2022 (5) TMI 1067 - HC - Income Tax

Stay of demand - 1st respondent was guided by the office memorandum dated 31.07.2017 of the Central Board of Direct Taxes (CBDT), as per which stay may be granted in cases where appeals are pending subject to payment of 20% of the disputed demand - HELD THAT - Supreme Court in Principal Commissioner of Income Tax vs. L.G. Electronics India Private Ltd. 2018 (7) TMI 1905 - SC ORDER observed that an administrative circular would not operate as a factor on the Commissioner since it is a quasi-judicial authority. Clarifying further, Supreme Court held that it would be open to the authority on the facts of individual cases to grant deposit orders of a lesser amount than 20% pending appeal. 1st respondent as the appellate authority exercises quasi-judicial powers. Power to consider prayer for stay is incidental and ancillary to the power to hear appeals. As a quasi-judicial authority, Commissioner (Appeals) is not bound by the administrative circulars issued by CBDT. He has to apply his own independent mind in the facts and circumstances of each case. Considering the above, the impugned order is hereby set aside. The matter is remanded back to the 1st respondent for a fresh decision on the prayer for stay of the petitioner in accordance with law after complying with the principles of natural justice. This shall be done within a period of four (04) weeks from the date of receipt of a copy of this order. Till such time, demand pursuant to the assessment order dated 21.12.2019 shall remain stayed.

Summary

Issues:
1. Petitioner's grievance against the order for depositing 20% of outstanding demand.
2. Applicability of CBDT office memorandum dated 31.07.2017.
3. Judicial interpretation of administrative circulars.
4. Quasi-judicial powers of the appellate authority.
5. Setting aside the impugned order and remanding the matter for a fresh decision.

Analysis:

Issue 1: The petitioner challenged the order requiring a deposit of 20% of the outstanding demand. The petitioner was aggrieved by the order dated 04.03.2022, where the 1st respondent directed that the petitioner would not be treated as in default if 20% of the outstanding demand was deposited by a specified date. The petitioner, an assessee under the Income Tax Act, was assessed for the year 2017-18, resulting in a substantial increase in the assessed income compared to the returned income.

Issue 2: The impugned order was guided by the CBDT office memorandum dated 31.07.2017, allowing for a stay in cases with pending appeals upon payment of 20% of the disputed demand. The court noted the reliance on this memorandum but emphasized that the authority is not bound by such administrative circulars. The Supreme Court precedent highlighted that the authority can exercise discretion to grant deposit orders for amounts less than 20% during appeals.

Issue 3: The judgment clarified the judicial stance on administrative circulars, emphasizing that the appellate authority, as a quasi-judicial body, must independently assess each case. The Commissioner (Appeals) is not mandated to follow administrative circulars blindly but must apply individual judgment based on the circumstances of each case.

Issue 4: Recognizing the quasi-judicial powers of the appellate authority, the court set aside the impugned order dated 04.03.2022. The matter was remanded back to the 1st respondent for a fresh decision on the stay petition, emphasizing compliance with natural justice principles. The appellate authority was directed to reconsider the petitioner's stay request within four weeks, maintaining the stay on the demand until a fresh decision is made.

Issue 5: The judgment concluded by disposing of the writ petition without imposing any costs. Additionally, any pending miscellaneous applications in the writ petition were directed to be closed as a sequel to the main decision, ensuring a comprehensive resolution of the legal matter.

This detailed analysis encapsulates the key issues addressed in the judgment, providing a comprehensive understanding of the legal reasoning and implications of the court's decision.