Not specified in the document V. 1st respondent

WP/9349/2021

AI Insights

The case revolves around a challenge to an order directing the petitioner to pay 20% of a disputed tax demand pending the disposal of an appeal for the assessment year 2017-2018. The petitioner contested an order that deemed a deposit of Rs.29,00,000 as unexplained income, leading to an additional tax demand. The appellate authority's decision to require a 20% payment was based on CBDT instructions, which the petitioner argued was a mechanical application of policy without individual consideration. The court referenced a Supreme Court decision emphasizing the need for appellate authorities to apply their minds to each case, rather than solely following departmental instructions.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 805347 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 08-07-2021
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax and others v. LG Electronics India Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: KIRANMAYEE
• Keywords: Additional tax; Best Judgment Method; Quasi-judicial authority; Stay of collection; Undisclosed income; Unexplained income
• Section: 142(1); 69A; 220(6); 115 BBE

Judgement Text

"THE HON’BLE SRI JUSTICE JOYMALYA BAGCHI AND THE HON’BLE SRI JUSTICE K.SURESH REDDY WRIT PETITION No.9349 of 2021 (Taken up through video conferencing) ORDER: (Per Hon’ble Sri Justice Joymalya Bagchi) Order dated 02.03.2020 passed by the 1st respondent directing the petitioner to pay 20% of the disputed demand pending disposal of appeal before the first appellate authority for the assessment year 2017-2018 is under challenge. Upon issuance of notice under Section 142(1) of the Income Tax Act (for short, ‘the Act’) with regard to undisclosed income to the tune of Rs.29,00,000/-, the assessing authority on 14.12.2019 by following best judgment method and invoking provisions of Section 69A read with 115 BBE of the Act held that the aforesaid deposit to the tune of Rs.29,00,000/- was unexplained income for the assessment year 2017-2018. Accordingly, additional tax of Rs.35,61,968/- was raised on the petitioner-assessee. Petitioner- assessee appealed against such order before the first appellate authority and preferred an application for stay of collection of the demand pending disposal of the appeal in terms of Section 220(6) of the Act. By the impugned order in terms of the letter issued by Central Board of Direct Taxes (CBDT) in Instruction No.1914 F.No.404/72/93 ITCC dated 02.12.1993, petitioner-assessee was requested to pay 20% of the demand immediately. This has been assailed before us on the ground that the 1st respondent failed to exercise jurisdiction vested in it and mechanically disposed of the stay application as per CBDT instructions. Learned counsel relies 2 on a decision in Principal Commissioner of Income Tax and others v. LG Electronics India Pvt. Ltd.1 in support of his contention. Smt.Kiranmayee, learned Senior Standing Counsel for Income Tax, submits there is no illegality in the order and the same was appealable before the superior authorities under the Act. At the time of admission, the petitioner was directed to pay 10% of the tax demanded within four weeks as a condition for stay of recovery of the said demand. We are informed that the petitioner has deposited 10% of the tax demanded, however, beyond the stipulated time. Delay in making the deposit is condoned. Coming to the legality of the impugned order, we note that the same runs counter to the ratio laid down in Principal Commissioner of Income Tax (supra), wherein the Hon’ble Apex Court clarified in such cases the appellate authority being a quasi judicial authority ought to apply its mind to each individual case and not be guided solely by the instructions of the Department. The appellate authority has machanically followed the CBDT directions and ordered the assessee to deposit 20% of the demand. Hence, we are of the opinion that the said order suffers from an error apparent on the face of the record and is liable to be set aside in the facts and circumstances of the case. Ordinarily, under such circumstances, the matter ought to have been remanded to the first appellate authority for fresh consideration in accordance with law. However, as the petitioner- 1 (2018) 12 ITR-OL 334 (SC) 3 assessee has deposited 10% of the demanded amount, as aforesaid and the materials on record placed before us show that the petitioner has arguable case before the appellate authority, we direct that the said interim arrangement shall continue till the disposal of the appeal. With these directions, the Writ Petition is disposed of. There shall be no order as to costs. As a sequel, Miscellaneous Petitions, if any, pending in this Writ Petition shall stand closed. ______________________________ JUSTICE JOYMALYA BAGCHI ____________________________ JUSTICE K.SURESH REDDY Date: 08.07.2021 Ivd 4 THE HON’BLE SRI JUSTICE JOYMALYA BAGCHI AND THE HON’BLE SRI JUSTICE K.SURESH REDDY WRIT PETITION No.9349 of 2021 (Per Hon’ble Sri Justice Joymalya Bagchi) Dated: 08.07.2021 Ivd "