2022 (7) TMI 1590 - HC - Income Tax

Validity of Order passed u/s 254 hereby the Petitioner has been directed to pay an amount of Rs. 5 crores against the outstanding demand for the Assessment Year 2018-19 - Petitioner states that the challenge is primarily on the ground that said order has been passed arbitrarily as the payment has been directed against additions which stand covered in favour of the Petitioner by a series of decisions rendered by the Tribunal in the Petitioner s own case in previous seven assessment years - HELD THAT - In the present case the fact that the additions stand covered in favour of the Petitioner by a series of decisions rendered by the Tribunal for the last seven assessment years is not in dispute. This Court finds that the Central Board of Direct Taxes (CBDT) has itself issued Instruction No. 1914 dated 02nd February 1993 giving guidelines for Stay of Demand. One of the Guidelines for grant of complete stay is if the demand in dispute relates to issues that have been decided in assessee s favour by an appellate authority or court earlier. The impugned Order is in the teeth of the decisions of this Court which have categorically held that recovery of demand against issues which have been decided in favour of Assessee is wholly unwarranted. Consequently keeping in view the Guidelines/Instruction issued by the CBDT subsequent to the judgment of the Supreme Court in Dunlop India Ltd. 1984 (11) TMI 63 - SUPREME COURT (LB) the condition of deposit of Rs. 5 crore imposed by the Tribunal vide impugned order dated 14th July 2022 is set aside and the matter is directed to be heard by the Tribunal as expeditiously as possible.

Summary

The Delhi High Court, through Justice Manmohan, heard a writ petition challenging the Tribunal's order dated 14th July 2022 under Section 254 of the Income Tax Act, 1961, which directed the Petitioner to deposit Rs. 5 crores against an outstanding demand for AY 2018-19. The Petitioner contended that the demand was arbitrary since the disputed additions were covered in their favor by a series of Tribunal decisions in the preceding seven assessment years.The Court noted that the Respondent relied on the Supreme Court's test in Assistant Collector of Central Excise, Chandan Nagar vs. Dunlop India Ltd., requiring a prima facie case, balance of convenience, and irreparable injury for stay. However, the Court emphasized that the CBDT's Instruction No. 1914 (1993) provides that a complete stay should be granted if the demand relates to issues previously decided in the assessee's favor by an appellate authority.Relying on this guideline and prior High Court rulings that recovery against issues decided in favor of the assessee is "wholly unwarranted," the Court held that the Tribunal's condition of a Rs. 5 crore deposit was unjustified. The Court set aside the deposit order and directed expeditious hearing by the Tribunal, disposing of the writ petition accordingly.