Ms. Aesa Dey, Advocate v. Principal Commissioner Of Income Tax-1, Kolkata & Ors.….Respondent(S

HIGH COURT AT CALCUTTA(ORIGINAL SIDE) APO/32/2021WPO/184/2020IA No. GA/1/2021(Through Video Conferencing) INDIA POWER CORPORATION LIMITED & ANR. … .Appellant(s) Through : Mr. Ratnanko Banerji, Sr. Advocate (VC), Ms. Aesa Dey, Advocate VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATA & ORS.….Respondent(s) Through : Mr. P. K. Bhowmick, Coram : HON’BLE MR. JUSTICE RAJESH BINDAL, JUDGE HON’BLE MR. JUSTICE ANIRUDDHA ROY, JUDGE O R D E R 1.The present intra-court appeal has been filed against order datedJanuary 27, 2021, passed by the learned Single Judge of this Court. Thechallenge in the writ petition was to the order dated March 5, 2020 passed by thePrincipal Commissioner of Income Tax – I disposing of the application forinterim stay filed by the appellants during the pendency of the appeal. The orderwas challenged on the ground that no reasons have been assigned there. 2.While deciding the writ petition, the Learned Single Judge directedthat the sum of ₹ 19 crore as directed by PCIT-I, Kolkata be deposited by theappellants and recovery of balance the amount shall remain stayed. The appeal filed by the appellants is to be disposed of by CIT(A) on or before March 31,2021. 3.While impugning the order passed by the Learned Single Judge,Mr. Banerji, learned senior counsel for the appellants, submitted that whiledirecting payment of ₹ 19 crore, no reasons have been assigned. It is a case inwhich huge demand of ₹1776,85,38,547/- has been raised against the appellantsin an illegal manner. It was a case where the appellants had purchased a lossmaking unit of M/s Meenakshi Energy Limited at a distress value of $ 1 fromENGIE, a French company. M/s Meenakshi Energy Limited was a loss makingunit. In support of the argument that any authority deciding rights of the partiesis required to assign reasons therein, reliance was placed upon the judgements ofthe Supreme Court in KRANTI ASSOCATES PRIVATE LIMITED AND ANOTHER v.MASOOD AHMED KHAN AND OTHERS[(2010) 9 SCC 496] and THESECRETARY AND CURATOR, VITORIA MEMORIAL HALL v. HOWRAHGANATANTRIK NAGRIK SAMITY AND OTHERS[(2010) 3 SCC 732]. 4.He further submitted that the matter needs to be remanded to PCIT-I for consideration afresh for giving reasons for rejection of the said applicationfiled by the appellants or in the alternate, in view of the controversy where hugedemand has been made against the appellants in a totally illegal manner, wherethe value of shares of M/s Meenakshi Energy Limited had been added back inthe income of the appellants, absolute stay may be granted and CIT (A) bedirected to hear the appeal of the appellants. 5.On the other hand, learned counsel for the Revenue submitted thatPCIT-I, Kolkata had already granted indulgence to the appellants by directingdeposit of merely ₹ 19 crore out of total demand of ₹ 1776,85,38,547/-. It is merely a provisional payment as the appeal has been directed to be heard up toMarch 31, 2021. In case the appellant succeeds, the amount will be refunded oradjusted against the tax liability of the appellants. He further referred to thejudgement of the Supreme Court in SILIGURI MUNICIPALITY AND OTHERSv. AMALENDU DAS AND OTHERS[1984 (146) ITR 624] to submit that theCourt should not grant interim stay where recovery of tax is involved. Thepower is to be exercised only in exceptional circumstances and the case in handdoes not fall in that category. 6.In response, learned senior counsel for the appellants submitted thatthe facts of the instant case are exceptional where huge demand has been raisedagainst the appellants in a totally illegal manner. Hence, the recovery ought to bestayed. merely a provisional payment as the appeal has been directed to be heard up toMarch 31, 2021. In case the appellant succeeds, the amount will be refunded oradjusted against the tax liability of the appellants. He further referred to thejudgement of the Supreme Court in SILIGURI MUNICIPALITY AND OTHERSv. AMALENDU DAS AND OTHERS[1984 (146) ITR 624] to submit that theCourt should not grant interim stay where recovery of tax is involved. Thepower is to be exercised only in exceptional circumstances and the case in handdoes not fall in that category. 6.In response, learned senior counsel for the appellants submitted thatthe facts of the instant case are exceptional where huge demand has been raisedagainst the appellants in a totally illegal manner. Hence, the recovery ought to bestayed. 7.Heard the learned counsel for the parties and perused the paperbook. The impugned order passed by the Learned Single Judge states that a sumof ₹ 19 crore directed by the PCIT-I be deposited by the appellants up to March15, 2021 and the appeal be taken up by the CIT (A) for disposal by March 31,2021. The Assessing Officer was restrained from recovering the balance demandbeyond ₹ 19 crore. While framing assessment of the appellants a total demand of₹ 1776,85,38,547/- was raised on account of the fact that the appellants hadpurchased a loss-making unit, namely, M/s Meenakshi Energy Limited fromENGIE, a French company, for $ 1. As is evident from the facts stated in theassessment order, ENGIE had invested a sum of ₹ 3811,50,65,090/- in M/sMeenakshi Energy Limited towards the end of the financial year 2015-16 forpurchase of its shares and the aforesaid shares were transferred by ENGIE infavour of the appellants in financial year 2017-18 for a nominal price of $ 1. The Assessing Officer, taking that into account this fact and others as stated in theorder, levied tax on that. 8.We are not going into the merits of the controversy as the same issubject matter of consideration before the first appellate authority, namely, CIT(A). We find that the appellants had approached this Court in earlier round oflitigation by filing WP No.54 of 2020, when their prayer for grant of stay wasrejected. Earlier, in the order dated February 12, 2020, it has been noticed thatthe appellants were having a total income of about ₹ 30 crore. CIT (A) wasdirected to decide the stay application filed by the appellants within three weeks.It was subsequent thereto that the application of the appellants for stay wasdecided. 9.Considering the huge demands raised against the appellants and thefact noticed by Single Bench of this Court while passing the order datedFebruary 12, 2020, regarding income of the appellant at ₹ 30 crore, direction bythe PCIT – I for deposit of ₹ 19 crore cannot be said to be unreasonable.10.The present appeal and the application are dismissed. KOLKATA (ANIRUDDHA ROY) (RAJESH BINDAL)4.3.2021 JUDGE JUDGEakg/ SK