Seven Seas Hospitality Private Limited v. Principal Commissioner Of Income Tax Central,Delhi - 3 & Ors

Signature Not Verified $~1 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 6784/2022 SEVEN SEAS HOSPITALITY PRIVATE LIMITED ..... Petitioner Through:Mr.Salil Kapoor with Mr.TarunChanana, Advocates. versus PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL,DELHI - 3 & ORS. DELHI - 3 & ORS...... RespondentsThrough:Mr.Vibhooti Malhotra, seniorstanding counsel for the Revenue.%Date of Decision: 02[nd]May, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral): C.M.No.20624/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.6784/2022 & C.M.No.20623/2022 1.Present writ petition has been filed challenging the orders dated 31[st]March, 2022 and 13[th]December, 2021, passed by Respondents No.1 & 2,without considering the submissions made by the Petitioner. 2.Learned counsel for the Petitioner states that the Petitioner Companyfiled an application for stay of demand under Section 220(6) of the Act for W.P.(C) No.6784/2022 Signature Not Verified the assessment years 2013-14 to 2019-20 on the ground that the appeal filedby the Petitioner before the CIT(A) against the additions made byRespondent No.2is pending adjudication and the Petitioner Company isunder financial stress on account of COVID-19 pandemic and further onaccount of the fact that the accounts of the Petitioner Company have beendeclared as NPA by all the banks due to non-payment of principalinstallment and interest amount to banks. 3.Learned counsel for the Petitioner states that Respondents Nos.1 & 2have passed the impugned orders rejecting the plea of the Petitioner to staythe demand and directed the Petitioner to pay 20% of the total outstandingdemand of Rs.37,52,08,576/-. He submits that Respondents Nos.1 & 2 havealso rejected the stay application filed by the Petitioner in a cryptic manner. 4.Issue notice. Ms.Vibhooti Malhotra, senior standing counsel acceptsnotice on behalf of the Respondents.She states that the PCIT hasconsidered the submissions advanced by the Petitioner and has grantedinstallments to the Petitioner. 5.Having heard learned counsel for the parties and having perused thetwo office memorandums dated 29[th]February, 2016 and 31[st]July, 2017, thisCourt is of the view that the requirement of payment of twenty percent ofdisputed tax demand is not a pre-requisite for putting in abeyance recoveryof demand pending first appeal in all cases.The said pre-condition ofdeposit of twenty percent of the demand can be relaxed in appropriate cases.Even the Office Memorandum dated 29[th]February, 2016 gives instances likewhere addition on the same issue has been deleted by the appellateauthorities in earlier years or where the decision of the Supreme Court orjurisdictional High Court is in favour of the assessee. W.P.(C) No.6784/2022 Page 2 of 4 Signature Not Verified 6.In fact the Supreme Court in PCIT vs. M/s LG Electronics India Pvt.Ltd. (2018) 18 SCC 447 has held that tax authorities are entitled to grantstay on deposit of amounts lesser than twenty percent of the disputeddemand in the facts and circumstances of a case. The relevant portion of thesaid judgment is reproduced hereunder: W.P.(C) No.6784/2022 Page 2 of 4 Signature Not Verified 6.In fact the Supreme Court in PCIT vs. M/s LG Electronics India Pvt.Ltd. (2018) 18 SCC 447 has held that tax authorities are entitled to grantstay on deposit of amounts lesser than twenty percent of the disputeddemand in the facts and circumstances of a case. The relevant portion of thesaid judgment is reproduced hereunder: ‘HavingheardShriVikramjitBanerjee,learnedASGappearing on behalf of the appellant and giving credence tothe fact that he has argued before us that the administrativeCircular will not operate as a fetter on the Commissionersince it is a quasi-judicial authority, we only need to clarifythat in all cases like the present, it will be open to theauthorities, on the facts of individual case, to grant depositorders of a lesser amount that 20%, pending appeal.’appearing on behalf of the appellant and giving credence tothe fact that he has argued before us that the administrativeCircular will not operate as a fetter on the Commissionersince it is a quasi-judicial authority, we only need to clarifythat in all cases like the present, it will be open to theauthorities, on the facts of individual case, to grant depositorders of a lesser amount that 20%, pending appeal.’ 7.In the present case, the impugned orders are non-reasoned ordersinasmuch as Respondent Nos. 1 and 2 have not considered the submissionsof the Petitioner in the stay applications dated 14[th]December, 2021, 30[th]December, 2021 and 18[th]November, 2021 and thus, the discretion vested inRespondents Nos. 1 and 2 has not been exercised judiciously.Further,neither the Assessing Officer nor the PCIT have considered the three basicprinciples i.e. the prima facie case, balance of convenience and irreparableinjury while deciding the stay application. 8.Consequently, the impugned orders and notices are set aside and thematter is remanded back to the PCIT for fresh adjudication on theapplications for stay. However, before deciding the stay applications, thePCIT shall grant a personal hearing to the authorised representative of thePetitioner. For this purpose, list the matter before the PCIT on 23[rd]May,2022. After grant of personal hearing, the PCIT shall pass a reasoned orderin accordance with law. W.P.(C) No.6784/2022 Page 3 of 4 Signature Not Verified 9.It is clarified that till the stay applications filed by the Petitioner arenot decided, no coercive action shall be taken by the Respondents againstthe Petitioner in pursuance to the demands arising out of the orders dated31[st]March, 2022 and 13[th]December, 2021. 10.With the aforesaid directions, the present writ petition along withpending application stands disposed of. MANMOHAN, J DINESH KUMAR SHARMA, J MAY 02, 2022KA W.P.(C) No.6784/2022