MARKEM-LMAJE INDIA PRIVATE LIMITED,NEW DELHI V. INCOME TAX OFFICER ASSESSMENT UNIT, NEW DELHI

SA 417/DEL/2024

AI Insights

The case involves M/s Markem-Imaje India Private Limited, which filed a stay application against the Income Tax Officer, New Delhi, concerning an outstanding demand for the assessment year 2020-21. The dispute arose from discrepancies in the income and tax demand figures between the final assessment order, the computation sheet, and the demand notice. The assessee argued that the incorrect figures led to an unjustified tax demand and subsequent attachment of bank accounts, severely impacting business operations. The Tribunal found that the actions taken by the Assessing Officer, including the issuance of a notice under Section 221(1) of the Income Tax Act and the attachment order, were unsustainable due to the absence of a valid demand notice.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31802 (ITAT-DELHI)
• Duration Of Justice: 3 day(s)
• Appeal Type: Others
• Pronouncement Date: 18-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 18-10-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 15-10-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANKAR LAL VERMA; SENIOR
• Assessee Lawyers: HIMANSHU SINHA
• Keywords: Transfer pricing; Rectification of order; Application of stay
• Section: 154

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI FRIDAY FRIDAY FRIDAY FRIDAY BENCH BENCH BENCH BENCH- - - -I I I I : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE BEFORE BEFORE BEFORE SHRI SAKTIJIT DEY, SHRI SAKTIJIT DEY, SHRI SAKTIJIT DEY, SHRI SAKTIJIT DEY, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT AND AND AND AND SHRI S. RIFAUR RAHMAN SHRI S. RIFAUR RAHMAN SHRI S. RIFAUR RAHMAN SHRI S. RIFAUR RAHMAN , , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER Stay Application No. Stay Application No. Stay Application No. Stay Application No.417 417 417 417/Del/2024 /Del/2024 /Del/2024 /Del/2024 (In ITA No.4447 (In ITA No.4447 (In ITA No.4447 (In ITA No.4447/Del/2024) /Del/2024) /Del/2024) /Del/2024) Assessment Yea Assessment Yea Assessment Yea Assessment Year r r r : 20 : 20 : 20 : 2020 20 20 20- - - -21 21 21 21 M/s Markem M/s Markem M/s Markem M/s Markem- - - -Imaje India Private Imaje India Private Imaje India Private Imaje India Private Limited, Limited, Limited, Limited, L 61A, 2 L 61A, 2 L 61A, 2 L 61A, 2nd nd nd nd Floor, Connaught Floor, Connaught Floor, Connaught Floor, Connaught Circus, Connaught Place, Circus, Connaught Place, Circus, Connaught Place, Circus, Connaught Place, New Delhi New Delhi New Delhi New Delhi – – – – 110 001. 110 001. 110 001. 110 001. PAN : AAACI2979R. PAN : AAACI2979R. PAN : AAACI2979R. PAN : AAACI2979R. Vs. Vs. Vs. Vs. Income Tax Officer, Income Tax Officer, Income Tax Officer, Income Tax Officer, Assessment Unit, Assessment Unit, Assessment Unit, Assessment Unit, New Delhi. New Delhi. New Delhi. New Delhi. (Appellant) (Respondent) Appellant by : Shri Himanshu Sinha, Shri Prashant Meharchandani and Shri Jinender Kataria, Advocates. Respondent by : Shri Shankar Lal Verma, Senior DR. Date of hearing : 1 1 1 18 8 8 8.10 .10 .10 .10.2024 .2024 .2024 .2024 Date of pronouncement : 18 18 18 18. . . .10 10 10 10.2024 .2024 .2024 .2024 ORDER ORDER ORDER ORDER Per Saktijit Dey, Vice Per Saktijit Dey, Vice Per Saktijit Dey, Vice Per Saktijit Dey, Vice Pres Pres Pres President ident ident ident : : : : The captioned application has been filed by the assessee seeking stay on recovery of outstanding demand pertaining to assessment year 2020-21. 2. Learned Counsel appearing for the assessee submitted that in the final assessment order, the Assessing Officer has made an addition of `6,92,34,800/- and determined the total income at `21,15,94,870/- in terms with the directions of learned Dispute Resolution Panel (DRP). He submitted, whereas, in the computation sheet attached to the assessment order, the Assessing Officer has computed tax liability of `7,49,49,824/- on a total income of `32,91,24,980/-. He submitted, in the demand notice dated 29th July, 2024 attached to the assessment order, the Assessing Officer has raised zero demand. He submitted, though, the assessee has filed a rectification application before the Assessing Officer pointing out these mistakes, however, as yet, no rectification order has been passed. He submitted, on Stay –417/Del/2024 2 20th September, 2024, the Assessing Officer has issued a notice under Section 221(1) of the Act threatening to levy penalty unless the outstanding demand is paid. He submitted, in the notice under Section 221(1) of the Act, the Assessing Officer has revised the demand to `2,37,47,020/- as against the demand of `7,49,49,824/- mentioned in the computation sheet. He submitted, immediately after issuing notice under Section 221(1) of the Act, the Assessing Officer has issued an attachment order dated 9th October, 2024 under Section 226 of the Act attaching assessee’s bank accounts maintained with HSBC Bank and Punjab National Bank (PNB). He submitted, though the assessee, in the meanwhile, has deposited an amount of `45,92,000/- vide challan dated 14th October, 2024, however, the Assessing Officer has not lifted the attachment order. He submitted, due to attachment of the bank accounts, assessee’s business has virtually come to a standstill. Thus, he submitted, stay on recovery of balance outstanding demand may be granted and attachment order may be vacated. He further submitted that the appeal may be heard on an out of turn basis. 