Vodafone South Limited V. The Deputy Commissioner of Income Tax International Taxation Circle-I(1) and Director of Income Tax International Taxation and The Commissioner of Income Tax (Appeals)-12

WP/12690/2015

AI Insights

Vodafone South Limited filed writ petitions against the orders of the Deputy Commissioner of Income Tax and the Commissioner of Income Tax (Appeals), which rejected their applications for stay on tax and interest demands for the assessment years 2013-14 and 2014-15. The High Court refrained from commenting on the chargeability of tax, noting that the appellate authority was already reviewing the assessment order. Instead, the court focused on the procedural aspect, criticizing the CIT (Appeals) for not providing reasons in the stay rejection and for not adhering to statutory provisions that allow for such stays. The court restored the matter to the CIT (Appeals) for a fresh decision, emphasizing the need for the petitioner to meet certain financial conditions to protect the revenue's interest during the appeal process.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 821118 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-03-2015
• Assessment Year: misc
• Other Referred Cases: W.A.No.904-908/2014, W.A.No.3397/2011
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: ABHISHEK SINGHVI; KAVIN GULATI; M V SESHACHALA; RUBI AHUJA; ARAVIND CHAVAN; LZAFEER AHMAD
• Keywords: Appeal; Assessment Order; Bank guarantee; Income Tax; Stay of demand
• Section: 201(1); 246A; 201(1A); 253(3); 220(6); 251(1)(c)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26th DAY OF MARCH, 2015 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR WRIT PETITION Nos.12690/2015 and 12691/2015 (T-IT) BETWEEN: VODAFONE SOUTH LIMITED (FORMERLY KNOWN AS VODAFONE SOUTH ESSAR LIMITED) MARUTHIINFOTECH CENTRE, NO.11/1, 12/1, KORAMANGALA AMAR JYOTI LAYOUT, BENGALURU-560 071 REP. BY SENIOR MANAGER SRI ANUJ KUMAR SINGH ... COMMON PETITIONER (BY DR. ABHISHEK MANU SINGHVI, SR. COUNSEL, SRI. KAVIN GULATI, SR. COUNSEL; SRI M.V. SESHACHALA, SR.COUNSEL ALONG WITH SRI RUBI SINGH AHUJA, ADVOCATE SRI. ARAVIND CHAVAN; SRI LZAFEER AHMAD, ADVOCATES) AND: 1. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-I(1) NO.14/3A, 6TH FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU-560 001. 2 2. DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION NO.14/3A, 6TH FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU-560 001. 3. THE COMMISSIONER OF INCOME TAX (APPEALS)-12, NO.14/3A, RASHTROTHANA BHAVAN 5TH FLOOR, NRUPATHUNGA ROAD BENGALURU-560 001. …..COMMON RESPONDENTS (BY SRI K.V. ARAVIND, ADVOCATE) THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDERS DATED 23.03.2015 & 24.03.2015 PASSED BY THE R-3 & R-1 RESPECTIVELY VIDE ANNEX-S & T RESPECTIVELY FOR THE ASSESSMENT YEARS 2013- 14 AND 2014-15. THESE PETITIONS COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Heard Dr Abhishek Manu Singhvi, Learned Senior Counsel appearing on behalf of petitioner and Sri K.V.Aravind, Learned Panel Counsel who has accepted notice on behalf of respondents. By consent, these writ 3 petitions are taken up for final disposal. Perused the case papers. 2. Petitioner is seeking for quashing of the order dated 23.03.2015 (Annexure-S in both petitions) passed by third respondent and order dated 24.03.2015 (Annexure-T in both petitions) passed by first respondent. 3. For the assessment years 2013-14 and 2014- 15, an order came to be passed by first respondent on 18.02.2015 under Section 201(1) and interest came to be levied under Section 201(1A) of the Income Tax Act, 1961 (‘Act’ for short) by treating the petitioner as an ‘assessee in default’ and raising a demand thereunder. Being aggrieved by the said assessment orders, assessee has preferred appeals before CIT(Appeals) along with an application for stay of the tax and interest demanded. Simultaneously, petitioner also moved an application under Section 220(6) of the Act for stay of the demand before the Assessing Officer. These two Authorities by 4 the impugned orders referred to hereinabove, considered the prayer of the petitioner and rejected the applications for stay. Being aggrieved by these two impugned orders, petitioner – assessee is before this Court. 4. Though learned Senior Counsel appearing for petitioner has made a valiant attempt to persuade this Court to examine the issue of chargeability of tax, this Court refrains from expressing any opinion on the said issue for the simple reason that jurisdictional appellate authority is now seized of the matter or in other words appellate authority being the fact finding authority is examining the correctness or otherwise of the assessement order dated 18.02.2015- Annexure-A. Sri K.V.Aravind, learned panel counsel appearing for respondents has also made attempts to sustain the assessment orders passed by first respondent and the demands raised pursuant to same. 5 5. As already observed herein above, without going into merits of the rival contentions raised, this Court is of the considered view that it would suffice and meet ends of justice if the petitioner is put on terms and directed to pursue its grievance before appellate authority namely, CIT (Appeals). 