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2019 (10) TMI 1410 - HC - Income TaxStay of demand - It is the case of the Petitioners that so far as Serial Nos. 1 (deduction for claim incurred but not reported), 2 (Exemption under Section 10(38) of the Act) and 5 (Amortization of premium) hereinabove are concerned, the same stands concluded in favour of the Petitioner either by virtue of decision of the Income Tax Appellate Tribunal (Tribunal) or the decision of this Court - Commissioner of Income Tax has directed them to deposit 20% of the disputed amounts under Item Nos.2 and 5 above and 10% of the disputed amount under Item No.1 above - HELD THAT - The impugned order still directed a deposit of 10% of disputed demand on this Court in view of the decision of Chennai Bench of the Tribunal in the case of United India Insurance 2018 (10) TMI 1096 - ITAT CHENNAI . We note that the Chennai Bench decision of the Tribunal has ignored the co-ordinate bench decision of Mumbai in ECGC IT 2017 (10) TMI 1516 - ITAT MUMBAI and Kolkata benches of the Tribunal. Therefore, prima facie per incurium. In any case the CBDT Circular No. 530 dated 6 March 1989 states that stay of demand be granted where there are conflicting decisions of the High Court. This principle can be extended to the conflicting decisions of the different benches of the Tribunal. Thus, in the above facts the complete stay of the demand on the above head i.e. Item No.1 of the above chart was warranted in the Petitioner s favour. Issue No.2 of the above table is concerned we are informed that on further Appeal to the Tribunal, the demand attributable on the aforesaid head had been stayed on partial deposit and the Appeal is now fixed for hearing on 11 December 2019. However, we note the fact that while the impugned order of Commissioner of Income Tax directed the Petitioner to pay 20% on this issue, it has not indicated the reason it has chosen to follow the decision of the Commissioner of Income Tax (Appeals) for the earlier Assessment Year in preference to the decision of this Court in New India Assurance, 2018 (3) TMI 589 - BOMBAY HIGH COURT . This when it is the Petitioner s contention that the amendment made in Rule 5 of the 1st Schedule to the Act will not affect the claim for deduction under Section 10(38) of the Act. No prima facie view on this is taken by the impugned order. Besides the decision of jurisdictional High Court is binding upon the Authority. Therefore, in the above view, no deposit should have been directed on this head of disputed tax. An unconditional stay of this demand at Item No.2 of the chart in the present fact was warranted. So far as Issue No 5 CBDT Circular No. 530 dated 6 March 1989 while stating that a stay of demand be granted if there are conflicting views of the High Court. This in our view could be extended to conflicting view of different benches of the Tribunal. In the above view, the impugned order directing the deposit of 20% on this head was also not justified. An unconditional stay of this demand at Item No.5 of the chart, in the present facts is warranted. In the above view, we modify the impugned order dated 13 August 2019 of Respondent No.2 Commissioner of Income Tax to the extent that there shall be a complete stay of the demands made on Item at Serial Nos. 1,2 and 5 of the chart hereinabove. The Petitioner will deposit the balance amount as directed by the Commissioner of Income Tax (Appeals) of ₹ 26.40 crores with the Respondents within a period of four weeks from today. 0ne of the factors which weighed with us in passing this order was the hearing of the appeal is now fixed before the Commissioner of Income Tax (Appeals) on 21 October 2019 and the Petitioner s undertaking to us that it will cooperate with the Commissioner of Income Tax (Appeals) in early disposal of the appeal. Observations made herein are only in the context of the order of stay passed under Section 220(6) of the Act. Our observations are only prima facie view for the limited purpose of disposal of the stay application. It would not have impact/influence on the Commissioner of Income Tax (Appeals) while considering the Petitioner s appeal on merits for the order dated 30 May 2019 of the Assessing Officer. The Commissioner of Income Tax (Appeals) will dispose of the appeal on its own merits without in any manner being influenced by any observation in this order.
Issues Involved:
1. Challenge to the order under Section 220(6) of the Income Tax Act, 1961. 2. Requirement to deposit 20% of the disputed demand. 3. Conflicting Tribunal decisions on various heads of the disputed demand. 4. Application of CBDT Circulars/Instructions in stay applications. 5. Parameters for disposing of stay applications. Detailed Analysis: 1. Challenge to the order under Section 220(6) of the Income Tax Act, 1961: This Petition challenges the orders dated 12 June 2019 by the Assessing Officer and 13 August 2019 by the Principal Commissioner of Income Tax (Appeals) regarding the Petitioner’s application for not being treated as an assessee in default under Section 220(6) of the Income Tax Act, 1961. The Petitioner is contesting a demand of ?3601 crores raised in the assessment order dated 30 May 2019 for the Assessment Year 2017-18. 2. Requirement to deposit 20% of the disputed demand: The Assessing Officer initially allowed the Petitioner’s stay application on the condition of depositing 20% of the disputed demand (?720 crores). The Principal Commissioner of Income Tax modified this to a deposit of ?439 crores. The Petitioner contended that certain heads of the disputed demand were already decided in their favor by higher authorities and thus should not require any deposit. 3. Conflicting Tribunal decisions on various heads of the disputed demand: The Principal Commissioner of Income Tax’s order required deposits on several heads despite previous favorable decisions for the Petitioner. For instance: - Issue No. 1 (Deduction for Claims Incurred but Not Reported): The Petitioner cited favorable Tribunal decisions, but the Principal Commissioner required a 10% deposit due to a contrary decision by the Chennai Tribunal. - Issue No. 2 (Exemption under Section 10(38)): The Petitioner referenced a High Court decision in their favor, yet the Principal Commissioner demanded a 20% deposit, ignoring the binding nature of the High Court ruling. - Issue No. 5 (Amortization of Premium): Despite a favorable Mumbai Tribunal decision, the Principal Commissioner required a 20% deposit, citing a contrary Chennai Tribunal decision. 4. Application of CBDT Circulars/Instructions in stay applications: The Petitioner argued that CBDT Circular No. 530 (6 March 1989) supports granting a stay when there are conflicting Tribunal decisions. The Principal Commissioner’s order did not adequately consider these Circulars, leading to the Petitioner’s contention that the deposits were unjustified. 5. Parameters for disposing of stay applications: The Court referred to established parameters for stay applications, emphasizing: - Briefly setting out issues and submissions. - Granting stay when assessed income far exceeds returned income, or when issues are concluded by higher forum decisions. - Considering financial hardship and the likelihood of success in appeal. - Balancing the interest of the Revenue with mitigating hardship to the assessee. Judgment: The Court modified the Principal Commissioner’s order, granting a complete stay on demands related to Issues 1, 2, and 5, and required the Petitioner to deposit the remaining amount of ?26.40 crores within four weeks. The Court emphasized that the observations were prima facie and should not influence the Commissioner of Income Tax (Appeals) in the merits of the appeal. The Petition was disposed of accordingly.
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