Wp/12122/2022 Of Yeswanth Kavitha v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 06.05.2022 CORAM: THE HONOURABLE MRS. JUSTICE S.ANANTHI Yeswath Kavitha... Petitioner The Income Tax OfficerIncome Tax DepartmentNational Faceless Assessment CircleMinistry of FinanceDelhi.... Respondent Prayer: Writ petition filed under Section 226 of theConstitution of India, seeking to issue a Writ ofCertiorarified Mandamus, calling for the records of theRespondent bearing DIN and Letter No.ITBA/RCV/F/17/2022-23/1042889303(1) dated 28.04.2022 in pursuant to the Applicationof the petitioner dated 29.03.2022 under Section 220(6) of theIncome Tax Act, 1961, and quash the same with consequentialdirection to the Respondent to consider the petition filed underSection 220(6) of the Act 1961 by providing an opportunity ofbeing heard to the petitioner. For Respondent : Ms.Hema Muralikrishnan For Mr.A.P.Srinivas By consent of both parties, this Writ Petition is taken upfor final disposal at the admission stage itself. 2. The case of the petitioner in brief: The petitioner is a dealer in petroleum products underdealership from Indian Oil Corporation Ltd., and engaged inrunning retail outlet for petrol and diesel, petrol and dieselbunks in the National Highway 544, Ettimadai, Coimbatore-641 https://hcservices.ecourts.gov.in/hcservices/ For Respondent : Ms.Hema Muralikrishnan For Mr.A.P.Srinivas By consent of both parties, this Writ Petition is taken upfor final disposal at the admission stage itself. 2. The case of the petitioner in brief: The petitioner is a dealer in petroleum products underdealership from Indian Oil Corporation Ltd., and engaged inrunning retail outlet for petrol and diesel, petrol and dieselbunks in the National Highway 544, Ettimadai, Coimbatore-641 https://hcservices.ecourts.gov.in/hcservices/ 112. The petitioner is regular in filing her Income Tax Returnsalong with taxes due thereon. As per the notice issued by therespondent department, on 10.03.2022, the petitioner-Assesseefurnished the sales register, purchase register, cash book,bank statements and cash ledger to substantiate her case.Thereafter, assessment order was passed by the respondent on16.03.2022. The petitioner-Assessee invoking Section 69A ofthe Act, 1961 made addition to the taxable income to the tune ofRs.92,15,300/- under the National Faceless Assessment Centre.Thereby, a notice of demand dated 16.03.2022 for the assessmentyear 2017-18 under Section 156 of the Act 1961 as well asseparate Notice for penalty under Section 271AAC(1) were causedon the petitioner on the same day. Besides, penaltyproceedings under Section 271(1) (c) of the Act 1961 forconcealment of income were initiated separately. Thepetitioner/Assessee preferred first appeal under Section 246(A)of the Act before the Commissioner of Income Tax (Appeals) on29.03.2022 through E-Filing against the assessment order dated16.03.2022. He has also filed an separate application underSection 220(6) of the Act, before the Assessing Authority, ITOfor stay of the entire disputed demand raising various groundsseeking for stay of the entire disputed demand in the saidapplication. The petition filed under Section 220(6) of theIncome Tax Act, for the Assessment year 2017-2018 determined tobe payable Rs.1, 13,90,095/- by the petitioner during thependency of the appeal before the Appellate Authority treatingthe petitioner/Assessee as not being in default in respect ofthe amount in dispute. The Assessing Officer withoutconsidering the application for exercising power under theaforesaid provision, has directed the petitioner to pay 20% ofthe alleged outstanding as a condition precedent to consider theapplication under Section 220(6) of the Act, which is contraryto law. The Assessing Officer has no authority to whittle downthe statutory provision. The respondent having acted in acasual and perfunctory manner, simply passed an order dated28.04.2022, dismissing the application under Section 220 (3) and220 (6) of the Act, 1961, without assigning any reason inmechanical manner. The respondent has no authority to insist20% of the disputed amount as 'condition precedent' to considerthe application under Section 220(6) of the IT Act. Thepetitioner-Assessee being an aggrieved person, who is deprivedof personal hearing in violation of principles of naturaljustice, has been slapped with the impugned order in arbitrary,capricious and discriminatory manner. Therefore, challengingthe impugned order of the respondent dated 28.04.2022, thepetitioner has filed the present writ petition before thisCourt. 