3. Learned DR opposed grant of stay. 4. We have considered rival submissions and perused materials on record. In course of hearing, we have come across certain startling facts which clearly reveal undue harassment to the assessee. As could be seen from the facts on record, the assessee filed its return of income declaring income of `14,23,60,070/-. While framing the draft assessment order, the Assessing Officer added an amount of `10,56,16,830/- towards proposed transfer pricing adjustment. Against the draft assessment order, the assessee raised objections before the learned DRP. While disposing of the objections, learned DRP revised the transfer pricing adjustment to `6,92,34,800/-. Thus, in the final assessment order, the Assessing Officer added the amount of `6,92,34,800/- and determined the total income at `21,15,94,870/-. Surprisingly, in the computation sheet attached to the assessment order, the Assessing Officer determined the total income at a completely different figure of `32,91,24,980/- and created a tax demand of `7,49,49,824/- on such income. More surprisingly, in the demand notice dated 29th July, 2024 issued under Section 156 of the Act accompanying such assessment order and the computation sheet, the Assessing Officer has Stay –417/Del/2024 3 raised zero demand. Subsequently, on 20th September, 2024, the Assessing Officer issued a notice under Section 221(1) of the Act requiring the assessee to show cause as to why penalty should not be levied for not making payment of the outstanding demand for assessment year 2017-18 and 2020- 21. 5. It is not understood, in absence of a valid notice of demand, how the Department can proceed to recover any part of the demand. Whereas, immediately after issuance of the notice under Section 221(1) of the Act, the Assessing Officer has issued an attachment order on 9th October, 2024 attaching assessee’s bank account maintained with HSBC Bank and PNB. Thus, in our view, in absence of a valid demand notice, the notice issued under Section 221(1) of the Act and the attachment order dated 9th October, 2024, are unsustainable. In course of hearing, it has been brought to our notice by the learned counsel for the assessee that after the attachment order, the assessee has deposited an amount of `45,92,000/- through challan dated 14th October, 2024 towards the outstanding demand of the current year. It has also been brought to our notice that though the rectification application under Section 154 of the Act has been filed before the Assessing Officer on 14th October, 2024, however, it is yet to be disposed of. 6. Thus, having examined the facts and materials on record, we are convinced that not only the assessee has made out a prima-facie case but, balance of convenience also lies in its favour. In view of the aforesaid, we are inclined to grant stay on recovery of outstanding demand for a period of 180 days from the date of this order or till disposal of the corresponding appeal, whichever is earlier, subject to following :- (i) In case the payment of `45,92,000/- made by the assessee is equal to or more than 20% of the rectified demand, assessee need not pay any further amount. (ii) If 20% of the rectified demand is more than `45,92,000/-, the assessee is directed to pay the balance amount so as to cover 20% of the rectified demand. This amount should be paid by the assessee within a period of four Stay –417/Del/2024 4 weeks from the date of receipt of rectification order and revised demand notice. 7. Further, we direct the Assessing Officer to vacate the attachment orders issued qua PNB Account Number 2726002100049089 and HSBC Bank Account Number 499031607001, forthwith. Acceding to assessee’s request, which was not opposed by the learned DR, we direct the Registry to fix the corresponding appeal for hearing on 27th January, 2025, on an out of turn basis. Paper books, if any, must be filed by the parties sufficiently ahead of the date of hearing. Since the date of hearing of appeal was announced in the open Court in the presence of both the parties, issuance of separate notice of hearing is hereby dispensed with. We further make it clear, any deliberate attempt on the part of the assessee to delay the hearing of the appeal would result in vacation of the stay order. 8. In the result, the stay application is allowed in the above terms. Above decision was pronounced in the open Court on 18th October, 2024 on conclusion of hearing. Sd/- Sd/- ( ( ( (S. RIFAUR RAHMAN S. RIFAUR RAHMAN S. RIFAUR RAHMAN S. RIFAUR RAHMAN) ) ) ) (SAKTIJIT DEY (SAKTIJIT DEY (SAKTIJIT DEY (SAKTIJIT DEY) ) ) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT VK. Copy forwarded to: - 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "