Chennai – 603 202 v. The Deputy Commissioner Of Income Tax,Corporate Circle-1(1)

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 02.03.2022 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR W.P.No.4447 of 2022andW.M.P.Nos.4585 & 4586 of 2022 M/s.Intimate Fashions (India) Pvt.Ltd.,517-519, Thirupporur Kottamedu High Road,Nandhivaram Village, Guduvancheri, Chennai – 603 202. ... Petitioner Vs 1. The Deputy Commissioner of Income Tax,Corporate Circle-1(1),121, Mahatma Gandhi Road,Nungambakkam, Chennai – 600 034. 2. The Income Tax Officer,National Faceless Assessment Centre,New Delhi. 3. The Commissioner of Income Tax (Appeals) National Faceless Appeal Centre,New Delhi. ... Respondents PRAYER: Petition filed under Article 226 of the Constitution ofIndia, praying for issuance of a Writ of CertiorarifiedMandamus, calling for the records of 1[st] Respondent and to quashthe order bearing DIN No.ITBA/COM/F/17/2021 – 22/1039384331 (1)dated 04.02.2022 and to quash the same and consequently, directthe 1[st] Respondent to grant a stay of the demand, made pursuantto Assessment Order bearing No.ITBA/AST/S/143(3)/2021 –22/1035994825 (1) dated 29.09.2021 issued by the 2[nd] respondent,pending Appeal filed by the Petitioner vide AcknowledgmentNo.742605110271021 on the file of the 3[rd] Respondent. For Petitioner : Mr.Srinath Sridevan For Respondents : Mr.D.Prabhu Mukunth Arunkumar Junior Standing Counsel ORDER The prayer sought for herein is for a Writ of CertiorarifiedMandamus, calling for the records of 1st Respondent and to quashthe order bearing DIN No.ITBA/COM/F/17/2021 – 22/1039384331 (1)dated 04.02.2022 and to quash the same and consequently, directthe 1st Respondent to grant a stay of the demand, made pursuantto Assessment Order bearing No.ITBA/AST/S/143(3)/2021 –22/1035994825 (1) dated 29.09.2021 issued by the 2nd respondent,pending Appeal filed by the Petitioner vide AcknowledgmentNo.742605110271021 on the file of the 3rd Respondent. 2. The petitioner is an assessee under the respondents. Forthe Assessment Year 2018-19, there was an assessment order asagainst which, the petitioner preferred appeal before theCommissioner of Income Tax (Appeals) [in short 'CIT(A)'], where,the appeal is pending, where according to the Revenue, theoutstanding due is Rs.2,69,77,178/-. 3. In order to avoid the demand to be made for making thisoutstanding, the petitioner already approached the AssessingAuthority/1[st] respondent by filing an application under Section220(6) of the Income Tax Act, 1961 [in short, the Act]. The saidapplication since was rejected, the petitioner had challengedthe said rejection order in the earlier round of litigation byfiling writ petition in W.P.No.25164 of 2021 before this Court. 4. The said writ petition in W.P.No.25164 of 2021 wasdecided by a learned Judge of this Court by order dated24.11.2021, where, he has passed the following orders:“2. This writ petition is being disposed at thetime of admission considering the fact that the orderhas been relied on the Instruction No.1914 dated02.12.1993asmodifiedon31.07.2017videF.No.404/72/93-ITCC (FTS:284146). It is noticed that thedecision of the Hon'ble Supreme Court in the decision ofthe Principal Commissioner of Income Tax & 5 Ors Vs. LGElectricals India Private Ltd (2018) 18 SCC 477 has heldas under: ''having heard Shri Vikramjit Banerjee,learned ASG appearing on behalf of theappellant, and giving credence to the factthat he has argued before us that theadministrative circular will not operate as afetter on the Commissioner since it is aquasi-judicial authority, we only need toclarify that in all cases like the present, itwill be open to the authorities, on the facts of individual cases, to grant deposit ordersof a lesser amount than 20%, pending appeal.'' ''having heard Shri Vikramjit Banerjee,learned ASG appearing on behalf of theappellant, and giving credence to the factthat he has argued before us that theadministrative circular will not operate as afetter on the Commissioner since it is aquasi-judicial authority, we only need toclarify that in all cases like the present, itwill be open to the authorities, on the facts of individual cases, to grant deposit ordersof a lesser amount than 20%, pending appeal.'' 