Tata Teleservices Limited v. Commissioner Of Income Tax, Internationaltaxation-3 & Anr

$~59*IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 4660/2022 & C.M.Nos.13978-13979/2022 TATA TELESERVICES LIMITED ..... Petitioner ThroughMr.Kamal Sawhney with Mr.PrashantMeharchandani, Mr.Nikhil Agarwal,Mr.Arun Bhadauria and Mr.NishankVashistha, Advocates.Meharchandani, Mr.Nikhil Agarwal,Mr.Arun Bhadauria and Mr.NishankVashistha, Advocates. versus COMMISSIONER OF INCOME TAX, INTERNATIONALTAXATION-3 & ANR. ..... Respondents ThroughMr.Sunil Agarwal, senior standingcounsel with Mr.Tushar Gupta andMr.Samarth Chaudhari, Advocates. % Date of Decision: 23[rd]March, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral): 1.Present writ petition has been filed challenging the orders dated 28[th]February, 2022 and 14[th]March, 2022 passed by the Respondents wherebythe stay application filed by the Petitioner had been disposed of.It ispertinent to mention that the disputed demand of Rs.42,40,72,259/- hasarisen from an order dated 08[th]December, 2021 passed under section201(1)/201(1A) of the Income Tax Act, 1961 (“Act”) wherein the Petitionerwas held to be an assessee in default for failure to deduct tax at source while making interest payments to China Development Bank (“CDB”). 2.Vide the impugned Orders dated 28[th]February, 2022 and 14[th]March,2022, the Petitioner was granted stay till the disposal of the first appealsubject to payment twenty percent of the total demand i.e. Rs.8,48,14,452/-in accordance with the condition stipulated in Clause (B) of OfficeMemorandum dated 29[th]February, 2016. 3.Learned Counsel for the Petitioner submits that the order dated 08[th]December, 2021 passed under section 201(1)/201(1A) of the Act in itself ismanifestly against the plain language of law and was passed withoutfollowing the principles of natural justice.He further states that theimpugned orders dated 28[th]February, 2022 and 14[th]March, 2022 do not dealwith the facets of prima facie case, balance of convenience and irreparableharm or injury. 4.Issue notice.Mr.Sunil Agarwal, learned standing counsel acceptsnotice on behalf of the Respondents. He states that the direction to deposit20% of the demand is in accordance with the Office Memorandums dated29[th]February, 2016 and 31[st]July, 2017. 5.Having heard learned counsel for the parties and having perused thetwo Office Memorandums, in question, this Court is of the view that therequirement of payment of twenty percent of disputed tax demand is not apre-requisite for putting in abeyance recovery of demand pending firstappeal in all cases. The said pre-condition of deposit of twenty percent ofthe demand can be relaxed in appropriate cases. Even the OfficeMemorandum dated 29[th]February, 2016 gives instances like where additionon the same issue has been deleted by the appellate authorities in earlieryears or where the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee. 6.In fact the Supreme Court in the case of PCIT vs. M/s LG ElectronicsIndia Pvt. Ltd. (2018) 18 SCC 447 has held that tax authorities are eligibleto grant stay on deposit of amounts lesser than twenty percent of thedisputed demand in the facts and circumstances of a case. The relevantportion of the said 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.’ 7.In the present case, the impugned orders are non-reasoned orders.Neither the Assessing Officer nor the CIT have considered three basicprinciples i.e. the prima facie case, balance of convenience and irreparableinjury while deciding the stay applications. ‘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.’ 7.In the present case, the impugned orders are non-reasoned orders.Neither the Assessing Officer nor the CIT have considered three basicprinciples i.e. the prima facie case, balance of convenience and irreparableinjury while deciding the stay applications. 8.Consequently, the impugned orders and notices are set aside and thematter is remanded back to the Commissioner of Income Tax for freshadjudication in the application for stay. However, before deciding the stayapplication, the Commissioner of Income Tax shall grant a personal hearingto the authorised representative of the Petitioner. For this purpose, list thematter before the Commissioner of Income Tax on 18[th]April, 2022. 9.It is clarified that till the stay application filed by the petitioner is notdecided, no coercive action shall be taken by the respondents against thePetitioner in pursuance to the demand arising out of the order dated 08[th]December, 2021. 10.With the aforesaid directions, the present writ petition along withpending applications stand disposed of. MANMOHAN, J MARCH 23, 2022KA DINESH KUMAR SHARMA, J W.P.(C) No.4660/2022