M/s Navanatha Educational Society V. The Income Tax Officer

WP/15850/2022

AI Insights

The case involves M/s Navanatha Educational Society, represented by its Secretary cum Correspondent, Mr. Dasari Shankar, who filed a writ petition against the Income Tax Officer, Ward - 1, Nizamabad, and other respondents including the Principal Commissioner of Income Tax - 2, Hyderabad, and the National Faceless Appeal Centre, Delhi. The petitioner challenged the requirement to pay 20% of the disputed tax demand for the assessment year 2017-18 as a condition to stay recovery proceedings, which was imposed by the Income Tax Officer based on a directive from the Principal Commissioner of Income Tax. The petitioner argued that this condition was arbitrary, illegal, and violated principles of natural justice. The High Court found that the Income Tax Officer, acting as a quasi-judicial authority, failed to provide a reasoned order and did not apply his own mind, leading to the quashing of the impugned intimation.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 765733 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 19-04-2022
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax v. L.G. Electronics India Pvt Ltd
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A KRISHNA; A MURALI
• Assessee Lawyers: A V A KARTIKEYA
• Keywords: Mandamus; Natural Justice; Quasi-judicial authority; Stay of demand
• Section: 144; 151; 226

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY ,THE NINETEENTH DAY OF APRIL TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYAN THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRlT PETITION NO: 15850 OF 2022 Between: AND M/s Navanatha Educational Society, C/o Narendra Degree College, Survey No.. 21 , 46311 , 46312, Perkit, Armoor, Nizamabad District - 503 224' Telangana. Represented by its Secretary cum Correspondent, Mr. Dasari Shankar, S/o lMr. D.Rajaram. ...PETITIONER 1. The lncome Tax Officer, Ward - 1, Nizamabad, lncome Tax Office, 6-2-15613' Subhash Nagar, Nizamabad - 503 002, Telangana 2. The Principal Commissioner of lncome Tax - 2, Hyderabad' Signature Towers, Sy. No.. 6(P) of Kondapur, Sy. No\". 37(P) of Kothaguda, Opposite Botanicbl Gardens, Serilingampally M-andal, Ranga Reddy District, Hyderabad - 500 084, Telangana 3. The National Faceless Appeal Centre (NFAC), Delhi, lncome Tax Department, Ministry of Finance, Government of lndia 4. The State Bank of lndia, Main Branch, Armoor, Nizamabad District - 503 224 ...RESPONDENTS Petition under Article 226 of lhe 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, one, more particularly in the nature of Mandamus declaring. a.the order of the 'l st Respondent (served on 07.03-2022), in directing the Petitioner to pay 20 percentage of the disputed demand, pending disposal of the appeal of the Petitioner before the 4th Respondent, for the Assessment Year 2017 - 18, as arbitrary, illegal, bad in law, bereft of any reasons, violative of principles of natural justice and to consequently set-aside the same and grant stay of any recovery, pending disposal of the Petitioners appeal before the 1st Appellate Authority, in the interests of justice, and / . b.the notice u/s 226(3) ot the lncome Tax Act, 1961, dated 2311112021, issued by the '1 st Respondent to the bankers of the Petitioner, i.e., the 4th Respondent herein, as arbitrary, illegal, bad in law, violative of principles of natural justice and to consequently set-aside the same in the interests of justice, and to pass Petition under Section 151 CPC praying that in the circumstances stated in the affidavit flled in support of the petition, the High Court may be pleased to suspend the notices uls 226(3) of the lncome Tax Act, 1961, dated 2311112021 , issued by the 1 st Respondent to the bankers of the Petitioner, i.e., the 4th Respondent herein, pending disposal of the above Writ Petition. lA NO:2 OF 2022 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, including any recovery, pending disposal of the above Writ Petition; Counsel for the Petitioner:SRl. A V A SIVA KARTIKEYA Counsel for the Respondent Nos. 1 to 3: SRl. A RADHA KRISHNA, SC FOR lT Counsel for the Respondent No. 4: SRI A.MURALI The Court made the following: lA NO: 1 OF 2022 THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION No. 15850 of 2022 ORDER: (Per Hon'ble Si Justice Ujjal Bhuyan) Heard Mr.A.V.A. Siva Kartikeya, learned counsel for the petitioner and Mr. A.Radha Krishna, learned Standing Counsel Income Tax Department for respondent Nos. i to 3. 