6. Learned Sr.Counsel Dr. Abhishek Manu Singhvi has also brought to the notice of this Court that under similar circumstances, a Division Bench of this Court while examining the correctness or otherwise of the order passed by jurisdictional Tribunal had put the parties on terms and directed the parties to get their grievance redressed by the jurisdictional Tribunal. By keeping in mind the directions that came to be issued by Division Bench of this Court in W.A.No.904- 908/2014 and connected matters disposed of on 10.04.2014 (Annexure-P) and also taking into consideration that CIT (Appeals) has by a cryptic order dated 23.03.2015- Annexure-S (in both petitions) 6 refused to entertain the claim of petitioner for grant of stay which is contrary to the statutory provision namely, Section 251(1)(c) of the Act which enables the CIT (Appeals) to consider application of stay, said order requires to be set aside and petitioner should be relegated to appellate authority CIT (Appeals) by restoring both appeal and application for being adjudicated afresh. 7. In fact, Division Bench of this Court in W.A.No.3397/2011, disposed of on 21.04.2011 has clearly held that though Section 246A of the Act does not expressly confer the CIT(Appeals) power to grant stay, it has been clearly held that inherent power to grant or not to grant stay is conferred on him under Section 246A of the Act. In that view of the matter, impugned order dated 23.3.2015 (Annexure S in both petitions) which has been passed by CIT (Appeals) cannot be sustained particularly when no reasons are assigned at all. Since, both appeal and application are 7 being restored to CIT (Appeal) for being disposed of on merits within a timeframe. Interest of the revenue also requires to be protected by putting the petitioner on terms as this would meet the ends of justice. 8. In that view of the matter, I proceed to pass the following: ORDER (1) Writ petitions are hereby allowed in part. (2) Order dated 23.03.2015 (Annexure-S in both petitions) passed by third respondent is hereby set aside. (3) Applications filed by the petitioner before CIT (Appeals)-12 for stay which is at Annexure-F in both the writ petitions are restored to the file of CIT (Appeals)-12 (third respondent) for being adjudicated on merits along with the appeal itself expeditiously, at any 8 rate within an outer limit of two months from the date of receipt of copy of this order and subject to following conditions: (a) Petitioner-assessee shall deposit further a sum of Rs.20 Crores on or before 31.03.2015 before first respondent -Assessing Officer. (b) Petitioner- assessee shall deposit further sum of Rs.40 Crores before first respondent- Assessing Officer on or before 30.04.2015. (c) For the balance amounts as demanded under demand notice dated 18.02.2015 (Annexure-C in both writ petitions), petitioner shall furnish Bank Guarantee/s in favour of first respondent- Assessing Officer on or before 30.04.2015 and petitioner – 9 assessee shall ensure that Bank Guarantee/s is/are kept alive till disposal of the appeal by the CIT (Appeals)-12 and in the event of petitioner - assessee not succeeding before CIT (Appeals), first respondent- Assessing Officer shall not invoke or revoke said bank guarantee/s till the expiry of the period for filing of appeals or in other words, till the period provided for filing an appeal under Section 253(3) of the Act expires. (4) In view of the above directions issued, order passed by first respondent in exercise of the power under Section 220(6) of the Act dated 24.03.2015 (Annexure-T in both petitions) would not survive and parties are at liberty to 10 work out their remedy before CIT (Appeals). (5) It is needless to state that in the event of petitioner succeeding in the appeal, it would be at liberty to file necessary application before the authorities for return of the bank guarantee/s and same shall be considered by first respondent and appropriate orders be passed in accordance with law. (6) Sri K.V.Aravind, learned panel counsel, on instructions from respondent No.2 who is present in Court submits that in the event of petitioner succeeding in the appeal, revenue would refund the amount of Rs.60 Crores with applicable rate of interest as provided under the Act within a period of two weeks from the date of expiry of the period provided for filing appeal under Section 11 253(3) of the Act. His submission is placed on record. (7) All contentions of both parties on merits are left open and it is made clear that no opinion is expressed with regard to merits of the claim. Ordered accordingly. Sri K.V.Aravind, learned panel counsel is permitted to file memo of appearance within four weeks from today. Sd/- JUDGE *sp "