null V. Income Tax Department

WP/28560/2021

AI Insights

The case involves a challenge to the order passed by the Assistant Commissioner of Income Tax, which rejected the petitioners' stay application under Section 220(6) of the Income Tax Act, 1961. The petitioners had filed an appeal against the assessment order and sought a stay on the payment of 20% of the disputed tax, which was a requirement under the circular instructions from the Central Board of Direct Taxes. The High Court found that the 1st respondent did not adequately consider the central issue in the pending appeal or the grievances of the petitioners, leading to the decision to set aside the impugned order and remand the matter for fresh consideration.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 796555 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 25-04-2022
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax and Others vs. LG Electronics India Private Limited
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: M
• Assessee Lawyers: S SEKHAR
• Keywords: Assessment Year 2017-18; Disputed tax; Income Tax; Stay Application; Writ petition
• Section: 143(3); 246; 220(6)

Judgement Text

" AVSS,J & RNT,J W.P.No.28560 of 2021 1 HON'BLE SRI JUSTICE A.V.SESHA SAI AND HON’BLE SRI JUSTICE RAVI NATH TILHARI WRIT PETITION No.28560 of 2021 ORDER: (Per AVSS,J) Heard Sri S.Vivek Chandra Sekhar, learned counsel for the petitioners and Smt.M.Kiranmayee, learned Senior Standing Counsel for Income Tax Department, appearing for respondent Nos.1 and 2. 2. Challenge in the present Writ Petition is to the order passed by the 1st respondent-Assistant Commissioner of Income Tax, vide proceedings No.ITBA/RCV/F/17/2021-22/1033949254(1), dated 01.07.2021, rejecting the stay application, filed by the petitioners herein, under Section 220(6) of the Income Tax Act, 1961, (for short ‘the Act’), on the ground that the petitioners herein did not pay 20% of the demand raised for the assessment year 2017-18, before filing of appeal before the 2nd respondent. 3. On 24.11.2017, petitioners herein filed returns for the assessment year 2017-18, before the 1st respondent under Section 143(3) of the Act. The 1st respondent passed an order of assessment, vide proceedings No.ITBA/ AST/S/156/2019- 20/1021509554(1), dated 02.12.2019. 4. Felt aggrieved by the said order of assessment passed by the 1st respondent, petitioners herein preferred a statutory appeal before the 2nd respondent-The Commissioner of Income Tax (Appeals), under Section 246 of the Act. Pending the said appeal AVSS,J & RNT,J W.P.No.28560 of 2021 2 before the 2nd respondent, by availing the provisions of Section 220(6) of the Act, petitioners herein filed stay application before the 1st respondent, assessing authority on 20.01.2020. The 1st respondent, by way of an order dated 01.07.2021, as mentioned supra, passed an order rejecting the said stay application. Challenging the validity and the legal sustainability of the said order passed by the 1st respondent, rejecting the stay application, the present Writ Petition is filed under Article 226 of the Constitution of India. 5. According to the learned counsel for the petitioners, the order impugned in the present Writ Petition is highly erroneous, contrary to law and opposed to the very spirit and object of the circular instructions issued by the Central Board of Direct Tax on 29.02.2016 and 31.07.2017, and also contrary to the judgment of the Hon’ble Supreme Court in W.P.(C).No.6778 of 2017. 6. On the contrary, Smt.M.Kiranmayee, learned Senior Standing Counsel for Income Tax Department, appearing for respondent Nos.1 and 2 submits that, the order impugned in the present Writ Petition cannot be faulted, since the same is in accordance with the circular instructions issued by the Central Board of Direct Taxes on 29.02.2016 and 31.07.2017, which enable the 1st respondent to insist on payment of 20% payment of disputed tax. 7. In the above background, now the issue which this Court is called upon to answer in the present Writ Petition is-“Whether AVSS,J & RNT,J W.P.No.28560 of 2021 3 the order impugned in the present Writ Petition, dated 01.07.2021 is sustainable and tenable and whether the same warrants any interference of this Court under Article 226 of the Constitution of India? 