Cognizant Technology Solutions India Private Limited v. The Commissioner Of Income Tax (Appeals)-18, 3Rd Floor, Investigation Building

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 01.02.2022 CORAM THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.NO.1360 OF 2022 AND W.M.P.NO.1475 OF 2022(Through Video Conferencing) Cognizant Technology Solutions India Private Limited,No.165, Menon Eternity Building,6th Floor, St.Mary's Road,Chennai - 600 018. ...Petitioner Vs 1. The Commissioner of Income Tax (Appeals)-18, 3rd Floor, Investigation Building, No.46, (Old No.108), Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034. 2. The Assistant Commissioner of Income Tax, Circle-1, Large Tax Payer Unit, 7th Floor, Wanaparthy Block, Aayakar Bhawan, Nungambakkam, Chennai - 600 034.3. The Assistant Commissioner of Income Tax, Central Circle 1(1), 3rd Floor, Investigation Building, 46, (Old No.108), Mahtma Gandhi Road, Nungambakkam, Chennai - 600 034.4. The Principal Commissioner of Income Tax, Centre Circle-1, 3rd Floor, Investigation Building, 46, (Old No.108), Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034. ...Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India to issue a Writ of Certiorarifid Mandamus,forbearing the respondents, their agents or subordinates, from enforcingorgivingeffecttheorderbearingNo.ITBA/COM/F/17/2020-2021/1026999296(1) dated 29th April 2020issued by the second respondent until the disposal of the AppealNo.ITA.No.CIT(A), Chennai-17/10011/2020-2021 on the file of thefirst respondent, and for a period of 30 days thereafter, andalso direct the fourth respondent to release its lien on all thefixed deposits. For Respondent : Mr.A.P.Srinivas Senior Standing Counsel ORDER This Writ Petition has been filed for the issuance of a Writof Mandamus, forbearing the Respondents, their agents orsubordinates, from enforcing or giving effect the order bearingNo.ITBA/COM/F/17/2020-2021/1026999296(1) dated 29th April 2020issued by the second respondent until the disposal of the AppealNo.ITA.No.CIT(A), Chennai-17/10011/2020-2021 on the file of thefirst respondent, and for a period of 30 days thereafter, andalso direct the fourth respondent to release its lien on all thefixed deposits in the Schedule below. 2. The Petitioner had been issued with an order underSection 115 (O) of the Income Tax Act, 1961 on 22.03.2018 inrespect of certain transactions arising out of buy-back andpayment of amounts to the persons from the shares werepurchased. Pursuant to the directions from this Court in orderdated 18.04.2015 under Sections 391 & 392 of the Companies Act,1956. 3. It is the specific case of the petitioner that whilemaking payments for the buy back of the shares the petitionerhad also deducted tax and remitted the same to the credit of theIncome Tax Department. The Department however took a stand thatthe amount was paid by the petitioner was liable to pay taxunder Section 115 (O) of the Income Tax Act, 1961 and thusissued notice dated 23.03.2018 which was the subject matter ofthe proceedings before the High Court in W.P.No.7354 of 2018. 4. In the aforesaid writ petition an interim order came tobe passed and later a final order. The matter travelled upto theDivision Bench which affirmed the order of the Learned SingleJudge vide order daed 06.09.2019 in W.A.No.2063 of 2019.Aggrieved by the same, the petitioner had preferredS.L.P.No.1992 of 2020. 5. The Hon'ble Supreme Court by its order dated 04.03.2020,in which relevant paragraph No.18 is as follows:- "18. In the peculiar facts and circumstances ofthe present case, while disposing of this Appeal, wedirect:- (a). The Communication dated 22.03.2018 shall betreated as a show cause notice calling upon theappellant to respond with regard to the aspectsadverted in the said communication; (b). The appellant shall be entitled to put inits reply and place such material, on which it seeksto place reliance within 10 days from today; 5. The Hon'ble Supreme Court by its order dated 04.03.2020,in which relevant paragraph No.18 is as follows:- "18. In the peculiar facts and circumstances ofthe present case, while disposing of this Appeal, wedirect:- (a). The Communication dated 22.03.2018 shall betreated as a show cause notice calling upon theappellant to respond with regard to the aspectsadverted in the said communication; (b). The appellant shall be entitled to put inits reply and place such material, on which it seeksto place reliance within 10 days from today; (c). The appellant shall thereafter be affordedoral hearing in the matter; (d).The matter shall thereafter be decided onmerits by the concerned authority within two monthsfrom today; (e).Pending such consideration, as also till theperiod to prefer an appeal from the decision onmerits is not over, the interim order passed by theSingle Judge of the High Court on 03.04.2018 and asaffirmed by this Court vide its order dated14.10.2019, shall continue to be in operation; and (f).The amount of Rs.495,24,73,287/- depositedtowards payment of tax and the amount ofRs.2806,40,15,294/- which stands deposited andinvested in the form of Fixed Deposit Receipts shallbe subjected to the decision to be taken by theconcerned Authority on merits or to such directionsas may be issued by the Appellate Authority" 6.The learned Senior Counsel for the petitioner submits thatpursuant to the aforesaid directions of the Hon'ble SupremeCourt ordre, the petitioner had also sent a representation dated13.03.2020, which eventually confirmed the demand vide orderdated 29.04.2020. 