Wp(C)/10002/2020 Of Equity Intelligence India Private Limited v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 29TH DAY OF JUNE 2020 / 8TH ASHADHA, 1942 WP(C).No.10002 OF 2020(A) PETITIONER: EQUITY INTELLIGENCE INDIA PRIVATE LIMITEDREPRESENTED BY ITS DIRECTOR, ABHILASH VARGHESE, 5TH FLOOR, AREEKAL MANSION, MANORAMA JUNCTION, MAIN AVENUE, PANAMPILLY NAGAR, COCHIN-682 036. BY ADV. SRI.P.K.RAVI SANKAR RESPONDENTS: 1DEPUTY COMMISSIONER OF INCOME TAXCORPORATE CIR 1(1), KOCHI, CENTRAL REVENUE BUILDING, I.S. ROAD, KOCHI-682 018. 2COMMISSIONER OF INCOME TAX (APPEALS)KOCHI, POORNIMA BUILDINGS, PANAMPILLY NAGAR, KOCHI-682 036. R1- R2 BY ADV. SRI.P.K.RAVINDRANATHA MENON (SR.)R1- R2 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON29.06.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Dated this the 29th day of June 2020 Petitioner, a company registered under the Companies Act, is a'Portfolio Manager' and through instant writ petition assailedExt.P14 impugned order dated 20.03.2020, whereby applications forstay submitted along with Exts.P5 and P12 appeals preferred againstthe assessment orders pertaining to assessment years 2017-18 and2018-19, have been disposed of by commanding the petitioner to pay20% of the demanded amount. In support of the aforementionedprayer, it is averred that the petitioner company invests the surplusfunds from its principal business of Portfolio Management inequities of Indian Companies, apart from parking the funds in Bankaccounts. 2.For the assessment year 2017-18, the petitionersubmitted return showing total income and net tax payable. But thesame was not accepted resulting into issuance of notice underSection 143(2) of the Income Tax Act and after scrutiny of books ofaccounts, Ext. P2 assessment order dated 27.12.2019, the net incomeof the petitioner company was determined as Rs.17,15,01,720/-.Similarly for the assessment year 2018-19, a demand of Rs.44,30,632/- was raised. The petitioner preferred Exts. P5 and P12appeals under Section 246 of the Income Tax Act along with stayapplications. 3.Adv. Sri.P.K. Ravi Sankar, learned counsel for thepetitioner submits that the appellate authority vide Ext.P14impugned order has erroneously dismissed the applications for stayrelying upon Circular dated 31.07.2017 commanding the petitioner todeposit 20% of the demanded amount and there is no reference tothe arguments or Circular dated 29.02.2016, whereby an option wasgiven to the similarly situated persons for keeping the sale proceedseither in capital gain or in stock-in-trade. 4.Issue notice before admission. 5.Adv. Sri. Navaneeth N. Nath for Sri. Jose Joseph, learnedStanding Counsel accepts notice for respondents and submits thatthe other connected matters pertaining to disposal of the stayapplication by not demanding 20% of demanded amount, would notapply as they pertained to demand under Section 80P of the IncomeTax Act and do not deny the fact that there is no advertance to theCircular or the arguments alleged to have been submitted on behalfof the petitioner in support of interim stay. 6.Having heard learned counsel for the parties andappraised the paper books, I am of the view that Ext.P14 impugnedorder is not only bereft of the reasonings but has been passed in amost sketchy and mechanical manner. Ext.P14. Operative part of theorder dated 20.03.2020 is extracted hereunder:- "With reference to your petition for stay of collectionof demand and WP(C) No. 4618 of 2020(B) of High Court ofKerala filed by you in the above mentioned cases. Pleasenote that the CBDT's order in O.M. No.404/72/93-ITCC dated29.02.2016 and in Office Memorandum dated 31.07.2017 "20%of the disputed demand should be paid, where the demand iscontested before CIT(A)." 6.Having heard learned counsel for the parties andappraised the paper books, I am of the view that Ext.P14 impugnedorder is not only bereft of the reasonings but has been passed in amost sketchy and mechanical manner. Ext.P14. Operative part of theorder dated 20.03.2020 is extracted hereunder:- "With reference to your petition for stay of collectionof demand and WP(C) No. 4618 of 2020(B) of High Court ofKerala filed by you in the above mentioned cases. Pleasenote that the CBDT's order in O.M. No.404/72/93-ITCC dated29.02.2016 and in Office Memorandum dated 31.07.2017 "20%of the disputed demand should be paid, where the demand iscontested before CIT(A)." Taking an overall view of the facts and circumstancesof the case, further as per CBDT lnstruction 1914 and O.M.Dated 31.07.2017, the appellant should pay 20% of thedisputed demand immediately and pursue the appeal. Stay isgranted for balance demand on the condition of payment ofdisputed demand till the decision of appeal." 