9911796707
TMI Blog2024 (3) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited as a pre-condition for grant of stay. The OM dated 29 February 2016 specifically spoke of a discretion vesting in the AO to grant stay subject to a deposit at a rate higher or lower than 15% dependent upon the facts of a particular case. The subsequent OM merely amended the rate to be 20%. In fact, while the subsequent OM chose to describe the 20% deposit to be the standard rate , the same would clearly not sustain in light of the discussion which ensues. More recently in Indian National Congress vs Deputy Commissioner of Income Tax Central 19 Ors. [ 2024 (3) TMI 669 - DELHI HIGH COURT] we had an occasion to examine the scope of the power conferred by Section 220(6) wherein as held 20% which is spoken of in the OM cannot possibly be viewed as being an inviolate or inflexible condition. The extent of the deposit which an assessee may be called upon to make would have to be examined and answered bearing in mind factors such as prima facie case, undue hardship and likelihood of success. We note that while dealing with the question of the claim of stay as made by an assessee and the competing obligation to protect the interest of the Revenue, the Supreme Court in Benara Valve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is principally raised in the backdrop of the aforesaid adjustment having been made despite the petitioner having moved a rectification application pertaining to the final assessment which was framed for AY 2018-19 and an admitted failure on the part of the respondents to consider and dispose of the stay application which was moved and was referable to Section 220(6) of the Income Tax Act, 1961 [Act] . It is in the aforesaid backdrop that the petitioner has prayed for the refund being processed after adjustment of 20% of the disputed demand for AY 2018-19. For the purposes of examining the reliefs which are claimed, we deem it apposite to notice the following facts. 2. The petitioner filed its Return of Income [ROI] for AY 2018-19 on 29 September 2018 claiming a refund of INR 6,45,65,160/- on account of excess Taxes Deducted at Source [TDS] which was deducted during the course of the said year. In the course of processing of that ROI, notices under Section 143(2) and 142(1) of the Act came to be issued on 22 September 2019 and 09 January 2020 respectively. On 16 November 2019, the petitioner received an intimation, referable to Section 143(1) of the Act, apprising it of an amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the adjustments being made without its application referable to Section 220(6) being either considered or examined. According to Mr. Kapoor, the very purpose of Section 220(6) has been nullified by the action of the respondents who have proceeded to make the impugned adjustments without even examining the application of the petitioner for not being treated as an assessee in default . 6. Mr. Kapoor additionally submitted that as per the Central Board of Direct Taxes Office Memorandum No. 404/72/93-ITCC [OM] dated 31 July 2017, the respondents could have at best required the petitioner to deposit 20% of the outstanding demand. According to learned counsel, despite the aforesaid binding prescription, the entire outstanding demand illegally created for AY 2018-19 had been adjusted against the refunds which were due and payable to the petitioner. 7. Appearing for the respondents, Mr. Maratha, learned counsel submitted that they were clearly justified in effecting the adjustments in the absence of a declaration having been rendered in favour of the petitioner that it was not an assessee in default . Learned counsel submitted that although an application under Section 154 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the aforesaid O.M dated 29-2-2016 hereby stand modified to 20% of the disputed demand. Other guidelines contained in the O.M. dated 29-2-2016 shall remain unchanged. These modifications may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance. 10. It would also be beneficial at this juncture to notice the earlier OM dated 29 February 2016 and the same is reproduced hereinbelow:- OFFICE MEMORANDUM [F.NO.404/72/93-ITCC] SECTION 220 OF THE INCOME-TAX ACT, 1961 - COLLECTION AND RECOVERY OF TAX WHEN TAX PAYABLE AND WHEN ASSESSEE DEEMED IN DEFAULT AMENDMENT OF INSTRUCTION NO. 1914, DATED 21-3-1996 TO PROVIDE FOR GUIDELINES FOR STAY OF DEMAND AT FIRST APPEAL STAGE OFFICE MEMORANDUM [F.NO. 404/72/93-ITCC], DATED 29-2-2016 Instruction No. 1914 dated 21-3-1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. 2. In part 'C' of the Instruction, it has been prescribed that a demand will be stayed only if there are valid reasons for doing so and that mere filing of an appeal against the assessment order will not be a suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer. (D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 (C) above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be. (E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,- (i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; (ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te as a fetter on the Commissioner since it is a quasi-judicial authority, we only need to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal. 3. The appeal is disposed of accordingly. Pending application, if any, shall stand disposed of. 14. As is manifest from the order passed by the Supreme Court in Principal Commissioner of Income Tax Ors. vs LG Electronics India Pvt. Ltd. (2018) 18 SCC 447, it had been emphasized that the administrative circular would not operate as a fetter upon the power otherwise conferred on a quasi-judicial authority and that it would be wholly incorrect to view the OM as mandating the deposit