2017 (4) TMI 63 - HC - Income Tax

Pre deposit - waiver of demand deposit - Held that - In the present case, no doubt the AO did not in the first instance so refer the matter to the higher official; however, this court s order had clearly stated that the issue with respect to such relief should be reconsidered. If the AO felt constrained by the terms of the circular, he could have sought a clarification; at worst, he could have referred the matter to the Commissioner, if he thought that he did not have the power to grant such relief. What he could not have done was to revisit the entire issue as to whether the relief to the extent of 85% waiver of demand deposit could be given. AO could not have revisited the matter, as if there were a fresh or open remand. The court notices that the AO after rejecting the assessee s claim for benefit (i.e beyond 85% waiver) directed payment of ₹ 203 crores after adjusting ₹ 27,93,09,100/- refund. This relief (of adjustment of ₹ 27,93,09,100/- refund) had not been considered in the earlier order. In these circumstances, it is held that the impugned order, to the extent it reviewed the previous order (dated 22nd February, 2017) cannot be sustained. The relief granted (i.e adjustment of refund amount of ₹ 27,93,09,100/-) is, however, upheld. Accordingly, the impugned order, to the extent it reviewed the previous order of 22nd February 2017 and directed payments of ₹ 62,71,95,920/- is set aside. However, to the extent that it granted relief under Para (E) of the instruction (which the AO was within his rights to grant in terms of the remand) is upheld. Therefore, the assessee is directed to deposit the balance amount, i.e. ₹ 34,78,86,820/- (Rs. 62,71,95,920/- minus ₹ 27,93,09,100/-) within two weeks, which would be sufficient compliance of the orders.

Issues Involved:
1. Non-compliance with the court's previous order.
2. Entitlement to stay of recovery of demands for AY 2014-15.
3. Consideration of top line credit adjustment and license fee adjustment.
4. Treatment of refund standing to the credit of the petitioner.
5. Review and scope of remand by the AO.

Issue-wise Detailed Analysis:

1. Non-compliance with the Court's Previous Order:
The petitioner contended that the court's order in W.P.(C) 1874/2017 had not been given effect to. The court had previously directed the AO to reconsider specific issues raised by the petitioner and make an appropriate order under Section 220(6) of the Income Tax Act, 1961.

2. Entitlement to Stay of Recovery of Demands for AY 2014-15:
The petitioner sought a stay of recovery of demands amounting to ?4,18,13,06,110/- by depositing ?62,71,95,920/-. The petitioner relied on the Central Board of Direct Taxes (CBDT) Office Memorandum (OM) dated 29.02.2016, which allowed for a stay of demand in excess of 15% under certain conditions. The court noted that the AO had initially granted a stay of demand subject to a substantial relief of 85%.

3. Consideration of Top Line Credit Adjustment and License Fee Adjustment:
The petitioner argued that the AO had not considered the top line credit adjustment and license fee adjustment, which amounted to substantial sums. The court had previously directed the AO to specifically address these issues. The AO, in the impugned order, concluded that the issues related to unearned revenue and depreciation on the increased cost of spectrum remained contentious and thus, the demand would remain unenforceable until the disposal of the appeal.

4. Treatment of Refund Standing to the Credit of the Petitioner:
The petitioner claimed a refund of ?27,93,09,100/- for AY 2015-16 and AY 2016-17. The AO, in the impugned order, stated that the processing of the refund for AY 2015-16 could not be done due to a pending notice under Section 143(2). Similarly, for AY 2016-17, the necessary ticket for processing the ITR had not been forwarded by the CPC. Consequently, the refund could not be considered for passing the order under Section 220(6).

5. Review and Scope of Remand by the AO:
The court observed that the AO had exceeded the scope of remand by revisiting the entire issue of whether the relief of 85% waiver of demand deposit could be given. The court clarified that the AO was only required to consider whether further relief could be granted beyond the 85% waiver, as per the court's previous order. The AO's action of reviewing the previous order was not within the scope of the remand.

Conclusion:
The court held that the AO could not have revisited the matter as if there were a fresh or open remand. The court upheld the relief granted by the AO regarding the adjustment of the refund amount of ?27,93,09,100/-. However, the impugned order, to the extent it reviewed the previous order of 22nd February 2017, was set aside. The petitioner was directed to deposit the balance amount of ?34,78,86,820/- within two weeks, which would be sufficient compliance with the court's orders. The writ petition was partially allowed without any order as to costs.

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