7.Even the assessing officer had also referred to theCircular No. 6 of 2016 dated 29.02.2016 issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance,Government of India, but interpreted in a different context. Quasi-judicial authorities like Commissioner of Income Tax (Appeals) arealso legitimately expected to refer to the arguments submitted in DCS support of the interim prayer sought in support of the memorandumof appeal preferred against the assessment orders and cannot blindlyapply the Circular, as in the instant case. Even the order do notreflect whether opportunity of hearing was given to the petitionernor any advertance to any arguments. Such order cannot escape thescrutiny of the Court, while exercising the power of judicial reviewunder Article 226 of the Constitution of India. 8.In view of what has been noticed above, Ext.P14impugned order is set aside and the matter is remitted to the Officeof the Commissioner of Income Tax (Appeals) - I, to consider the stayapplications filed along with Exts.P5 and P12 appeals in respect ofassessment years 2017-18 and 2018-19 and pass detailed order, afteraffording opportunity of hearing to the petitioner. Let this exercisebe undertaken within a period of two months and still that time, nocoercive action shall be taken against the petitioner. The writ petition is disposed of. Sd/- AMIT RAWAL JUDGE APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE ARTICLES OF ASSOCIATION OFTHE PETITIONER COMPANY.THE PETITIONER COMPANY. EXHIBIT P2TRUE COPY OF THE ORDER OF ASSESSMENT DATED 27.12.2019 ISSUED BY THE IST RESPONDENT.27.12.2019 ISSUED BY THE IST RESPONDENT. EXHIBIT P3TRUE COPY OF THE CIRCULAR NO.6 OF 2016 DATED 29.2.2016 ISSUED BY THE CENTRAL BOARDOF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA.DATED 29.2.2016 ISSUED BY THE CENTRAL BOARDOF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA. EXHIBIT P4TRUE COPY OF THE NOTICE OF DEMAND DATED 27.12.2019 ISSUED BY THE IST RESPONDENT.27.12.2019 ISSUED BY THE IST RESPONDENT. EXHIBIT P5TRUE COPY OF THE MEMORANDUM OF APPEAL DATEDNIL SUBMITTED ON 22.1.2020 SUBMITTED BY THEPETITIOENR COMPANY BEFORE THE 2ND RESPONDENT.NIL SUBMITTED ON 22.1.2020 SUBMITTED BY THEPETITIOENR COMPANY BEFORE THE 2ND RESPONDENT. EXHIBIT P6TRUE COPY OF THE PETITION DATED NIL FILED ON 28.1.2020 BY THE PETITIONER COMPANY BEFORE THE 2ND RESPONDENT.ON 28.1.2020 BY THE PETITIONER COMPANY BEFORE THE 2ND RESPONDENT. EXHIBIT P7TRUE COPY OF THE JUDGMENT DATED 18.2.2020 IN WP(C) NO.4618 OF 2020 OF THIS HONOURABLECOURT.IN WP(C) NO.4618 OF 2020 OF THIS HONOURABLECOURT. EXHIBIT P8TRUE COPY OF THE RELEVANT PAGES OF THE INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 20189-19 SUBMITTED BY THE PETITIONER COMPANY.INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 20189-19 SUBMITTED BY THE PETITIONER COMPANY. EXHIBIT P5TRUE COPY OF THE MEMORANDUM OF APPEAL DATEDNIL SUBMITTED ON 22.1.2020 SUBMITTED BY THEPETITIOENR COMPANY BEFORE THE 2ND RESPONDENT.NIL SUBMITTED ON 22.1.2020 SUBMITTED BY THEPETITIOENR COMPANY BEFORE THE 2ND RESPONDENT. EXHIBIT P6TRUE COPY OF THE PETITION DATED NIL FILED ON 28.1.2020 BY THE PETITIONER COMPANY BEFORE THE 2ND RESPONDENT.ON 28.1.2020 BY THE PETITIONER COMPANY BEFORE THE 2ND RESPONDENT. EXHIBIT P7TRUE COPY OF THE JUDGMENT DATED 18.2.2020 IN WP(C) NO.4618 OF 2020 OF THIS HONOURABLECOURT.IN WP(C) NO.4618 OF 2020 OF THIS HONOURABLECOURT. EXHIBIT P8TRUE COPY OF THE RELEVANT PAGES OF THE INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 20189-19 SUBMITTED BY THE PETITIONER COMPANY.INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 20189-19 SUBMITTED BY THE PETITIONER COMPANY. EXHIBIT P9TRUE COPY OF THE COMMUNICATION REFERENCE NUMBER CPC/1819/G22/1882111886 DATED 17.3.2019 ISSUED ON BEHALF OF THE IST RESPONDENT TO THE PETITIONER COMPANY.NUMBER CPC/1819/G22/1882111886 DATED 17.3.2019 ISSUED ON BEHALF OF THE IST RESPONDENT TO THE PETITIONER COMPANY. EXHIBIT P10SCREEN SHOT OF THE CLARIFICATION SUBMITTED BY THE PETITIONER COMPANY.BY THE PETITIONER COMPANY. EXHIBIT P11TRUE COPY OF THE RECTIFICATION ORDER DATED 30.10.2019 ISSUED UNDER SECTION 154 OF THE INCOME TAX ACT BY THE IST RESPONDENT.30.10.2019 ISSUED UNDER SECTION 154 OF THE INCOME TAX ACT BY THE IST RESPONDENT. EXHIBIT P12 EXHIBIT P13 EXHIBIT P14 TRUE COPY OF THE MEMORANDUM OF APPEAL DATEDNIL SUBMITTED BY THE PETITIONER COMPANY BEFORE THE 2ND RESPONDENT. TRUE COPY OF THE PETITION DATED NIL BY THE PETITIONER COMPANY BEFORE THE 2ND RESPONDENT. TRUE COPY OF THE ORDER F.NO.CIT(A)-1/STAY OF DEMAND/2019-20 DATED 20.3.2020 ISSUED BYTHE 2ND RESPONDENT.