2018 (4) TMI 1874 - HC - Income Tax

Stay of demand - petitioner to pay 20% of the disputed tax - HELD THAT - Commissioner of Income Tax (Appeals) as well as before the ITAT, the petitioner has succeeded for the assessment years 2010-11 and 2012-13, and it is the Revenue, which is on Appeal. Therefore, balance of convenience is entirely in favour of the assessee/petitioner, which is also the Government of India undertaking sponsored by the Ministry of Commerce and Industry. Thus, the impugned order, directing the petitioner to pay 20% of the disputed tax is not sustainable in law. For the above reasons, the Writ Petition is allowed, the impugned order is set aside. There will be an order of stay of collection of the tax pertaining to the assessment year 2015-16 till the disposal of the Appeal. The learned counsel appearing for the petitioner submitted that before the matter could be taken up, the third respondent has already taken a demand draft from the petitioner's bankers for a sum. The petitioner is granted liberty to submit a representation to the respondents 2 and 3 for repatriation of the said amount of ₹ 36,00,000/- to the bank account of the petitioner. If such representation is made, the respondents 2 and 3 shall consider the same, bearing in mind the observation made by the second respondent, in the earlier order, dated 31.10.2017 as well as the observation made in the order, dated 01.12.2017, while granting stay of the entire demand. Such decision should be taken within a period of two weeks from the date on which the representation is made.

Summary

Issues:
1. Disputed tax payment order for the assessment year 2015-16
2. Jurisdiction of the third respondent to review earlier order
3. Balance of convenience in favor of the petitioner
4. Stay of tax collection

Analysis:

1. The petitioner challenged the order directing payment of 20% disputed tax for the assessment year 2015-16. The petitioner had succeeded in previous assessments for 2010-11 and 2012-13, with pending appeals by the Department. The Assessing Officer acknowledged the eligibility of the petitioner for exemption under Section 10 (23) (iv) based on ITAT's decision. Despite the petitioner's appeal and stay granted by the second respondent, the third respondent reviewed the order, raising concerns over their jurisdiction. The High Court found the third respondent's review without jurisdiction, as the statute did not empower such revision.

2. The petitioner's success in previous assessments and pending appeals indicated the balance of convenience favored the petitioner, a Government of India undertaking. The impugned order demanding payment of 20% disputed tax was deemed unsustainable in law due to the petitioner's favorable track record before the Commissioner of Income Tax (Appeals) and ITAT. Consequently, the High Court set aside the impugned order and granted a stay on tax collection for the assessment year 2015-16 until the appeal's disposal.

3. The petitioner was granted liberty to request repatriation of the demanded amount to their bank account. The High Court directed respondents 2 and 3 to consider the representation within two weeks, considering previous observations related to granting stay on the entire demand. The Writ Petition was allowed without costs, and connected Writ Miscellaneous Petitions were closed.