Case Law Details
T.S. Aji Vs ITO (Kerala High Court)
Introduction: In a recent judgment, the Kerala High Court has delivered a crucial decision regarding the binding nature of administrative circulars on a Tax Commissioner, emphasizing their role as quasi-judicial authorities. The case of T.S. Aji vs. ITO highlights the court’s stance on whether an administrative circular can be considered as a legal constraint on the Tax Commissioner’s actions. This article delves into the details of the case, its analysis, and the broader implications of this significant ruling.
The Case Background: The case revolves around a writ petition filed by T.S. Aji, challenging the validity of an official notice, Ext.P4, dated 20th July 2023. The petitioner sought a directive to the first respondent, the Income Tax Officer (ITO), to reconsider a stay application (Ext.P3). During the course of the legal proceedings, the petitioner’s counsel informed the court that an appeal against the assessment order was already pending before the appellate authority, namely the 2nd or 3rd respondent.
Judicial Proceedings: Upon hearing arguments from the petitioner’s counsel, it was revealed that the appeal process was underway, leading to a significant development in the case. The petitioner was granted one week’s time to submit a stay application before the relevant appellate authority. Importantly, the court directed the appellate authority to evaluate this application fairly, taking into account various factors, including the content of Office Memorandums (Ext.P5 to Ext.P7) issued by the Central Board of Direct Taxes.
The court also referred to a Supreme Court judgment, specifically the case of Principal Commissioner of Income Tax-5 & Others v. LG Electronics India Private Limited [(2018) 18 SCC 447]. In this precedent, the Supreme Court observed that an administrative circular should not act as a constraint on the Commissioner since the Commissioner functions as a quasi-judicial authority. The Supreme Court ruling further emphasized that in cases similar to the one in question, authorities have the discretion to grant deposit orders for amounts lower than 20% while appeals are pending.
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