Case Law Details
Punathil Nishriya Vs ITO (Kerala High Court)
Introduction: A recent judgment by the Kerala High Court in the case of Punathil Nishriya vs. ITO raises important considerations regarding the authority of the Commissioner in quasi-judicial matters and the impact of CBDT Office Memorandums. The court’s decision allows for the deposition of orders with amounts less than 20% during pending appeals.
Detailed Analysis: The petitioner in this case sought to challenge an order dated 20.07.2023 (Ext.P4) and requested the court to direct the 1st respondent (Income Tax Officer) to reconsider their stay application (Ext.P3). Additionally, a writ of mandamus was sought against respondent Nos. 2 and 3 to expedite the consideration and resolution of their statutory appeal (Exhibit P2).
The Kerala High Court, referring to a significant ruling by the Apex Court in the case of “Principal Commissioner of Income Tax v. LG Electronics India Private Limited” (Order dated 20.07.2018 in Civil Appeal No. 6850 of 2018), shed light on a crucial legal aspect. The Apex Court clarified that administrative circulars, such as those issued by the Central Board of Direct Taxes (CBDT), should not be considered as a restraint on the Commissioner, who functions in a quasi-judicial capacity.
In the aforementioned decision, it was emphasized that the administrative circulars would not operate as a fetter on the Commissioner since they serve as a quasi-judicial authority. This implies that the Commissioner holds the discretion to assess each case individually and make decisions based on its specific circumstances.
In accordance with this legal standpoint and the fact that CBDT Office Memorandums were not considered binding on the Commissioner’s quasi-judicial authority, the Kerala High Court directed the appellate authority to reevaluate the stay application (Exhibit P3) based on its merits. Additionally, they were asked to consider the Office Memorandums (Exhibits P5 to P7) issued by the Central Board of Direct Taxes and the decision of the Apex Court in the LG Electronics India Private Limited case.
Conclusion: The Kerala High Court’s decision in the case of Punathil Nishriya vs. ITO reaffirms the quasi-judicial authority of the Commissioner, emphasizing that CBDT Office Memorandums should not be perceived as constraints on their decision-making. This judgment ensures that the Commissioner has the flexibility to assess each case individually and make decisions, particularly regarding deposit orders of amounts less than 20%, during pending appeals. This decision sets an essential legal precedent for the authority and discretion exercised by quasi-judicial authorities in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed impugning Ext.P4 order dated 20.07.2023 and seeking a direction to the 1st respondent to reconsider Ext.P3 stay application. A writ of mandamus was also sought for to respondent Nos. 2 and 3 to consider and dispose of Exhibit P2 statutory appeal expeditiously within a time frame to be fixed by this Court.
2. In Principal Commissioner of Income Tax v. LG Electronics India Private Limited [Order dated 20.07.2018 in Civil Appeal No. 6850 of 2018], the Apex Court has held as follows:
“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. In that view of the matter, this writ petition is disposed of with a direction to the appellate authority to consider Exhibit P3 stay application on its merit, keeping in view Exhibits P5 to P7 Office Memorandums issued by Central Board of Direct Taxes as well as the decision of the Apex Court in M/s. LG Electronics India Private Limited (cited supra).
Writ petition stands finally disposed of.
