED 07.03.2024 ISSUED BY THE 2ND RESPONDENT FOR THE A.Y 2017-18 Exhibit P7 THE TRUE COPY OF THE LETTER DATED 19.03.2024 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P8 THE TRUE COPY OF THE STAY PETITION (WITHOUT ANNEXURES) DATED 18.03.2024 FILED BY THE PETITIONER BEFORE THE OFFICE OF THE 3RD RESPONDENT, FOR THE A.Y 2017-18 Exhibit P9 THE TRUE COPY OF THE COMMUNICATION DATED 25.03.2024 PASSED BY THE 2ND RESPONDENT, FOR THE A.Y 2017-18 Exhibit P10 THE TRUE COPY OF THE E-MAIL COMMUNICATION DATED 02.04.2024, 11.03.2024 AND 07.03.2024, BETWEEN THE PETITIONER AND THE 2ND RESPONDENT "