M/S Dharma Jewellers v. The Assistant Commissioner Of Income Tax, Non Corp Circle

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.No.23221 of 2021andW.M.P.Nos.24520 and 24523 of 2021 (Through Video Conferencing) M/s Dharma Jewellers,Represented by its partner B.Muralinarasimhan,No.75, Savithiri Nagar, Chetty Street,Coimbatore – 641 001. ... Petitioner Vs 1.The Assistant Commissioner of Income Tax, Non Corp Circle 1, CBE, Coimbatore-Main Building, 63, Race Course Road, Coimbatore – 641 018. 2.The Deputy Commissioner of Income Tax, Non Corp Circle 4, CBE, Coimbatore-Main Building, 63, Race Course Road, Coimbatore – 641 018. 3.The Commissioner of Income Tax-2 (Appeals), Coimbatore. (R3 suo motu impleaded in W.P.No.23221 of 2021 by MSJ)... Respondents Prayer: Petition filed under Article 226 of the Constitutionof India to issue a Writ of Certiorarified Mandamus callingfor the records of the impugned order dated 11.10.2021 videDIN & Letter No.ITBA/COM/F/17/2021-2022/1036304326(1) passedby the second respondent and quash the same and direct therespondents to stay the recovery of tax demand until thedisposal of the appeal by the Commissioner of Income Tax(Appeals). For Petitioner : Mr.R.Balaramesh For Respondents: Mr.A.P.Srinivas Senior Standing Counsel https://hcservices.ecourts.gov.in/hcservices/ ORDER The petitioner has challenged the impugned order dated11.10.2021 passed by the second respondent, the DeputyCommissioner of Income Tax under Section 220(6) of the IncomeTax Act, 1961 (hereinafter referred to as the IT Act). 2. The learned counsel for the petitioner submits that anAssessment Order came to be passed by the first respondent on18.12.2019 for the Assessment Year 2017-2018. Under thesecircumstances, the petitioner had also preferred an appealbefore the Commissioner of Income Tax (Appeals) under Section246(A) of the IT Act, 1961. 3. The learned counsel for the petitioner further submitsthat the appeal was also taken up for hearing before theCommissioner of Income Tax (appeals) and a written submissionwas filed by the petitioner on 11.01.2021. Thereafter, theimpugned order has been passed by the second respondentpurportedly in terms of Section 220(6) of the IT Act, 1961. 4. The learned counsel for the petitioner submits thatunder similar circumstances, this Court by its order dated18.11.2015 in N.Jegatheesan Vs Deputy Commissioner of Income-tax, Non-Corporate Circle-2, Madurai, CDJ 2016MHC 2220 passed in W.P.(MD).No.10171 of 2015 has grantedrelief to a person in terms of the decision of the RajasthanHigh Court in Maheshwari Agro Industries Vs Union of India[2012] 346 ITR 375/206 Taxman 375/17 taxmann.com 68(Raj). 5. The learned counsel for the petitioner has also placedreliance on the decision of the Hon'ble Supreme Court inPrincipal Commissioner of Income Tax-5 and others Vs M/s. LGElectronics India Private Limited in Civil Appeal No.6850 of2018 vide its order dated 20.07.2018, wherein the Hon'bleSupreme Court observed that administrative circulars will notoperate as a fetter on the Commissioner since it is a QuasiJudicial Authority and that the Hon'ble Supreme Courtclarified that in all cases, it will be open for theauthorities on the facts of individual case to grant depositorders of lesser amount than twenty percent. 6. Appearing on behalf of the respondents, the learnedSenior Standing Counsel submits that Central Board of DirectTaxesclarification/circulardated29.02.2016videO.M.No.404/72/93-ITCC was modified Vide office memorandum inF.No.404/72/93-ITCC dated 31.07.2017 and a modified guidelineswas issued to streamline the process of stay petition tostandardize the quantum of lump sum payment required to bemade by an assessee as pre-condition for stay of demand ofdisputed tax before Commissioner of Income Tax (Appeals).Therefore, there is no merits in the present writ petition. https://hcservices.ecourts.gov.in/hcservices/ 6. Appearing on behalf of the respondents, the learnedSenior Standing Counsel submits that Central Board of DirectTaxesclarification/circulardated29.02.2016videO.M.No.404/72/93-ITCC was modified Vide office memorandum inF.No.404/72/93-ITCC dated 31.07.2017 and a modified guidelineswas issued to streamline the process of stay petition tostandardize the quantum of lump sum payment required to bemade by an assessee as pre-condition for stay of demand ofdisputed tax before Commissioner of Income Tax (Appeals).Therefore, there is no merits in the present writ petition. https://hcservices.ecourts.gov.in/hcservices/ 7. By way of rejoinder, the learned counsel for thepetitioner submits that already the petitioner has pre-deposited a sum of Rs.11,90,000/- and that there is an excessof Rs.9,00,000/- and TDS amount has not been adjusted duringthe previous Assessment Years. He therefore submits thatimpugned order may be quashed by directing the Commissioner ofIncome Tax (Appeals) to pass final order. 8. Heard the learned counsel for the petitioner and thelearned Senior Standing Counsel for the respondents. 9. The guide lines issued by the Central Board of DirectTaxes are binding on authorities acting under the Act.However, the position of law stands now clarified by theHon'ble Supreme Court in LG Electronics India Private Limitedcase referred to supra. 10. This aspect ought to have been considered by thesecond respondent instead of asking the petitioner to straightaway pay twenty percent of the disputed demand in terms ofclarification/circular dated 29.02.2016 vide O.M.No.404/72/93-ITCC of the Central Board of Direct Taxes. 11. Considering the same, the impugned order is quashedand the case is remitted back to the second respondent to passa fresh order keeping in mind the observation of the Hon'bleSupreme Court in LG Electronics India Private Limited casereferred to supra. This exercise shall be carried out by thesecond respondent within a period of thirty days from the dateof receipt of a copy of this order. 12. This Writ Petition stands allowed with the aboveobservations. No costs. Consequently, connected WritMiscellaneous Petitions are closed. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant Registrar rgm/arbTo1.The Assistant Commissioner of Income Tax, Non Corp Circle 1, CBE,Coimbatore-Main Building, 63, Race Course Road,Coimbatore – 641 018.2.The Deputy Commissioner of Income Tax, Non Corp Circle 4, CBE,Coimbatore-Main Building, 63, Race Course Road,Coimbatore – 641 018.3.The Commissioner of Income Tax-2 (Appeals),Coimbatore.+1 cc to Mr.A.P.Srinivas, Advocate Sr.NO. 58216+2 ccs to Mr.R.Balaramesh, Advocate Sr.NO. 58233 W.P.No.23221 of 2021and W.M.P.Nos.24520 and 24523 of 2021