Case Law Details
IBS Software Private Limited Vs Union of India (Kerala High Court)
The recent judgment by the Kerala High Court in the case of IBS Software Private Limited Vs Union of India addresses the controversy surrounding the applicability of a CBDT Circular concerning the deposition of assessed tax. The dispute arises from a notice issued by the Income Tax Department, directing the petitioner to deposit a substantial amount.
The petitioner, IBS Software Private Limited, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the assessment order. The contention primarily revolves around the interpretation of Circular No. 1914/1993 and subsequent amendments. The petitioner argues that by depositing 20% of the assessed tax, they are entitled to protection from further recovery until the appeal is decided.
However, the Income Tax Department contests this interpretation, asserting that the Circular applies only to appeals filed before the Commissioner of Income Tax (Appeals) and not before the ITAT. They argue that without an interim order from the ITAT, the remaining amount should be enforced.
The High Court carefully considered the submissions and focused on the intent of the Circular. It concludes that the Circular aims to provide relief to taxpayers during the pendency of appeals. Thus, regardless of the forum of appeal, if the assessed tax is partially deposited, protection from further recovery should be granted until the appeal is decided.
In light of the analysis, the Kerala High Court disposed of the writ petition, directing the ITAT to expedite the consideration of the stay petition filed by the petitioner. It ordered that the notice from the Income Tax Department should not be enforced for a period of two months. This decision clarifies the applicability of the CBDT Circular in cases where the appeal lies only before the ITAT, ensuring fair treatment of taxpayers during the appellate process.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. The present writ petition has been filed impugning Exhibit P-9 notice issued by the 2nd respondent directing the petitioner to deposit entire assessed tax, penalty, interest etc., which comes to Rs. 21,21,12,860/-.
2. The petitioner has filed Exhibit P-2 appeal before the Income Tax Appellate Tribunal (ITAT) against the assessment order in Exhibit P-1, along with the stay petition in Exhibit P-8.
3. The assessment order has been finalised under the provisions of Section 143(3) read with Section 144C of the Income Tax Act, 1961. Against the assessment order finalised under Section 144C, the appeal lies only before the ITC and not before the Commissioner of Income Tax (Appeals) [CIT(A)].
4. Learned Counsel for the petitioner submits that CBDT Circular No. 1914/1993 and para 4 of the OM with F. No. 404/72/93-ITCC dated 29.02.2016, which is amended in the year 2017, if an assessee deposits 20% of the assessed tax, till the decision of the appeal before the 1st appellate authority, the remaining amount should not be enforced.
5. Mr. G. Keerthivas, learned Counsel for the Income Tax Department, however, submits that the above Circular is applicable only in case of the appeals filed before the CIT(A) and it is not applicable in respect of the appeals which are filed before the ITAT and, therefore, the petitioner, an assessee cannot contend that since he has deposited 20% of the assessed tax, penalty, interest etc., the remaining amount should not be realised as there is no interim order passed by the ITAT.
6. I have considered the submissions. The intent of the Circular is to grant protection to an assessee from further recovery till his stay petition is considered by the appellate authority, if the assessee deposits 20% of the assessed tax, penalty, interest etc. In the present case, the appeal against the assessment order lies only before the ITAT. Therefore, I am of the considered view that, considering the intent of the Circular No. 1914/1993 read with OM dated 29.02.2016 (amended in the year 2017), the Circular be applicable in the case the appeal against the assessment order lies only before the ITAT.
7. In view thereof, the present writ petition is disposed of with direction to the 3rd respondent ITAT to consider and decide the stay petition in Exhibit P-8 filed by the petitioner along with the appeal in Exhibit P-2 expeditiously, preferably within a period of two months. For a period of two months, the impugned notice in Exhibit P-9 shall not be given effect to.
Author Bio
The Income Tax should be amended in such a way that automatic stay should be granted for the demands against which appeals have been filed.