8. There is absolutely no controversy with regard to the facts of filing appeal before the 2nd respondent on 23.12.2019, against the orders of assessment passed by the 1st respondent under Section 144 of the Act and filing of stay application before the 1st respondent, pending such appeal under Section 220(6) of the Act. 9. The Central Board of Direct Taxes in the direction of modifying the instructions No.1914, dated 21.03.1996, issued revised guidelines, vide office memorandum dated 29.02.2016. By way of the said office memorandum dated 29.02.2016, the Board imposed a condition, enabling to insist on the payment to 15% of the disputed tax. Subsequently, the Board, by way of office memorandum dated 31.07.2017, enhanced the said amount to 20% of the disputed demand, modifying the earlier office memorandum dated 29.02.2016. The said office memorandum came up for consideration before the Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax and Others vs. LG Electronics India Private Limited, reported in [2018] 12 ITR-OL 334 (SC). Para Nos.6 to 8 of the judgment read in the following manner: “6.Mr.Deepak Chopra, learned counsel for the petitioner, has produced before this Court a copy of the office memorandum dated July 31, 2017 which modifies this earlier office memorandum dated February 29, 2016, issued by the Central Board of Direct Taxes („CBDT‟), stating that AVSS,J & RNT,J W.P.No.28560 of 2021 4 standard rate for grant of stay had been revised from 15 percent to 20 percent of the disputed demand. 7. The impugned order clearly makes no reference to the central issue in the pending appeal or the grievance of the petitioner regarding the order passed by the Assessing Officer. The impugned order in short is without reasons and is therefore unsustainable in law. 8. For the above reasons, the impugned order is set aside and a direction is issued that the petitioner‟s application will once again be heard by the Principal commissioner of Income-tax on the merits and without reference to the office memorandum dated July 31, 2017, which, on the face of it, appears to curtain his discretion. The Principal Commissioner of Income-tax will dispose of the application with a reasoned order not later than two weeks from the date of receipt of this order.” 10. Coming to the case on hand, as rightly pointed out by the learned counsel for the petitioners except referring to the office memorandum dated 20.02.2016, 21.03.2016 and 31.07.2017, the 1st respondent herein did not make any endeavor to consider the central issue in the pending appeal and the grievance of the petitioners regarding the order passed by the assessment officer. 11. In the considered opinion of this Court, the principle laid down by the Hon’ble Apex Court is squarely applicable to the present case and this Court is also of the opinion that the issue is required to be remitted to the 1st respondent for fresh consideration and for passing appropriate orders strictly in accordance with law and in the light of the orders of the Hon’ble Supreme Court referred to supra. 12. For the aforesaid reasons, the Writ Petition is allowed, setting aside the impugned proceedings bearing No. ITBA/RCV/F/17/2021-22/1033949254(1), dated 01.07.2021 of the 1st respondent and the stay application filed by the petitioners stands restored to file of the 1st respondent, for consideration of the same and passing appropriate orders, strictly in accordance with law and in the light of the judgment of AVSS,J & RNT,J W.P.No.28560 of 2021 5 the Hon’ble Supreme Court referred to supra, as expeditiously as possible, preferably within a period of four (4) weeks. There shall be no order as to costs. Miscellaneous Petitions pending, if any, in this Writ Petition shall stand closed. ___________________________ JUSTICE A.V.SESHA SAI _____________________________________________ JUSTICE RAVI NATH TILHARI Date:25.04.2022 VSL AVSS,J & RNT,J W.P.No.28560 of 2021 6 HON'BLE SRI JUSTICE A.V.SESHA SAI AND HON’BLE SRI JUSTICE RAVI NATH TILHARI WRIT PETITION No.28560 of 2021 25.04.2022 VSL "