2020 (4) TMI 335 - HC - Income Tax

Recovery proceedings - AO required the petitioner to deposit 20% of the disputed amount - projection of Tax on Returned Income - projection of the petitioner was that the prepaid taxes lying with the revenue were to the tune of ₹ 175,33,83,084/-, and the said amount was much more than the 20% of the disputed demand payable at ₹ 164,52,95,215/- - explanation furnished by petitioner for not disclosing the MAT tax liability, is that the Assessing Officer had not accepted the return on MAT basis and, therefore, the said amount was not reflected - HELD THAT - Petitioner, while circulating the tabulation at the initial hearing of the petition, projected the Tax on Returned Income as ₹ 69,83,85,442/- on the assumption that its returned income was ₹ 210,24,62,383/-, and without accounting for the several additions and disallowances made by the Assessing Officer. Pertinently, in the Assessment order, the figure of ₹ 69,83,85,442/- is nowhere to be seen. If the petitioner were to be fair to the Court, the petitioner would have reflected the amount of ₹ 2,247,073,334/ which was the minimum tax liability of the petitioner, assuming that its return based on the consolidated financial statement, were to be accepted. Against the column indicating the Tax on admitted liability (Returned Income) , the said amount of ₹ 2,247,073,334/- would have been reflected, which would have completely changed the equation that was projected before us by the petitioner. The explanation furnished by Mr. Balbir Singh, learned senior counsel for the petitioner for not disclosing the MAT tax liability, is that the Assessing Officer had not accepted the return on MAT basis and, therefore, the said amount was not reflected. We do not find any weight in this submission. Since, the MAT liability, even according to the petitioner, was the higher of the two figures i.e. the tax on the net taxable income (as returned by the petitioner), and the MAT amount, the petitioner could not have run away from the fact that its liability was, at least, if not more than ₹ 2,247,073,334/-. Thus, we were clearly misled by the petitioner at the preliminary hearing of the petition which led to our passing the interim order. Petitioner has invoked the discretionary extraordinary writ jurisdiction of this Court, the petitioner was expected to approach this Court with clean hands, which, unfortunately, we find is completely lacking in the present case. We are, therefore, not inclined to exercise our discretionary writ jurisdiction in favour of such a petitioner. Accordingly, we dismiss this petition with costs quantified at ₹ 5 lakhs to be paid to the Delhi High Court Advocates Welfare Trust.

Summary

Issues:
1. Interpretation of Office Memorandum dated 29.02.2016 and Section 220(6) regarding the deposit required for disputed tax demand.
2. Compliance with court orders by the petitioner regarding adjournments in the appeal before CIT (A).
3. Allegations of gross suppression and misstatement by the petitioner regarding tax liabilities.

Analysis:
1. The court analyzed the interplay of Section 220(6) and the Office Memorandum dated 29.02.2016 to determine the deposit required for disputed tax demand. The petitioner argued for 20% of the tax on the amount in dispute, while the respondent sought 20% of the demand raised. The court restrained coercive action by the respondent, subject to the petitioner not seeking adjournments during appeal proceedings before CIT (A).

2. The respondent alleged that the petitioner sought adjournments before CIT (A) despite court directions against it. The court noted the petitioner's justification for adjournments related to a pending appeal for another assessment year. However, the court found the petitioner's actions in violation of court orders and emphasized the need for compliance without seeking modifications.

3. The court addressed the serious issue of gross suppression and misstatement by the petitioner regarding tax liabilities. The petitioner projected a lower outstanding liability by not disclosing the Minimum Alternate Tax (MAT) liability, misleading the court. The court dismissed the petition due to lack of transparency and clean hands, imposing costs on the petitioner for misleading the court and not disclosing the actual tax liabilities accurately.

This detailed analysis highlights the court's examination of legal provisions, compliance with court orders, and the petitioner's transparency in disclosing tax liabilities, leading to the dismissal of the petition with costs.