Unitech Limited v. Additional Commissioner Of Income Tax, Range 18, Newdelhi & Others

THE HIGH COURT OF DELHI AT NEW DELHI %Judgment delivered on: 15.05.2013 +WP (C) 3183/2013 UNITECH LIMITED ..... Petitioner versus ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 18, NEWDELHI & OTHERS..... Respondents ..... Respondents Advocates who appeared in this case: For the Appellant: Mr C. S. Aggarwal Sr. Advocate with Mr PrakashKumar, Advocate.For the Respondent : Ms Suruchi Aggarwal, Advocate CORAM:-HON’BLE MR JUSTICE BADAR DURREZ AHMEDHON’BLE MR JUSTICE VIBHU BAKHRU JUDGMENT BADAR DURREZ AHMED, J (ORAL) CM No.6044/2013 (exemption) Exemption is allowed subject to all just exceptions. WP (C) No.3183/2013 and CM No.6043/2013 1.This writ petition is directed against the order dated 08.05.2013 passed bythe Commissioner of Income Tax which is similar to the earlier order passed bythe said Commissioner on 11.02.2013.Both these orders pertain to the staygranted to the petitioner in respect of the demand raised against the petitioner pursuant to the assessment order dated 01.08.2012. The petitioner has filed anappeal, which is pending before the Commissioner of Income Tax (Appeals) andthe petitioner has already argued the matter and submitted detailed writtensubmissions before the Commissioner of Income Tax (Appeals).The remandreport requested from the Assessing Officer which was earlier not complete, hasnow, according to learned counsel for the respondents, been completed. This is,however, disputed by the learned counsel for the petitioner. 2.On 11.02.2013, the Commissioner while considering the stay applicationof the petitioner had concluded as under:- “3.I have gone through the petition filed by theassessee and discussed the same with the representative ofthe assessee, the order of stay of demand passed by theAdditional CIT Rang 18 and the instructions of 1914issued by CBDT for recovery of outstanding tax demand.I am of the opinion that there are exceptionally andcompelling circumstances as the assessment order appearsto be high pitched and a genuine hardship is likely to becaused to the asessee, this order is being passed by theundersigned. As elaborated in the order dated 16/11/2012passed by the Additional CIT Range-18 the undisputeddemand amounts to Rs. 369 crore. In any case, theassesseehas topay the entire undisputed demandimmediately but looking into the hardship which maycause to him and the fact that the securities having facevalue more than total tax demand have already attached bythe Department the following arrangement is made:(i) The disputed demand which amount to Rs. 665crore is stayed till 31/3/2013.The assessee isadvised to cooperate and file details before thelearned CIT(A) so that his appeal is decided at anearly date. (ii) Out of undisputed demand of Rs. 369 croresthe assessee should pay at least 30 crore more tillthe end of the Financial Year 2012-13in equal two instalments of Rs. 15 crore each. In case he is notable to pay 15 crore per month he is to make goodfor the same in the next installments. In any case,the total payment should not be less than 30 croreup to 31/3/2013. (iii) The first installment should be paid by20/2/2013 and the second by 20/3/2013.Thisorder shall be reviewed on 10[th]of April, 2013. (iv) It has been made clear that failure to adhere tothe arrangement of payment of demand will renderthe assessee for coercive action for recovery bytreating assessee in default.” (underlining added) (ii) Out of undisputed demand of Rs. 369 croresthe assessee should pay at least 30 crore more tillthe end of the Financial Year 2012-13in equal two instalments of Rs. 15 crore each. In case he is notable to pay 15 crore per month he is to make goodfor the same in the next installments. In any case,the total payment should not be less than 30 croreup to 31/3/2013. (iii) The first installment should be paid by20/2/2013 and the second by 20/3/2013.Thisorder shall be reviewed on 10[th]of April, 2013. (iv) It has been made clear that failure to adhere tothe arrangement of payment of demand will renderthe assessee for coercive action for recovery bytreating assessee in default.” (underlining added) 3.It will be noticed from the above extract that at that point of time, theCommissioner was under the impression that the disputed amount was ` 665crores and the amount of ` 369 crores was undisputed. While, the Commissionerhad stayed the recovery of the disputed amount of ` 665 crores till 31.03.2013,the Commissioner directed the petitioner to pay at least ` 30 crores more (inaddition to the ` 13 crores already paid by the petitioner) by the end of thefinancial year 2012-2013. We are informed that the said sum of ` 30 crores hasbeen paid by the petitioner. The Commissioner, by virtue of the order dated11.02.2013 had directed that the same would be reviewed on 10.04.2013.Inbetween, the petitioner had filed a writ petition before this Court being W.P.