of 20%, irrespective of the facts of an individual case. This would also flow from the clear and express language employed in sub-section (6) of Section 220 which speaks of the Assessing Officer [AO] being empowered in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case . The discretion thus vested in the hands of the AO is one which cannot possibly be viewed as being cabined by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely offering or consenting to deposit 20% of the outstanding liability. Ultimately, it is for the authorities to examine and consider what amount would be sufficient to securitise the interest of the Revenue and thus a just balance being struck. The quantum of the deposit that would be required to be made would ultimately depend upon the facts and circumstances of each case. This is evident from the order of the Supreme Court in Principal Commissioner of Income Tax and others Vs. LG Electronics India Private Limited and which is extracted hereunder: - 1. Delay condoned. Leave granted. 2. Having heard Shri Vikramjit Banerjee, learned ASG appearing on behalf of the appellant, and giving credence to the fact that he has argued before us that the administrative circular will not operate as a fetter on the Commissioner since it is a quasi-judicial authority, we only need to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal . 3. The appeal is disposed of accordingly. Pending application, if any, shall stand disposed of. 23. The position which thus emerges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen s faith in the impartiality of public administration, interim relief can be given. 9. It has become an unfortunate trend to casually dispose of stay applications by referring to decisions in Siliguri Municipality and Dunlop India cases without analysing factual scenario involved in a particular case. xxxx xxxx xxxx 11. Two significant expressions used in the provisions are undue hardship to such person and safeguard the interests of Revenue . Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. 12. As noted above there are two important expressions in Section 35-F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. In Mehsana District Cooperative Milk P.U. Ltd. v. Union of India, 2003 (154) E.L.T. 347 (S.C.), the Hon'ble Supreme Court considered the case of dispensation of pre-deposit condition and held that the Appellate Authority must address to itself to the prima facie merits of the appellant's case and upon being satisfied of the same, determine the quantum of deposit taking into consideration the financial hardship and other such related factors. xxxx xxxx xxxx 23. In J.N. Chemicals Pvt. Ltd. v. CEGAT, 1991 (53) E.L.T. 543, the Calcutta High Court while considering the provisions of pre-deposit of duty and penalty, observed that where the authority concerned comes to the conclusion that the appellant has a good prima facie case so as to justify the dispensation of requirement of pre-deposit of the disputed amount on duty and penalty, the authority must exercise its discretion to dispense with such requirement particularly in a case where the appellant satisfies the authority concerned that its case is squarely covered by the decision of a competent Court binding on it. In such an eventuality, asking the appellant to deposit the duty demanded and penalty levied would undoubted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguable case, the Appellate Authority must safeguard the interest of the Revenue, as the same also cannot be jeopardised. 27. In Sri Krishna v. Union of India, 1998 (104) E.L.T. 305, Delhi High Court considered the issue of dispensation of pre-deposit condition and the concept of undue hardship while considering the provisions of Section 129E of the Customs Act, 1962 and Section 35 of the Act and held that the Court while considering the case of the appellant should examine as to whether the Appellate Authority or Tribunal have dealt with the plea raised by the appellant before it and have considered as to whether the appellant has a prima facie case on merit. In case the appellant has a strong prima facie case, as is most likely to exonerate him from liability and the Appellate Authority/Tribunal insists on the deposit of the amount, it would amount to undue hardship. 28. In Hoogly Mills Co. Ltd. v. Union of India, 1999 (108) E.L.T. 637, the Calcutta High Court again reiterated the view that if the appellant has a strong prima facie case, he is entitled of waiving the pre-deposit condition and in case the Appellate Authority insists to deposit the amount so assessed or penalty so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vereign dues is concerned. While considering the application for stay/waiver of a pre-deposit, as required under the law, the Court must apply its mind as to whether the appellant has a strong prima facie case on merit. In case it is covered by the judgment of a Court/Tribunal binding upon the Appellate Authority, it should apply its mind as to whether in view of the said judgment, the appellant is likely to succeed on merit. If an appellant having strong prima facie case, is asked to deposit the amount of assessment so made or penalty so levied, it would cause undue hardship to him, though there may be no financial restrain on the appellant running in a good financial condition. The arguments that appellant is in a position to deposit or if he succeeds in appeal, he will be entitled to get the refund, are not the considerations for deciding the application. The order of the Appellate Authority itself must show that it had applied its mind to the issue raised by the appellant and it has been considered in accordance with the law. The expression undue hardship has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
