Sri Annamalai S., In Support Of The Aforesaid Propositions, Relies Upon The Decisions In Principal Commissioner Of Income Tax 5 And Others v. M/S. Lg Electronics India Pvt. Ltd[1]Andin Uthangarai Sri Vidya Mandir Educational And Social Welfare Trust V. Assistant Commissioner Of Income-Tax, Cricle-1, S

Digitally signed byNARASIMHAMURTHY VANAMALALocation: HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20 DAY OF JANUARY, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD -WRIT PETITION NO. 747 OF 2023 (TIT) BETWEEN: M/S BHARATH RMC PRODUCTS A PARTNERSHIP FIRM CONSTITUTED UNDER THE PARTNERSHIP ACT 1932 REPRESENTED BY ITS MANAGING PARTNER SRI SANGAYYA VEERABHADRAYYA HIREMATH S/O VEERABHADRAYYA HIREMATH AGED ABOUT 58 YEARS, 99, CHEMASANDRA VILLAGE, OPP GRINDWELL NORTON INDUSTRIAL AREA VIRGO NAGAR, BENGALURU-560049 …PETITIONER (BY SRI. ANNAMALAI S.,ADVOCATE) AND: 1. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BENGALURU CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU-560001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2) BENGALURU- 01 INCOME TAX CENTRAL CIRCLE-1(2) BENGALURU- 01 CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU-560001 (BY SRI.E.I. SANMATHI., ADVOCATE) …RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE R1 VIDE DIN NO. ITBA/COM/M/17/2022-23/1048290385(1) DATED 20.12.2022 HEREIN ENCLOSED AND MARKED AS ANNEXURE –A; DIRECT THE R1 TO APPROPRIATELY MODIFY THE ORDER PASSED BY THE R1 VIDE DIN NO. ITBA/COM/M/17/2022-23/1048290385(1) DATED 20.12.2022 HEREIN ENCLOSED AND MARKED AS ANNEXURE -A. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has impugned the first respondent’s order dated 20.12.2022 [Annexure – A] under Section 220 of the Income Tax Act, 1961 [for short, ‘the IT Act’]. The first respondent by this order dated 20.12.2022 has disposed of the petitioner’s application for stay stipulating that it must deposit 20% of the disputed demand in ten (10) equal monthly instalments with the stipulation that such instalments shall be paid on or before 10[th] of every month and if there is any default in making payments in terms of the instalments granted, stay granted shall be treated as vacated. 2.Sri Annamalai S., the learned counsel for the petitioner, canvasses multi fold submissions in support of the challenge against Annexure-A. He argues that the assessment order is based only on loose sheets [cash statements purportedly seized] and the statement made by an accountant with M/s.Bharat Cement Products without an opportunity to cross examination. The administrative instructions on stay only envisage a thumb rule and will not create fetters on the exercise of quasi-judicial jurisdiction, and the authorities must consider the facts and circumstances of each individual case to decide whether the grant of deposit must be lesser than the amount of 20%. 3.Sri Annamalai S., in support of the aforesaid propositions, relies upon the decisions in Principal Commissioner of Income Tax 5 and Others v. M/s. LG Electronics India Pvt. Ltd[1]andin Uthangarai Sri Vidya Mandir Educational and Social Welfare Trust v. Assistant Commissioner of Income-tax, Cricle-1, Salem[2], with emphasize on the following paragraph from the second decision. “The Officer, 1st respondent in the writ petition, proceeds on the basis that the payment of 20% of the tax , as per Office Instruction dated 31.0.2017, is a pre-condition for consideration of stay of demand and therein lies the flaw in the order. I have, in my order, in the case of Mrs. Kannammal v. Income Tax Officer [W.P.No.3849 of 2019 dated 13.02.2019] discussed various Circulars/Instructions issued by the Income Tax Department on the matter of grant of stay, concluding that the grant of stay is conditional upon the 1 (2018) 18 SCC 447 2(2019) 104 Taxmann.com 248 (Madras) “The Officer, 1st respondent in the writ petition, proceeds on the basis that the payment of 20% of the tax , as per Office Instruction dated 31.0.2017, is a pre-condition for consideration of stay of demand and therein lies the flaw in the order. I have, in my order, in the case of Mrs. Kannammal v. Income Tax Officer [W.P.No.3849 of 2019 dated 13.02.2019] discussed various Circulars/Instructions issued by the Income Tax Department on the matter of grant of stay, concluding that the grant of stay is conditional upon the 1 (2018) 18 SCC 447 2(2019) 104 Taxmann.com 248 (Madras) satisfaction of three primary aspects, i.e., the existence of a prima facie case, financial stringency demonstrated and established by the Assessee and the balance of convenience in the matter. Thus, the Office Instruction directing the Assessing Authority to call upon the assessee to remit 20% of the disputed tax, is, at best, only a thumb rule and not a mandatory pre-condition, cast in stone.” 4.Sri Annamalai S lastly canvasses that the petitioner, a registered firm, is engaged in the business of RMC (manufacture and supply of Ready Mix Concrete) and has availed different loans for the purposes of different businesses. The total loan availed is in sum of Rs.8,71,78,611/- from different lenders such as Axis Bank and Deutsche Bank, and the petitioner must pay every month Rs.13,24,636/-. As such, the petitioner has requested for personal loans. The petitioner has placed all the materials before the first respondent and notwithstanding the same, the present petition is filed. 5.Sri E.I.Sanmathi, the learned counsel for the respondents, without controverting the proposition of law relied upon by Sri Annamalai S, submits that the first respondents has extended the benefit of instalment scheme calling upon the petitioner to pay 20% of the amount in 10 instalments considering the submissions during the physical hearing. The petitioner cannot as a matter of right contend that deposit for stay during the pendency of the appeal must necessarily be below 20%. 6.The rival submissions are considered in the light of the undisputed proposition and the petitioner’s assertion that it has outstanding loan of Rs.8,71,78,611/- and to ensure that the business is run, the petitioner must pay a sum of Rs.13,24,636/- every month as EMI. In the peculiarities of the present case, this Court is of the considered view that the petitioner has brought on record the circumstances which would justifyapplying thethumb rule indicated in the administrative instructions on quantum more reasonably. The petitioner’s appeal against the assessment order will have to be examined in the light of the petitioner’s case that the additions are because of certain loose sheets. At this stage, Sri Annamalai S. submits that this Court could consider reducing deposit to 10% as against 20% and continue the instalment that is extended by the impugned order. He also submits that the first instalment of Rs.5,89,170/- has also been paid. 7.In the light of the afore, this Court is of the view that this Court must interfere with the first respondent’s order dated 20.12.2022 [Annexure – A] because this respondent has failed to exercise discretion in the light of the settled proposition and the undisputed circumstances pleaded by the petitioner modifying the impugned order restricting the deposit to 10% of the disputed demand continuing 10 monthly instalments permitted by the impugned order and affirming other stipulation contained therein. The petition stands disposed of accordingly. SD/- JUDGE SA ct:sr