3. Considering the same, since the order has notdiscussed the case of the petitioner on merits, as towhether the petitioner is entitled for waiver of amountbelow 20% of the disputed tax in the impugned order, theimpugned order is quashed and the case is remitted backto the 1 st respondent to pass a speaking order in thelight of the above decision of the Hon'ble SupremeCourt. This exercise shall be carried out by the 1 strespondent within a period of 30 days from the date ofreceipt of a copy of this order. If desired, thepetitioner may file appropriate application for beingheard through Video Conferencing, in which case, the 1st respondent shall consider the representation/therequest of the petitioner, in accordance with theprevailing rules governing for such personal hearing andgrant such an opportunity of being heard through VideoConferencing.” 5. Pursuant to which, the Assessing Authority has onceagain decided the application of the petitioner filed underSection 220 (6) of the Act and the same has now been rejectedthrough the impugned order dated 04.02.2022. Challenging thesame, the present writ petition has been filed. 6. Mr.Srinath Sridevan, learned counsel appearing for thepetitioner would submit that, though the earlier order passed bythe Assessing Authority, rejecting the application of thepetitioner filed under Section 220 (6) of the Act was set asideand the matter was remanded and while, remanding the same, thelearned Judge in the said order (cited supra) has indicatedthat, the Assessing Authority should consider the judgment madeby the Hon'ble Supreme Court of India in the case of PrincipalCommissioner of Income Tax 5 & Ors Vs. LG Electronics IndiaPrivate Limited, reported in (2018) 18 SCC 447, give reasons asto why, an amount at the rate of 20% or below the rate of 20%can be imposed as a condition precedent, for which, reasons tobe given or to waive even the 20% amount of the disputed tax andby considering these aspects, orders should be passed, was theindication of the learned Judge in the said order. Despite that,the present rejection order once again has been made by theAssessing officer outrightly rejecting the plea of thepetitioner for grant of stay by citing the reason that, inrespect of the previous Assessment years for 2016-17 and 2017-18also, appeals were filed by the petitioner / assessee, which arepending before the CIT(A), where, no stay had been granted andno amount had been paid or deposited by the assessee and everyyear i.e., from 2016-17 to 2017-18, the business profit has enhanced. Therefore, there should be no financial difficulty forthe petitioner to make the payment of the present due and byciting this reason and also citing the CBDT Instruction No.1914dated 31.07.2017, the Assessing Authority has rejected thepetition through the impugned order, which according to thelearned counsel for the petitioner is against the factual matrixas well as against the direction given by this Court in theearlier order, where, indications had been made by the learnedJudge, citing the judgment of the Hon'ble Supreme Court.Therefore, on that ground, the impugned order is to beinterfered with. enhanced. Therefore, there should be no financial difficulty forthe petitioner to make the payment of the present due and byciting this reason and also citing the CBDT Instruction No.1914dated 31.07.2017, the Assessing Authority has rejected thepetition through the impugned order, which according to thelearned counsel for the petitioner is against the factual matrixas well as against the direction given by this Court in theearlier order, where, indications had been made by the learnedJudge, citing the judgment of the Hon'ble Supreme Court.Therefore, on that ground, the impugned order is to beinterfered with. 7. Per contra, Mr.D.Prabhu Mukunth Arunkumar, learnedJunior Standing Counsel appearing for the respondents wouldsubmit that, even in the earlier order, it has been indicatedthat, in the earlier order dated 29.10.2021, it has beenindicated at Paragraph 3 that, even to grant stay as per thestandardized quantum of lump-sum payment, as prescribed in themodified instruction No.1914 dated 31.07.2017, at the rate of20% of the disputed demand was to be made. However, the saidorder since has been set aside and a direction was given by thisCourt in the earlier order to consider the merits of the case byusing his discretion and to pass orders, he has considered themerits of the case and passed this order, where, even though itis stated that the stay petition is rejected, that means, it wasrejected only for grant of complete stay without making anypayment, but that does not mean that, it was rejected even formaking the payment of 20% of the demand and if the petitionercomes forward to make such payment, certainly, the remaining 80%would be stayed, that would be the intend of the AssessingOfficer, which is reflected in the order, he contended. 8. I have considered the said rival submissions made by thelearned counsel appearing for both sides and have perused thematerials placed before this Court. 