Case Law Details
NSPIRA Management Services Private Limited Vs DCIT & ACIT (Telangana High Court)
From a perusal of the impugned order dated 16.12.2022, it is seen that respondent No.1 had followed instructions of the Central Board of Direct Taxes (CBDT) dated 31.07.2017 to the effect that where outstanding demand is disputed before the appellate authority, the assessee has to pay 20% of the disputed demand. Accordingly, petitioner has been directed to pay 20% of the outstanding demand.
We are afraid respondent No.1 did not apply his mind while passing the order dated 16.12.2022. It appears to be a mechanical exercise of power. When the Income Tax authority exercises jurisdiction under Section 220(6) of the Act, he exercises quasi-judicial powers. While exercising quasi-judicial powers, the authority is not bound or confined by departmental instructions.
That being the position, HC set aside the order dated 16.12.2022 passed by Assessing officer and remand the matter back to Assessing officer for passing a fresh order in accordance with law after giving due opportunity of hearing to the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. A.V.A.Siva Kartikeya, learned counsel for the petitioner and Ms. Sapna Reddy, learned counsel representing Mr. J.V.Prasad, learned Standing Counsel, Income Tax Department for the respondents.
2. This petition has been filed under Article 226 of the Constitution of India assailing legality and validity of the order dated 16.12.2022 passed by respondent No.1 for the assessment year 201 8-19.
3. Petitioner is an assessee under the Income Tax Act, 1961 (briefly ‘the Act’ hereinafter) having the status of a company. For the assessment year 2018-19, petitioner had submitted return of income on 23.10.2018 declaring deemed total income of 1,17,17,40,942.00. The case was selected for limited scrutiny where after, the assessment order was passed on 21.04.2021 whereby and where under total assessed income was quantified at Rs.3,56,93,33,205.00. Petitioner has filed appeal against the aforesaid order of assessment before the commissioner of Income Tax (Appeals) under Section 246A of the Act, which is pending.
4. Following the assessment order, notice of demand under Section 156 of the Act dated 21.04.2021 was issued to the Petitioner submitted an application for stay of recovery of demand before respondent No.1 under Section 226 of the Act which was taken up along with applications for stay for other assessment years. However, in respect of assessment year 2018-1 9, the following order came to be passed on 16.12.2022:
For the Assessment year 2018-19, as per CBDT O.M. in F.No.404/72/93-ITCC dated 31.07.2017, pending first appeal, stay against collection of demand by the Assessing Officer can be granted only on payment of 20% of the demand raised. Hence, you are requested to pay 20% of the demand raised, i.e., 20% of Rs.69,96,03,180/- i.e., Rs.13,99,20,636/- immediately and request for stay of collection of balance demand.
5. From a perusal of the impugned order dated 16.12.2022, it is seen that respondent No.1 had followed instructions of the Central Board of Direct Taxes (briefly ‘CBDT’ hereinafter) dated 31.07.2017 to the effect that where outstanding demand is disputed before the appellate authority, the assessee has to pay 20% of the disputed demand. Accordingly, petitioner has been directed to pay 20% of the outstanding demand.
6. We are afraid respondent No.1 did not apply his mind while passing the order dated 16.12.2022. It appears to be a mechanical exercise of power. When the Income Tax authority exercises jurisdiction under Section 220(6) of the Act, he exercises quasi-judicial powers. While exercising quasi-judicial powers, the authority is not bound or confined by departmental instructions.
7. This position has been well settled by the Supreme Court in Principal Commissioner of Income Tax v. LG Electronics India Pvt. Ltd.1
8. That being the position, we set aside the order dated 16.12.2022 passed by respondent No.1 and remand the matter back to respondent No.1 for passing a fresh order inaccordance with law after giving due opportunity of hearing to the petitioner. This shall be done within a period of six (06) weeks from the date of receipt of a copy of this order. Till the aforesaid period of six (06) weeks, respondents are directed not to take coercive steps for realizing the outstanding demand for the assessment year 2018-19.
9. Writ Petition is accordingly allowed. However, there shall be no order as to costs.
As a sequel, miscellaneous petitions, pending if any, stand closed.
Notes:
1. (2018) 12 ITR-OL 334 (SC)