(C)No.2585/2013. In that writ petition, one of the contentions was that while thepetitioner was being directed to pay a sum of ` 30 crores, the appeal was itselfbeing delayed on account of the Assessing Officer not furnishing the commentson the written submissions submitted by the petitioner on 11.03.2013 and21.03.2013. After hearing the learned counsel for the parties, we disposed of thesaid writ petition by an order dated 23.04.2013 in the following manner:- “WP (C) 2585/2013 & CM 4906/2013(stay) By an order dated 11.02.2013 the Commissioner of IncomeTax stayed the collection of demand of the tax by passing aconditional order. The condition was that the petitioner would payan amount of Rs.30 Crores by the end of the financial year 2012-13.It was also stated in the order that the same would be reviewed on10.04.2013.Apparently, nothing happened on 10.04.2013 but ahearing was granted on 16.04.2013, when the matter was apparentlyadjournedto22.04.2013.Accordingtothepetitioner,theCommissioner had orally rejected the prayer for further extension ofthe stay granted by the Commissioner. However, according to thelearned counsel for the respondent, the Commissioner had fixed22.04.2013 as the date for further consideration. Be that as it may, we feel that since the Commissioner, in theorder dated 11.02.2013 has herself stated that the order would bereviewed on 10.04.2013. As such, it would be appropriate if theCommissioner considers the same and passes an order in respect ofthe future. The learned counsel for the petitioner has contended thatthe appeal pending before the Commissioner of Income Tax(Appeals) is being delayed unnecessarily because the AssessingOfficer is not furnishing the comments on the written submissionssubmitted by the petitioner on 11.03.2013 and 21.03.2013.Hefurther stated that the appeal is now fixed for hearing on 26.04.2013and that the petitioner has till date not received a copy of thecomments. After hearing counsel for the parties, we are disposing thiswrit petition with the direction that the Commissioner shall reviewthe arrangement of stay within two weeks. In the first instance, thepetitioner shall appear before the Commissioner on 29.04.2013 at11:00 a.m. We also direct that the Commissioner of Income Tax(Appeals) who is seized of the matter shall dispose of the appeal asexpeditiously as possible. The Assessing Officer shall also furnishhis comments at the earliest. Till the Commissioner decides the further course of actionafter hearing the petitioner on 29.04.2013, the respondent shall nottake any coercive steps. After hearing counsel for the parties, we are disposing thiswrit petition with the direction that the Commissioner shall reviewthe arrangement of stay within two weeks. In the first instance, thepetitioner shall appear before the Commissioner on 29.04.2013 at11:00 a.m. We also direct that the Commissioner of Income Tax(Appeals) who is seized of the matter shall dispose of the appeal asexpeditiously as possible. The Assessing Officer shall also furnishhis comments at the earliest. Till the Commissioner decides the further course of actionafter hearing the petitioner on 29.04.2013, the respondent shall nottake any coercive steps. The writ petition stands disposed of as above.” 4.Thereafter, the matter was reviewed by the Commissioner and uponreview the impugned order dated 08.05.2013 has been passed. By virtue of thesaid order, the Commissioner has, inter alia, concluded as under:- “10.I have gone through the decisions cited by the assesseecompany with regard to stay of outstanding demand. I am of theopinion that though there are compelling circumstances as theassessment order appears to be high pitched and a genuinehardship is likely to be caused to the assessee, the outstandingtax dues have to be paid by the assessee within a reasonabletime. The instruction No. 1914 also provides that: (ii) In granting stay, the Assessing Officer may impose suchcondition as he may think fit. Thus he may, -condition as he may think fit. Thus he may, - (a) require the assessee to offer suitable security to safeguardthe interest of revenue;the interest of revenue; (b) require the assessee to pay towards the disputed taxes areasonable amount in lump sum or in installments;reasonable amount in lump sum