9. Insofar as the disposal of the stay applications madeunder Section 220(6) of the Act is concerned, the very provisionitself contemplates that, it is purely the discretion of theAssessing Authority to decide such application and dispose ofit, of course by imposing conditions depending upon thecircumstances of the case. 10. By using the discretion, normally, the AssessingAuthority would indicate a payment of 20% of the demand as acondition precedent for grant of stay for the remaining 80% ofthe demand, if the appeal is filed and it is pending before theAppellate Authority. 11. One such case in LG Electronics (cited supra), which https://hcservices.ecourts.gov.in/hcservices/ came to be considered by the Hon'ble Supreme Court, it has beenindicated that, it is open to the authorities i.e., theauthority, who exercise the power under Section 220 (6) of theAct on the facts of individual cases to grant deposit orders ofa lesser amount than 20% pending appeal. 12. Based on this indication made in LG Electronics case(cited supra), the issue raised by the petitioner in hisapplication was directed to be considered by the orders of thelearned Judge in the earlier round of litigation by order dated24.11.2021. 11. One such case in LG Electronics (cited supra), which https://hcservices.ecourts.gov.in/hcservices/ came to be considered by the Hon'ble Supreme Court, it has beenindicated that, it is open to the authorities i.e., theauthority, who exercise the power under Section 220 (6) of theAct on the facts of individual cases to grant deposit orders ofa lesser amount than 20% pending appeal. 12. Based on this indication made in LG Electronics case(cited supra), the issue raised by the petitioner in hisapplication was directed to be considered by the orders of thelearned Judge in the earlier round of litigation by order dated24.11.2021. 13. When that being so, now in the impugned order, theAssessing Authority has stated the reason that, in the previousassessment years, though appeal is pending no amount has beendeposited by the petitioner and for consecutively threeassessment years from 2016-17, 2017-18 and 2018-19, there hasbeen a steady enhancement of the business profit. Therefore,there could be no impediment for the petitioner / assessee tomake the payment of the present demand. Therefore, on theground, primarily it appears that the order impugned has beenpassed by the Assessing Authority. Therefore, this Court feelsthat, the reasonings given in the present order is not inconsonance with the direction issued by the learned Judge in theearlier order as cited above, where, specifically, the learnedJudge directed to consider the law indicated by the Hon'bleSupreme Court in LG Electronics case (cited supra) 14. In that view of the matter, this Court has nohesitation to hold that, the present order cannot stand in thelegal scrutiny, in view of the aforesaid facts andcircumstances. Accordingly, it is liable to be set aside. In theresult, the following orders are passed in this writ petition:(i) That the impugned order is set aside and the matter isremitted back to the respondent for reconsideration. Whilereconsidering the same, the Assessing Authority, while using hisdiscretion, even to impose conditions as contemplated underSection 220 (6) of the Act shall bear in mind, what has beenindicated by the Hon'ble Supreme Court in LG Electronics case(cited supra) and in this regard, if any additional input to besupplied by the petitioner in his application in addition to thereasons already given, that can also be considered andaccordingly, a reasoned order can be passed by using thediscretion, where, if at all the Assessing Authority wants toimpose any conditions as a precedent for grant of stay of thedemand, that should be indicated in clear terms. The aforesaidexercise shall be undertaken by the Assessing Authority at theearliest on receipt of the copy of this order. 15. With these observations, this writ petition is disposedof accordingly. However, there shall be no order as to costs.Consequently, connected miscellaneous petition is closed. Sd/-Assistant Registrar(CS-II) //True Copy//Sub Assistant Registrar kakTo1. The Deputy Commissioner of Income Tax,Corporate Circle-1(1),121, Mahatma Gandhi Road,Nungambakkam, Chennai – 600 034.2. The Income Tax Officer,National Faceless Assessment Centre,New Delhi.3. The Commissioner of Income Tax (Appeals)National Faceless Appeal Centre,New Delhi. +1cc to Mr.Srinath, Advocate, S.R.No.14554+1cc to Mrs.Hema Murali Krishnan, Advocate, S.R.No.14389 W.P.No.4447 of 2022 PA(CO)SU(25/05/2022)