Volvo Group India Pvt. Ltd Vs DCIT (ITAT Bangalore)
(i) S. 220(6) has no application to a case where an appeal is filed before the Tribunal though the Tribunal has inherent power to grant stay. The order passed u/s 220(6) is null and void. The Tribunal should have decided the stay application instead of calling upon the AO to dispose of the application u/s 220(6);
(ii) It is wrong to say that an adjustment of refund u/s 245 is not a “recovery” only on the ground that s. 245 is placed in the Chapter of “Refunds”. The term “recovery” is comprehensive and includes adjustment thereby reducing the demand. In Circular No. 1914 dated 2.12.1993, even the CBDT did not regard ‘recovery’ as excluding ‘adjustment’ u/s 245. However, different parameters may apply in considering a request for stay against coercive measures to recover the demand and a stay against refund adjustment. It is permissible for the authority to direct stay of recovery by coercive methods but not grant stay of adjustment of refund. However, when a simple & absolute order of stay of recovery is passed, it bars recover of the demand by way of adjustment of demand. The revenue must be obedient and respect the stay order and not over-reach or circumvent the stay order. No deviancy or breach should be made;
(iii) It will be specious & illogical for the Revenue to contend that if an issue is decided in favour of the assessee giving rise to a refund in an earlier year, that refund can be adjusted u/s 245, on account of the demand on the same issue in a subsequent year. While the AO can made an addition on the ground that the appellate order for an earlier year has not been accepted, he cannot make an adjustment towards a demand on an issue decided in favour of the assessee.
(iv) The argument that as the assessment order has been passed u/s 144C after reference to the DRP, the orders passed by the CIT(A) and Tribunal in favour of the assessee have lost significance and do not justify stay of demand in covered matters is not acceptable. The decisions of the CIT (A) & Tribunal in favour of the assessee should not be ignored and have not become inconsequential. This is not a valid ground to ignore the decisions of the appellate authorities and is also not a good ground to not to stay demand or to allow adjustment u/s 245;
(v) The respondents are officers of the State and the Law requires that they perform their duties with utmost objectivity and fairness, while keeping in mind the sanctity of the role and function assigned to them which at times requires tough steps. On facts, the conduct and action of the Revenue in recovering the disputed tax in respect of additions on issues which are already covered against them by the earlier orders of the ITAT or CIT (A) is unjustified and contrary to law. Directions issued to refund the tax.
The above decision lays down two propositions which are relevant in the present case, viz., (i) The term “recovery” is comprehensive and includes adjustment thereby reducing the demand; (ii) It will be specious & illogical for the Revenue to contend that if an issue is decided in favour of the assessee giving rise to a refund in an earlier year, that refund can be adjusted u/s 245, on account of the demand on the same issue in a subsequent year.
The facts brought to our notice show the existence of a prima facie case in favour of the assessee. The facts also show that the balance of convenience is in favour of the assessee, considering the facts brought to our notice on the financial hardship. If an order of stay is not granted, we are of the view that the assessee may be put to hardship. Even if adjustment of refund due to the assessee for earlier assessment years is against the outstanding demand for the aforesaid assessment years, which are subject matter of appeals before the Tribunal, that would also amount to recovery of outstanding demand as held by Hon’ble Delhi High Court in the case of Maruti Suzuki Ltd (supra). In coming to the conclusion that the assessee has a prima facie case, we have also kept in mind the observations of Hon’ble Delhi High Court that outstanding demand arising out of issues already decided in favour of the assessee by the Tribunal in the earlier assessment years cannot be recovered. We also notice from the chart of outstanding demand filed by the assessee before us, which has been extracted in the earlier part of the order, that more than 50% of the tax portion of the outstanding demand has been paid by the assessee in AY 2010-11 to 2012-13. We therefore grant stay of recovery of outstanding demand for these years for a period of six months from the date of this order; or till the disposal of appeals of these years, whichever period expires earlier.
As far as AY 2013-14 is concerned, we find that only 35.48% of the outstanding tax portion has been paid by the assessee till date. We are of the view that it would meet the ends of justice, if the revenue is permitted to adjust a sum of Rs.5.00 crores towards outstanding demand for AY 2013-14 out of the refund arising to the assessee. Subject to the payment of tax by way of adjustment as aforesaid, there will be stay of recovery of outstanding demand for AY 2013-14 for a period of six months from the date of this order; or till the disposal of appeals of the Assessee, whichever period expires earlier. We order accordingly.
FULL TEXT OF THE ITAT JUDGEMENT
The assessee has filed the above stay applications seeking stay of outstanding demand relating to assessment years 2010-11 to 2013-14.
2. The Ld A.R submitted that the assessee is manufacturer and dealer of bus chassis, road laying machineries and trader in construction equipments and is also engaged in providing software development services. The assessments of the assessment years AY 2010-11 to 201314 were completed u/s 143(3) of the Income Tax Act, 1961 (Act), wherein various additions including addition relating to Transfer pricing adjustments were made. He submitted that the assessee has already made payment of substantial amount of outstanding demand and, in this regard, he submitted following table highlighting the position of outstanding demand in each of the years:-
A. As per last order
(Amt. in Rs.)
