Sampath Kumar Jewelers Private Limited V. The Assistant Commissioner of Income Tax, Circle 3(1), Hyderabad and The Assistant Commissioner of Income Tax, Circle 7(1), Hyderabad

WP/5055/2023

AI Insights

The case involves Sampath Kumar Jewelers Private Limited, which challenged an order from the Assistant Commissioner of Income Tax directing them to pay 20% of a disputed tax demand for the assessment year 2017-18, pending the appeal's disposal. The petitioner argued that the order was arbitrary, illegal, and violated principles of natural justice, seeking a writ of mandamus to set aside the order and grant a stay on recovery. The respondents defended the order, citing the discretionary powers of the Appellate Authority under Section 220(6) of the Income Tax Act, 1961. The court dismissed the petition, finding that the Appellate Authority had exercised its discretion appropriately and provided sufficient reasons for its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 805607 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 18-08-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: A V A SIVA KARTIKEYA
• Keywords: Disputed Demand; Income Tax; Mandamus; Natural Justice; Stay of recovery; Writ petition
• Section: 220(6)

Judgement Text

"[ 33861 HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE EIGHTEENTH DAY OF AUGUST TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE LAXMI NARAYANA ALISHETTY WRIT PETITION NO: 5055 OF 2023 Between: [rt1_1,eotj-am ,sampath Kumar Jeweilers private Limited, B-7-159, Sunir rheatre, srarron fioad, .warangar^-. 5gg q0?, Telangana. Represented by its Director, Mr. Bottam Sampath Kumar, S/o Mr. Bollam Vishwanadham. .....PETITIONER AND 'l . The Assistant Commissioner_of lncome Tax, Circle 3(1), Hyderabad, Signature Towers, Sy. No.. 6(p) of Kondapur, Sy. No.. SZf Fj oiXotf,'ror.f, Opposite Botanical G,!dens, Serilingampally Mandal, Rangi ReOOy D\"istriit, Hyderabad - 500 084, Telangana. - 2. The Assistant Commissioner of lncome Tax, Circle 7(1), Hyderabad, Signature Towers, Sy. No.. 6(p) of Kondapur, Sy. No.. Sltbt o,f Xotfr'aora, oppostte Botanical Galdens, Serilingampally MSndal, nangi ReOOy district, Hyderabad - 500 084, Telangana. - .....RESPONDENTS Petition Under Article 226 of rhe 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 particurarry in the nature of Mandamus declaring the order of the 1st Respondent, dated 31 .o1 .2023, vide DlN. lrBA/coMlFl17l2o22-2311o49264s87(1), directing the petitioner to pay 20 percentage of the disputed demand, pending disposal of the appeal of the Petitioner before the 1st Appellate Authority, for the Assessment year 2017 - 1g, as arbitrary, illegal, bad in law, bereft of any reasons, violative of principles of natural justice and to consequen y set-aside the same and grant stay of recovery, pending disposal of the Petitioners appeal before the 1st Appellate Authority, in the interests of justice. !.A.NO:1 OF 2023 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, pursuant to the order of the 1st Respondent, dated 31 .O1 .2023, vide DlN. ITBA/COM/F/1 712022- 2311049264587('1 ), directing the Petitioner lo pay 2Oo/o of the disputed demand, pending disposal of the appeal of the Petitioner before the 1st Appellate Authority, for the Assessment Year 2017 - 18, pending disposal of the above writ petition. Counsel for the Petitioner : Sri A.V.A.Siva Kartikeya Counsel forthe Respondents : Sri J.V.Prasad (Sr. SC For lncome Tax) The Court made the following Order :- THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA AIISHETTY W.P. No. 5O55 of 2O23 ORDER: /per ,ao n'ble Sn ,Justice P.SAM KOSHY) Heard Mr.A.V.A. Siva Kartikeya, learned counsel.for the petitioner and Mr-J.V.Prasad, ' learned Senior Standing Counsel for Income Tax Department appearing for respondents- 2. The instant writ petition has been hled assailing the order dated 3 1.0 1.2o23 vide DIN: ITBA/COM / F / 17 / 2022-23 / 1049264587 l1l passed by respondent No. I directing the petitioner to pay 2Oo/o of the disputed demand. 3. lrarned counsel for the petitioner while referring to the provisions of Section 220(61 of the Income Tax Act, 1961 (for short, the Act') highlighted the fact that the Appellate Authority ought to have applied its mind and given reasons while passing the order for payment of 2Ooh of the demand raised so as to stay further execution of the order which is under challenge. Learned counsel submitss that the authority concerned has committed a flaw, frrstly, so far as relying upon a circular issued by Central Board of Direct Ta:res (CBDT) and secondly, the order being passed in a mechanical manner without application of mind and thirdly, the discr'etion ought to had been exercised more judiciously rather than passing an order in a routine manner ald for the aforesaid reasons, the order is liable to be set aside ald the matter required to be remalded 4'r ./ / .1^. 