7.The learned Senior Counsel for the petitioner had alsofiled an appeal before the first respondent CIT Appeals on23.06.2021 and that the said appeal heard on 27.01.2022. 8.The learned senior counsel submits that although the https://hcservices.ecourts.gov.in/hcservices/ petitioner has deposited the amounts mentioned above, thecontinuance of lien over the bank account deposit and the bankguarantee furnished cannot be countenanced in the light of thecircular of CBDT issued for the purpose of Section 220 (6) ofthe Income Tax Act, 1961 vide Ciruclar & Instruction No.1914dated 20.02.1993. 9.The learned senior counsel further submits that theHon'ble Supreme Court has also passed an order in LG ELECTRONICINDIA PVT. LTD. Vs. CIT 2018 8 SCC 447 and has clarified that inall similar cases it deposit of an amount lesser than 20 percent can be entertained pending appeal in the facts of each case. 10.The learned senior counsel for the petitioner furthersubmits that the amount is lying un-utilized and is un-productive for a period of over four years since 2018. It issubmitted that even if in a worst case scenario, pending appeala maximum 20 per cent can be insisted not more, whereas in thiscase more than 15 per cent of the amount stands depositedpursuant to the order of the Learned Single Judge of this Courtand that if the amount which lying on the deposit over whichlien is being exercised and considered, the amount would exceedmore than 20 per cent. 11.The learned Senior Counsel for the petitioner submitsthat the petitioner has already a sum of Rs.495,24,73,287 crorespursuant to the interim direction of the Learned Single Judge ofthis Court and a sum of Rs.8,98,01,63,318/- as withholding taxand then the TDS and the respondents are exercising the lein ofRs.29,56,84,89,997/- (Principle of Rs.2806,40,15,294/-) cannotbe countenanced. 12.The learned Senior Counsel submits that even if adverseorders are passed, the petitioner is entitled to take the issuefurther appeal before the Appellate Tribunal, therefore, underno circumstances the amount can exceed 20 per cent. 11.The learned Senior Counsel for the petitioner submitsthat the petitioner has already a sum of Rs.495,24,73,287 crorespursuant to the interim direction of the Learned Single Judge ofthis Court and a sum of Rs.8,98,01,63,318/- as withholding taxand then the TDS and the respondents are exercising the lein ofRs.29,56,84,89,997/- (Principle of Rs.2806,40,15,294/-) cannotbe countenanced. 12.The learned Senior Counsel submits that even if adverseorders are passed, the petitioner is entitled to take the issuefurther appeal before the Appellate Tribunal, therefore, underno circumstances the amount can exceed 20 per cent. 13.Today when the case was taken up for hearing, the learnedSenior Standing Counsel for the respondents submits that thepetitioner's appeal before the Commissioner of Income Tax(Appeals) will be finally taken up for hearing on 07.02.2022 andorders will be passed by the Appellate Commissioner within aperiod of fifteen days from the date of receipt of copy of thisorder. 14.The above submissions of the learned senior standingcounsel for the respondents stand recorded. 15. In view of the above, this writ petition is disposed bydirecting the respondents not to encash the bank guarantee or https://hcservices.ecourts.gov.in/hcservices/ the amounts lying in deposit pursuant to order of this Courtpending further orders by the CIT Appeals. In case, adverseorders are passed and appeal is filed by the petitioner withinthe time stipulated under the provisions of the Income Tax Act,1961 total recovery cannot exceed 20% in terms of circularissued under Section 220 (6) of the Income Tax Act, 1961 andexcess lying as security shall be refunded back to thepetitioner. No costs. Consequently, connected writ miscellaneouspetition is also closed. Sd/- Assistant Registrar(CS-IX) nst/rgm //True Copy// Sub Assistant Registrar To: 1. The Commissioner of Income Tax (Appeals)-18, 3rd Floor, Investigation Building, No.46, (Old No.108), Mahatma Gandhi Road, Nungambakkam,Chennai - 600 034.2. The Assistant Commissioner of Income Tax, Circle-1, Large Tax Payer Unit, 7th Floor, Wanaparthy Block, Aayakar Bhawan,Nungambakkam, Chennai - 600 034.3. The Assistant Commissioner of Income Tax, Central Circle 1(1), 3rd Floor, Investigation Building, 46, (Old No.108), Mahtma Gandhi Road, Nungambakkam, Chennai - 600 034.4. The Principal Commissioner of Income Tax, Centre Circle-1, 3rd Floor, Investigation Building, 46, (Old No.108), Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034. +1cc to M/s.Srinath Sridevan, Advocate, S.R.No.6110+1cc to M/s.A.P.Srinivas, Advocate, S.R.No.6105 SSN(CO)RGA(21/02/2022) W.P.No.1360 of 2022 and W.M.P.No.1475 of 2022