High Court of Delhi was dealing with the petition filed challenging the orders dated 28th February, 2022 and 14th March, 2022 passed by the Respondents whereby the stay application filed by the Petitioner had been disposed of. It is pertinent to mention that the disputed demand of Rs.42,40,72,259/- has arisen from an order dated 08th December, 2021 passed under section 201(1)/201(1A) of the Income Tax Act, 1961 wherein the Petitioner was held to be an assessee in default for failure to deduct tax at source while making interest payments to China Development Bank (“CDB”).
Petitioner’s Contention:
Learned counsel for the petitioner submitted that the order dated 08th December, 2021 passed under section 201(1)/201(1A) of the Act in itself is manifestly against the plain language of law and was passed without following the principles of natural justice. He further stated that the impugned orders dated 28th February, 2022 and 14th March, 2022 do not deal with the facets of prima facie case, balance of convenience and irreparable harm or injury.
Respondent’s Contention:
Learned counsel for the petitioner submitted that the direction to deposit20% of the demand is in accordance with the Office Memorandums dated 29th February, 2016 and 31st July, 2017.
HC’s Observations:
After hearing both the sides Court stated that the requirement of payment of twenty percent of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases. The said pre-condition of deposit of twenty percent of the demand can be relaxed in appropriate cases. Even the Office Memorandum dated 29th February, 2016 gives instances like where addition on the same issue has been deleted by the appellate authorities in earlier years or where the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee.
HC relied upon the case of PCIT vs. M/s LG Electronics India Pvt. Ltd. where the SC held that tax authorities are eligible to grant stay on deposit of amounts lesser than twenty percent of the disputed demand in the facts and circumstances of a case.
HC stated that in the present case, the impugned orders are non-reasoned orders. Neither the Assessing Officer nor the CIT have considered three basic principles i.e., the prima facie case, balance of convenience and irreparable injury while deciding the stay applications. Consequently, the impugned orders and notices are set aside and the matter is remanded back to the Commissioner of Income Tax for fresh adjudication in the application for stay.
HC Held:
After evaluating submissions made by both the parties the Court held that “before deciding the stay application, the Commissioner of Income Tax shall grant a personal hearing to the authorised representative of the Petitioner. For this purpose, list the matter before the Commissioner of Income Tax on 18th April, 2022. It is clarified that till the stay application filed by the petitioner is not decided, no coercive action shall be taken by the respondents against the Petitioner in pursuance to the demand arising out of the order dated 08th December, 2021.”
Case Title: Tata Teleservices Limited v. Commissioner of Income Tax, International Taxation-3 & Anr.
Bench: Hon'ble Mr. Justice Manmohan and Hon'ble Mr. Justice Dinesh Kumar Sharma
Citation: W.P.(C) 4660/2022 & C.M.Nos.13978-13979/2022
Decided on: 23rd March, 2022
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