2 back to the Appellate Authority for reconsideration of the application for interim order 4. Per contr:r, learned counsel for the department submits that it is a case where the powers under Section 220(61 of the Act have to be exercised under the discretionary jurisdiction of the Appellat,: Authority and this Court cannot interfere with the order passed bl' Appellate Authority under discretionary jurisdiction and hence, the present writ petition for the said reason deserwes to be rejccted. 5. Having heard the contentions put forth by either side and on perusal of record, we are of the opinion that it would be relevalt at this juncture, to quote the provision of 1aw which has to be exercised by considering the interim application under section 220(61 of the: Act' Section 220(61 of the Act reads as under 'Where an assessee has presented an appeal under Section 246 lor section 246A] tine [Assessing] Officer may, in his discretion and subject to such conditions as he may think fit to imposc in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such app':al remains undisposed of. 6. A plain reading of the aforesaid section would clearly reflect that provision of law itself specifically enumerates that the Appellate Authority has to pass al order strictly in its discretion. When the statute prescribes the term 'the discretion of the authority', it means the subjective satisfaction of thc Appellate Authority which needs to be arrived at. Under those circumstances, it is now necessall/ to take note of 3 t I the frndings given by the Appellate Authority while passing the impugned order dated 31.O 1.2023, whrch reads as under: '3. I have carefully examined letter submitted on O8.O9.2O22 and communicated on 30.11.2022 that stay on payment of taxes can't be considered in terms of OM 1914 of 1994 of CBDT- Further it was communicated that instead of stay, option of installment was provided to which proposal was sought from Bollam Sampath Kumar Jewelers Private Limited on or before 15.12.2022. Till Date no such proposal has been received in this office. 4. Record indicates that during th,e F.y 2O2l-2O22, Sampath Kumar Jewelers Private Limited reported Rs. 117 crores as the revenue from the operations, however no ta-xes were paid against the outstanding demand. Under these circumstances, I hereby reject the stay petition filed by Sampath Kumar Jewel€rs Private Limited. 5. tn this regard, I would like to thrust upon once again that as per OM 1914 of 1994 of CBDT, 20 percent of the demand has to be paid till the disposal of the first appeal\". 7. A plain reading of the aforesaid observations made by the Appellate Authority while deciding the matter would clearly reflect that it is not a case where we find that the order has been passed in a mechanical manner arrd it is also not the case where the authority has not given any reasons alrd justifications for passing the said order. 8. We find that the authority concerned has taken note of the factual developments that have been transpired during the course of the proceedings and also has taken note of the hnancial status of the petitioner's establishment arrd it is only thereafter decided that let the appellant pay atleast 2O percent of the demand. 9. In the given facts and circumstances of the case, where there are certain justifiable reasons given by the authority concerned while passing the impugned order, we are of the hrm view that the Writ Court at this I l -f, 4 juncture would not be in a position to frnd fault with the order passed Lry t.}'e Appellate Authority, especially, when it is passed ex,:rcising its discretionary jurisdiction and moreover, when the order is passed giving explanation ald reasons for reaching to the said conclusion. 10. Thus, the Writ Petition is devoid of merits and is accordingly dismissed. No order as to costs. Consequently, miscellaneous petitions pending, if any, shall stard closed. SD/. K. VENKAIAH ASSISTANT REGISTRA //TRUE COPY// SECTION OFFICER To 1. One CC to Sri A.V.A.Siva Kartikeya, Advocate tOpUCl 2. One CC to Sri J.V.Prasad (Sr. SC For tncome iax) tOirUCl 3. Two CD Copies SA GJP HIGH COURT DATED:1810812023 ORDER WP.No.5055 of 2023 DISMISSING THE W.P WITHOUT COSTS. ,J r r E': ai, r. r),l q ' ,> 5 51 AIE OF ) o ,1 o ? l, T 1 jA "