2. By filing this petition, under Article 226 ol tbe Constitution of India, petitioner seeks quashing of undated communication of respondent No.l (at page 62 of paper book). 3. Be it stated that petitioner is an assessee under the Income Tax Act, 1961(briefly referred to hereinafter as 'the Act). For the assessment year 2Ol7-1.8, respondent No.1 passed assessment order dated 17 .12.2019 under Section 144 of the Act. Aggrieved by the aforesaid order of assessment, petitioner has preferred appeal before respondent No.3. The appeal is stated to be pending. During the pendency of the appeal, petitioner filed a petition for stay of the demand on O4.O2.2O22. By the impugned 2 UB, J &, SN, J W.P.No.1585O of 2022 intimation, respondent No.1 granted stay of the demand subject to deposit of 2O%o thereof. This order is impugned in the present proceedings. 3.1. Impugned intimation reads as under: \" As directed by the Pr.Commissioner of Income Tax-2, Hyderabad it is hereby informed that as per the Board circular, 2OYo of the outstanding demand for the assessment year 20i7-2018 is to be paid on or before 2a.O3.2O22 to stay the Collection of Demand.\" 4. From a perusal of the above, we {ind that respondent No.t had acted on a direction of respondent No.2, who had informed that as per circular of the Central Board of Direct Taxes (CBDT) stay can be granted subject to payment of 2OYo of the demand. 5. Respondent No.l, while dealing with a petition for stay of demand under Section 22O (61 of the Act, acts as a quasi-judicial authority. Being a quasi-judicial authority, he is expected to apply his own mind and pass a reasoned order either rejecting the prayer for stay or granting stay with or without conditions. 6. A perusal of the impugned intimation would go to show that the same is devoid of reasons. All that has 3 UB,J&SN,J W.P.No.15850 of 2022 1 been mentioned by respondent No.1 is that respondent No'2 had informed him about the circular of the CBDT, which provides for granting stay of demand subject to payment of 2Oo/o of the outstanding demand' Accordingly, the order was passed. 7 . Supreme Court in Principal Commissioner of Income Tax v. L.G.Elecronics India Pvt Ltd, decided on 2O.O7.2O1a has held that administrative circular of the CBDT would not operate as a fetter on the authority acting in a quasi-judicial manner discharging quasi-judicial function. In that case, Supreme Court clari{ied that it would be open to the authorities on the facts of individual cases to grant deposit orders of a lesser amount than 2Oo/o ' pending disPosal of the aPPeal' 8. That being the position, and on due consideration, impugned intimation (at page 62 of the paper book) is hereby set aside and quashed' Consequently matter is remanded back to respondent No'1 for taking a fresh decision on the stay petition of the petitioner dated O4.O2.2O22, in accordance with law, and after hearing the petitioner. fi //TRUE COPY// UB,J&SN,J W.P.No. 1585O of 2022 SECTION OFFICER SD/-B.SAT,YAVATHI ASSISTANT REGISTRAR L-l \"-' 4 8.1. The above exercise shall be carried out within a period of thirty (30) days from the date of receipt of a copy of this order. 9. However, during this period of thirty (30) days, respondents shall not take coercive steps against the petitioner. 10. At this stage, learned counsel for the petitioner submits that the petitioner's bank accounts have been attached pursuant to the assessment order. 11. We make it clear that attachment of petitioner's bank accounts would be subject to such order that may be passed by respondent No.1 in terms of the present order. 12. This disposes of the Writ Petition. However, there shall be no order as to costs. 13. As a sequel, miscellaleous applications pending, if any, in this Writ Petition, shall stand closed. I To, 1 The lncome Tax Officer, Ward - 1, Nizamabad, lncome Tax Office, 6-2-15613' Subhash Nagar, Nizamabad - 503 002, Telangana The Principai Commissioner of lncomeTax-2, Hyderabad, Signature Towers, Sy. No.. 6(P) of Kondapur, Sy. No.. 37(P) of Kothaguda, Opposite Botanical 6ardens, Serilingampally Mandal, Ranga Reddy District, Hyderabad - 500 084, Telangana 2 I 3. The National Faceless Appeal Centre (NFAC), Delhi, tncome Tax Department, Ministry of Finance, Government of lndia 4. The State Bank of lndia, Main Branch, Armoor, Nizamabad District - SO3 224 5. One CC to Sri. A V A Siva Kartikeya Advocate tOpUCl 6. One CC to Sri. A Radha Krishna, SC For lT tOpUCl 7. One CC to Sri. A MURALI, Standing counsel, 8. Two CD Copies. 9. One spare copy PM SW I / / I HIGH COURT DATED:1910412022 ORDER WP.No.15850 ot 2022 Disposing of the Wp Without costs. ( It ;r; S r .-r 14, .. o -) 2 3 AU$ 2[22 OF.9opTC i.,..1 I ,v1 I '->. "