3. The learned counsel appearing for the petitioner wouldsubmit that the impugned order passed by the respondent is 3. The learned counsel appearing for the petitioner wouldsubmit that the impugned order passed by the respondent is contrary to law. The petition filed under Sections 220(3) and220 (6) of the Act 1961 ought to have been disposed of in suchmanner pending disposal of appeal in a fair and reasonablemanner with a speaking order. The respondent ought to haveexercised his discretion while disposing of the applicationunder Section 220(3) and 220 (6) for not treating the Assesseein default' in view of the pendency of the appeal before theCommissioner of Income Tax (Appeals), but has not invested withany authority to consider the petitioner's application that the'Assessee not being in default'. The respondent has failed togive weightage to the instructions of Central Board Direct Taxes(CBDT) as how "discretion has to be exercised. CBDT instructionNo.95 dated 21.08.1969 would squarely applies to thepetitioner's case. The mere statement in the order without anyfactual foundation, the order is not valid as held by thisCourt in the case of M.G.M. Transport (Madras) Pvt. Limited vs.ITO and another reported in (2008) 303 ITR 115 (Mad.). Hence, heprays to quash the order of the respondent and also direct therespondent to consider the petition filed under Section 220(6)of the Act by providing an opportunity of hearing to thepetitioner. 4.The learned counsel appearing for the respondent wouldsubmit that as per the Office Memorandum dated 31.07.2017 issuedby the Central Board of Direct Taxes, in partial modification ofBoard's Instruction No.1914 dated 21.03.1996 and 29.02.2016, ina case where the assessee is in appeal before the CIT (A) , heshould pay 20% of the disputed demand. Following the aforesaidprocedure, the respondent sent a letter dated 28.04.2022requesting the petitioner to pay 20% of the demand outstanding.He would further submit that as per 5. On a perusal of the records, it appears that the appealfiled by the petitioner is pending with the appellate authority.During the pendency of the appeal, the petitioner filed anapplication seeking for stay till the disposal of the firstappeal. To the petitioner's application, the respondent passedthe impugned order dated 28.04.2022, asking the petitioner topay 20% of the demand outstanding i.e. Rs.22,78,019/-and afterthe payment of the same, the remaining 80% of outstanding demandmay be considered for stay under Section 220(6) of the IncomeTax Act, 1961 till the disposal of the first appeal. Aggrievedover the aforesaid impugned order, the present petition has beenfiled. 6. The learned counsel appearing for the petitioner wouldrely upon Section 220 sub clause (2) of the Income Tax Act,which reads as follows:If the amount specified in any notice of demandunder Section 156 is not paid within the period limitedunder sub-section (1), the assess shall be liable to pay simple interest at one and one-half per cent forevery month or part of a month comprised in the periodcommencing from the day immediately following the endof the period mentioned in sub section (1) and endingwith the day on which the amount is paid. Therefore, as per Section 220 sub clause (2) of the Income TaxAct, 1995, the petitioner-Assessee has to pay 1-1/2% per centinterest for every month for the outstanding amount. 7. Considering the facts and circumstances of the case andalso in view of the aforesaid submissions, this Court isinclined to direct the respondent to dispose of the appeal asexpeditiously as possible, after affording an opportunity to thepetitioner. Meanwhile, the petitioner is directed to deposit10% of the outstanding demand i.e Rs.22,78,019/- within a periodof four weeks, from the date of receipt of a copy of this order. 8. With the above direction, this Writ Petition standsdisposed of. No costs. Consequently, connected MiscellaneousPetitions are closed. Sd/- Vacation Officer //True Copy// Sub Assistant Registrar uma To 7. Considering the facts and circumstances of the case andalso in view of the aforesaid submissions, this Court isinclined to direct the respondent to dispose of the appeal asexpeditiously as possible, after affording an opportunity to thepetitioner. Meanwhile, the petitioner is directed to deposit10% of the outstanding demand i.e Rs.22,78,019/- within a periodof four weeks, from the date of receipt of a copy of this order. 8. With the above direction, this Writ Petition standsdisposed of. No costs. Consequently, connected MiscellaneousPetitions are closed. Sd/- Vacation Officer //True Copy// Sub Assistant Registrar uma To The Income Tax OfficerIncome Tax DepartmentNational Faceless Assessment CircleMinistry of FinanceDelhi. +1cc to Mr.P.N.Rajan, Advocate, S.R.No.31163 W.P.No.12122 of 2022andW.M.P Nos.11557 & 11559 of 2022 AJB(CO)SB(16/05/2022)