or in installments; (c) require an undertaking from the assessee that he willcooperate in the early disposal of appeal failing which thestay order will be cancelled;cooperate in the early disposal of appeal failing which thestay order will be cancelled; (d) reserve the right to review the order passed after expiry ofreasonable period, say upto 6 months, or if the assessee hasnot cooperated in the early disposal of appeal, or where asubsequent pronouncement by a higher appellate authorityor court alters the above situations;reasonable period, say upto 6 months, or if the assessee hasnot cooperated in the early disposal of appeal, or where asubsequent pronouncement by a higher appellate authorityor court alters the above situations; (e) reserve a right to adjust refunds arising, if any against thedemand.demand. (iii) Payment by installments may be liberally allowed so as tocollect the entire demand within a reasonable period notexceeding 18 months.collect the entire demand within a reasonable period notexceeding 18 months. 11. Accordingly, looking into the facts and circumstances of thecase and the fact that the investments in shares have alreadybeen attached and the book value of such investments is morethan the demand outstanding against the assessee and that ifcoercive measures are taken to collect the entire demand, it will put assessee in undue hardship, the following arrangement ismade: (i) This order is being passed initially for the threemonths and shall be reviewed on 12-08-2013 or onreceipt of order of CIT(A), whichever is earlier. (ii) Theassesseeshouldpaydemandbywayofinstallments of Rs. 80 crore each. The first installmentshould be paid by 20/05/2013 and then by 20th day ofeach month starting from June, 2013. (iii) It has been made clear that failure to adhere to thearrangement of payment of demand will render theassessee liable for coercive action for recovery ofarrear tax, by treating the assessee in default.” (underlining added) put assessee in undue hardship, the following arrangement ismade: (i) This order is being passed initially for the threemonths and shall be reviewed on 12-08-2013 or onreceipt of order of CIT(A), whichever is earlier. (ii) Theassesseeshouldpaydemandbywayofinstallments of Rs. 80 crore each. The first installmentshould be paid by 20/05/2013 and then by 20th day ofeach month starting from June, 2013. (iii) It has been made clear that failure to adhere to thearrangement of payment of demand will render theassessee liable for coercive action for recovery ofarrear tax, by treating the assessee in default.” (underlining added) 5.We have heard learned counsel for the parties at length. While, learnedcounsel for the petitioner strenuously urged that the petitioner is under noposition (financially) to make the payments as per the directions of theCommissioner by virtue of the impugned order and that the petitioner has anexcellent case, we feel that the Commissioner ought to have stuck to the samemethodology of payment as indicated in the earlier order dated 11.02.2013. Atthat point of time, the Commissioner had only directed the payment of theundisputed amount of ` 369 crores by requiring payment in two installments of` 15 crores each so that the amount of ` 30 crores is collected by the end offinancial year 2012-2013. However, now, after the entire amount is disputed, yetthe Commissioner has directed the assessee to pay the demand by way ofinstallments of ` 80 crores each month, the first being due on 20.05.2013.Initially, the installments are to be for 03 months inasmuch as the order is to bereviewed on 12.08.2013 or on receipt of the order the Commissioner of IncomeTax (Appeals), whichever was earlier. 6.We feel that since the Commissioner had initially only directed payment ofinstallments of ` 15 crores each month, the same should have been continuedeven by virtue of the subsequent order, particularly, as at the stage of passing thesubsequent order, the petitioner had clarified that the entire amount was disputed.That being so, we modify the order of the Commissioner dated 08.05.2013 to theextent that instead of paying installments of ` 80 crores each month, thepetitioner shall pay installments of ` 15 crores each month. The first installmentshall be due on 31.05.2013 followed by payments each month to the extent of` 45 crores. 7.We also direct that the Commissioner of Income Tax (Appeals) to disposeof the appeal positively within three months, that is, by 31.08.2013. 8.With these observations and directions, the writ petition is disposed of. Dasti. MAY 15, 2013MK BADAR DURREZ AHMED, JVIBHU BAKHRU, J