M/S SOLITAIRE FOODS PRIVATE LIMITED V. UNION OF INDIA AND 3 OTHERS

WTAX/1265/2019

AI Insights

The case involves M/S Solitaire Foods Private Limited challenging a letter from the Deputy Commissioner of Income Tax, Central Circle, Meerut, which imposed conditions for the release of the company's bank account. The petitioner argued that the conditions were contrary to the applicable CBDT circular (Instruction No. 1914) regarding the collection and recovery of tax. The respondent, representing the Revenue, referred to an Office Memorandum that partially modified the circular. The court found that the conditions imposed by the Deputy Commissioner lacked a reasonable basis and did not conform to the applicable guidelines, leading to the quashing of the letter and a directive for a fresh decision.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 722162 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 19-11-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GAURAV MAHAJAN; VINAY PATHAK
• Assessee Lawyers: KRISHNA VYAS
• Keywords: Bank account release; CBDT Circular; Income Tax; Stay of demand; Writ Tax
• Section: 220

Judgement Text

"Court No. - 7 Case :- WRIT TAX No. - 1265 of 2019 Petitioner :- M/S Solitaire Foods Private Limited Respondent :- Union Of India And 3 Others Counsel for Petitioner :- Krishna Dev Vyas Counsel for Respondent :- A.S.G.I., Gaurav Mahajan, Vinay Kumar Pathak Hon'ble Biswanath Somadder,J. Hon'ble Ajay Bhanot,J. The subject matter of challenge in the instant writ proceeding is a letter dated 12th September, 2019, issued by the Deputy Commissioner of Income Tax, Central Circle, Meerut, addressed to the Principal Officer/Director, M/s Solitaire Foods Pvt. Ltd., New Delhi (being the writ petitioner before us). For convenience, the impugned letter is set- out hereinbelow: “To, The Principal Officer/Director M/s Solitaire Foods Pvt. Ltd. 108, 1st Floor, No. 53, Hasanpur Village, Patpadganj, New Delhi. Sir/Madam, Sub:- Request for the Solitaire Foods Private Limited, (Pan: AALCS5930M) releasing/defreezing of account no.: C/A-272811100001963, Andhra Bank, Chander Vihar Market, Patpadganj, New Delhi-reg. Kindly refer to the above mentioned subject and your letter received in this office on 22.08.2019 on the above issues. 2. In this regard, I have been directed to convey you the observation of Pr. CIT(C), Kanpur letter F.No. Pr. CIT (C)/KNP/Stay of Demand/2019-20 dated 11.09.2019. I have been further directed to communicate you that your above bank account may be released subject to the following conditions:- (i). You make upfront payment of Rs. 20 lacs before 15 September, 2019. (2) (ii). From October, 2019 you pay of monthly instalments of Rs. 7 lacs for period of 12 Months or decision of First Appeal, whichever is earlier. 3. In the light of the above, you are requested to make compliance of the above conditions by 15th September, 2019. It is strongly conveyed you that your request made for releasing/de-freezing of the above account may be considered only after compliance on your part of the above conditions. Yours faithfully, (Sunil Kumar Yadav) Deputy Commissioner of Income Tax Central Circle, Meerut According to the learned advocate for the petitioner, the impugned letter is contrary to the applicable CBDT circular, as contained under Instruction No. 1914, dealing with section 220 of the Income Tax Act, 1961-Collection and Recovery of tax-When tax payable and When assessee deemed in default-Recovery of Outstanding Tax demands. The learned advocate appearing on behalf of Revenue, however, draws our attention to an Office Memorandum dated 31st July, 2017, issued by the Director (ITCC), which seeks to partially modify Instruction No. 1914, dated 21st March, 1996, to the extent as provided therein. For convenience, the Office Memorandum dated 31st July, 2017 is reproduced hereinbelow: “Office Memorandum Subject: Partial modification of Instruction No. 1914 dated 21.3.1996 to provide for guidelines for stay of demand at the first appeal stage. (3) Reference: Board’s O.M. of even number dated 29.02.2016. Instruction No. 1914 dated 21.3.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. Vide O.M. NO.404/72/93-ITCC dated 29.2.2016, revised guidelines were issued in partial modification of Instruction No. 1914, wherein, inter alia, vide para 4 (A) it had been laid down that in a case where the outstanding demand is disputed before CIT(A), the Assessing Officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) there under. Similar references to the standard rate of 15% have also been made in succeeding paragraphs therein. The matter has been reviewed by the Board in the light of feedback received from field authorities. In view of the Board's efforts to contain over pitched assessments through several measures resulting in fairer and more reaonable assessament orders, the standard rate of 15% of the disputed demand is found to be on the lower side. Accordingly, it has been decided that the standard rate prescribed in O.M. dated 29.2.2016 be revised to 20% of the disputed demand, where the demand is contested before CIT(A). Thus, all references to 15 % of the disputed demand in the aforesaid O.M. dated 29.2.2016 hereby stand modified to 20 % of the disputed demand. Other guidelines contained in the O.M. dated 29.2.2016 shall remain unchanged. These modifications may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance. (A.K. Sinha) Director (ITCC) 23092939” A plain reading of the impugned letter dated 12th September, 2019, reveals that the writ petitioner has been asked to make an upfront payment of Rs. 20 lacs before 15th September, 2019 and from October, 2019, it has been directed to pay monthly instalments of Rs. 7 lacs for a period of 12 months or decision of the pending First Appeal, whichever is earlier. Now the question which arises for consideration is whether the Deputy Commissioner of Income Tax, Central Circle, Meerut, while (4) issuing the letter dated 12.09.2019, gave any cogent or justifiable reason in order to substantiate the payment requirement in order to have the assessee’s bank account released. Certainly, the Deputy Commissioner of Income Tax, Central Circle, Meerut, is well within his right to impose conditions for release of the bank account, provided the same conforms to the applicable instructions/circulars/ guidelines, issued by the CBDT from time to time. In the facts of the instant case, however, it is palpably evident that the conditions imposed upon the assessee for release of its bank account is bereft of any reason, not to mention, absence of cogent or justifiable reasons. As such, the impugned letter dated 12th September, 2019, cannot be sustained in law and is liable to be set aside and quashed and is, accordingly, set aside and quashed. The concerned Assessing Officer is directed to take a fresh decision in the matter upon considering the letter of the writ petitioner dated 22nd August, 2019 addressed to the DCIT, Central Circle, Room No. 319, 3rd Floor, Central Circle, Meerut. Such decision, needless to mention, shall be supported with cogent and justifiable reasons and shall conform to the applicable written instructions/circulars/guidelines, issued by the CBDT from time to (5) time. The entire exercise, in terms of this order, shall be completed by the concerned Assessing Officer as expeditiously as possible, preferably within a period of fortnight, but not later than three weeks from the date of communication of a photostat certified copy of this order. The application stands disposed of accordingly. Order Date :- 19.11.2019 Deepak/ (Biswanath Somadder, J.) (Ajay Bhanot, J.) "