Priya Soparkar v. Income Tax Officer, 345 Itr71, In Which This Court Laid Down

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) NO.570 OF 2020 Play Games 24 x 7 Private Limited, Mumbai. … PetitionerV/s. Assistant Commissioner of Income-tax- 13(1)(2), Mumbai and ors. … Respondents--- Mr.J.D.Mistri, Senior Advocate with Mr.Atul K. Jasani, Advocatefor the Petitioner.Mr.Akhileshwar Sharma, Advocate for Respondents. --- CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. DATE : MARCH 13, 2020 P.C.:- 1.Heard Mr.J.D.Mistri, learned senior counsel for thepetitioner; and Mr.Akhileshwar Sharma, learned standingcounsel, Revenue for the respondents. 2.By filing this petition under Article 226 of theConstitution of India, petitioner seeks quashing of ordersdated 12[th] February, 2020 passed by respondent No.1rejecting the application for stay of demand of the petitioneras well as order dated 21[st] February, 2020 passed byrespondent No.2 also rejecting the application for stay of thepetitioner and further seeking a stay of recovery of demandby the respondents till disposal of the appeal filed by thepetitioner before the Commissioner of Income Tax (Appeals)against the order of assessment. 3.Shorn of details, it may be mentioned that respondentNo.1 as the Assessing Officer passed assessment order dated28[th] December, 2019 in respect of the petitioner for theassessment year 2015-16 under Section 143(3) r/w Section263 of the Income Tax Act, 1961 (briefly "the Act" hereinafter). 4.Petitioner is a company assessed to income tax underthe jurisdiction of respondent No.1. It is engaged in thebusiness of providing platform for online and mobile games.In the assessment order, respondent No.1 held that petitionerhad failed to bring on record the compliance of tax deductedat source under Section 194B of the Act and therefore appliedthe provisions of Section 40(a)(ia) of the Act. Respondent No.1added 30% of the winning payout of Rs.9,11,45,13,136.00towards winning from lottery or crossword puzzles and non-deduction of TDS which works out to Rs.2,73,43,53,943.00, tothe total income of the assessee under Section 40(a)(ia) of theAct. This was followed by issuance of notice of demand ofeven date under Section 156 of the Act calling upon thepetitioner to pay a sum of Rs.1,53,16,72,220.00 as theamount of tax due for the assessment year 2015-16. 5.Aggrieved by the order of assessment, petitionerpreferred appeal before the Commissioner of Income Tax(Appeals)-21, Mumbai, also referred to as the first appellateauthority, on 22[nd] January, 2020 bearing acknowledgmentNo.294729211220120. Priya Soparkar 3 906 wp 570-20-o 6.Simultaneously, petitioner also filed an applicationbefore respondent No.1 on 23[rd] January, 2020 seeking stayof demand under Section 220(6) of the Act. By order dated12[th] February, 2020, respondent No.1 rejected theapplication for stay of demand, granting liberty to thepetitioner to pay 20% of the total demand within 3 days inwhich event it was stated that the outstanding demandwould be stayed. 7.Being aggrieved, petitioner preferred further staypetition dated 14[th] February, 2020 before respondent No.2.By order dated 21[st] February, 2020, respondent No.2 directedthe petitioner to pay atleast 5% of the total outstandingdemand as per the schedule mentioned therein subject towhich it was stated that the demand would be stayed. 8.Aggrieved, present writ petition has been filed. 7.Being aggrieved, petitioner preferred further staypetition dated 14[th] February, 2020 before respondent No.2.By order dated 21[st] February, 2020, respondent No.2 directedthe petitioner to pay atleast 5% of the total outstandingdemand as per the schedule mentioned therein subject towhich it was stated that the demand would be stayed. 8.Aggrieved, present writ petition has been filed. 9.Mr.Mistri, learned senior counsel has referred to Section194B of the Act and submits that petitioner is only providing aplatform for playing of card games by the users. In terms ofSection 194B of the Act, petitioner has been deductingincome tax at the prescribed rate for every game where thewinnings exceed Rs.10,000.00. Other than that, petitionerhas nothing to do with the card games played on its platform.Its earning is only by way of commission earned on thegames. He has also referred to the provisions contained inSection 40(a)(ia) of the Act to contend that while computingthe income chargeable under the head "profits and gains of Priya Soparkar business or profession", 30% of any sum payable by anassessee to a resident on which tax is deductable at sourceand such tax has not been deducted or after deduction hasnot been paid, shall not be deducted. He submits thatconsidering the nature of business carried on by thepetitioner question of applicability of Section 40(a)(ia) doesnot arise. Taking exception to the way in which respondentNos.1 and 2 have dealt with the stay application of thepetitioner, Mr.Mistri has placed reliance on the decision of thiscourt in UTI Mutual Fund Vs. Income Tax Officer, 345 ITR71, in which this court laid down certain guidelines for therevenue authorities to be borne in mind while dealing withstay application. Referring to guideline No.3, he submits thatin so far the previous assessment years of the petitioner areconcerned, provisions of Section 40(a)(ia) of the Act werenever applied to the petitioner. He therefore, submits that asper guideline No.3 if the Assessing Officer has taken a viewcontrary to what has been held in the preceding previousyears without there being a material change in facts or law,that will be a relevant consideration in deciding theapplication for stay. This aspect of the matter was completelyoverlooked by respondent Nos.1 and 2 while dealing with thestay application of the petitioner. 10.On the other hand, Mr.Sharma, learned standing counsel,Revenue submits that respondent No.2 has fairly consideredthe stay application of the petitioner and against the totaloutstanding demand he has directed petitioner to pay only 5%of the demand that too in three installments. That apart, Priya Soparkar 5 906 wp 570-20-o petitioner has already moved the first appellate authority inappeal. It is open to the petitioner to pray for stay before theappellate authority. In the circumstances, question ofinterference by the court does not arise. 11.Submissions made by learned counsel for the partieshave been considered. 12.At the outset, it may be mentioned that petitioner hasalready paid Rs.1,53,16,72,220.00 as part of the outstandingdues, ofcourse without prejudice to its rights and contentions. 13.Without expressing any opinion on merit, we feel that itwould be in the interest of justice if the first appellateauthority hears the appeal filed by the petitioner and decidesthe same in accordance with law within a period of fourmonths from the date of receipt of an authenticated copy ofthe order. 14.Ordered accordingly. 15. Till decision is rendered on the appeal of the petitionerby the first appellate authority within the period specified,there shall be stay of the demand notice issued pursuant tothe assessment order dated 28[th] December, 2019. 16.Petition is disposed of. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.)