Learning from case of Indus Towers Ltd. Writ petitions - petitioner is expected to approach the Court with clean hands so suppression of facts or wrong facts and statements before Courts must be avoided.

[DEV KUMAR KOTHARI]

Learning from case of Indus Towers Ltd.

Writ petitions - petitioner is expected to approach the Court with clean hands so

suppression of facts or wrong  facts and statements before Courts must be avoided.

2020 (4) TMI 335 - DELHI HIGH COURT - M/S. INDUS TOWERS LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME -TAX CIRCLE 12 (1) & ANR. W.P.(C.) No. 10289/2019 Dated: - 04 March 2020

and

2022 (5) TMI 122 - SUPREME COURT - M/S. INDUS TOWERS LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12 (1) AND ANR. - Civil Appeal No.7600 of 2021 (Arising Out of SLP (C) No.20460 of 2021 Arising Out of Diary No.9011 Of 2020) Dated: - 10 December 2021

In this case the matter relates to challenge order of Assessing Officer who demanded 20% of tax demand.

First we need to go through judgment of Delhi High Court.

The fact is that before the High Court assesse pleaded that taxes paid or deemed to be paid by way of advance tax , TDS etc. were much higher than tax demanded and  tax in dispute. However, in the computations filed at the time of interim hearing there was no mention of amount of tax  admitted and demanded as minimum alternate tax on book profits. Thus there was suppression of fact. The High Court was naturally annoyed by such conduct.

From order of High Court with highlights added for analysis and easy understanding:

“ 10. We may have overlooked the aforesaid infraction of the condition and taken a lenient view of the matter – in view of the explanation furnished by Mr. Balbir Singh, learned senior counsel for the petitioner. However, we find that there is a much more serious issue raised by Mr. Raghvendra Singh, learned senior standing counsel for the Revenue. The issue raised is that of gross suppression and misstatement by the petitioner, which led to a false projection of the outstanding liability/ refund due from/ to the petitioner.

11. It is pointed out by Mr. Raghvendra Singh that the petitioner was required to file a consolidated return in respect of the merged entity i.e. the petitioner, which was filed by the petitioner for the assessment year 2011-12. The petitioner had, in the said return, computed the net taxable income (loss) as Rs.(–)11,977,945,558/-. The assessment order computes the taxable income after making several additions and disallowances, ₹ 1994,56,00,488/- which is under challenge before the CIT (A). Pertinently, even if the consolidated financial statement furnished by the petitioner were to be accepted as true and correct, the Minimum Alternate Tax (MAT) liability worked out by the petitioner itself is ₹ 2,247,073,334/-. Pertinently, the petitioner itself computed the book profit at ₹ 1127,45,45,714/- and on that basis, the petitioner would be liable to pay tax of ₹ 2,247,073,334/-. This is the minimum tax liability that the petitioner would have to incur. It could be higher, if the additions/ disallowances result in net taxable income increasing.

        “12. Even if the Assessing Officer were to accept the consolidated return, as filed by the petitioner, or the said appeal were to be accepted by the CIT (A), admittedly, its liability would be to the tune of ₹ 2,247,073,334/-. However, the petitioner, while circulating the aforesaid tabulation at the initial hearing of the petition, projected the “Tax on Returned Income” as ₹ 69,83,85,442/- on the assumption that its returned income was ₹ 210,24,62,383/-, and without accounting for the several additions and disallowances made by the Assessing Officer. Pertinently, in the Assessment order, the figure of ₹ 69,83,85,442/- is nowhere to be seen. If the petitioner were to be fair to the Court, the petitioner would have reflected the amount of ₹ 2,247,073,334/ – which was the minimum tax liability of the petitioner, assuming that its return based on the consolidated financial statement, were to be accepted.

13. Similarly, against the column indicating the “Tax on admitted liability (Returned Income)”, the said amount of ₹ 2,247,073,334/- would have been reflected, which would have completely changed the equation that was projected before us by the petitioner.

14. The explanation furnished by Mr. Balbir Singh, learned senior counsel for the petitioner for not disclosing the MAT tax liability, is that the Assessing Officer had not accepted the return on MAT basis and, therefore, the said amount was not reflected.

15. We do not find any weight in this submission. Since, the MAT liability, even according to the petitioner, was the higher of the two figures i.e. the tax on the net taxable income (as returned by the petitioner), and the MAT amount, the petitioner could not have run away from the fact that its liability was, at least, if not more than ₹ 2,247,073,334/-. Thus, we were clearly misled by the petitioner at the preliminary hearing of the petition which led to our passing the interim order.

16. Considering the fact that the petitioner has invoked the discretionary extraordinary writ jurisdiction of this Court, the petitioner was expected to approach this Court with clean hands, which, unfortunately, we find is completely lacking in the present case. We are, therefore, not inclined to exercise our discretionary writ jurisdiction in favour of such a petitioner. Accordingly, we dismiss this petition with costs quantified at ₹ 5 lakhs to be paid to the Delhi High Court Advocates’ Welfare Trust. The costs should be paid within two weeks from today.”

Un quote:

It is surprising and unfortunate that wrong, misleading information even about admitted tax liability for Minimum Alternate Tax (MAT) was suppressed. When it came to the notice of High Court, an attempt was made to justify the same.

Before the Supreme Court:

It seems that before the Supreme Court appeal was filed with a view to seek certain directions. At hearing stage counsels of both sides agreed that the matter is before the  CIT(A) ,and the matters had arisen out of the proceedings initiated by way of a writ petition before the High Court questioning the demand, therefore, both sides were  agreeable that the matters pending before the Commissioner of Income Tax (Appeals) be taken to logical conclusion.

Therefore, the Court left  the assessee as well as the revenue to agitate all the issues before the Commissioner of Income Tax (Appeals) in the pending appeals.

Court also directed that those issues be considered by the (CIT(A) without being influenced by any of the observations made by the High Court .

The Court also directed the Commissioner of Income Tax (Appeals) to dispose of the matters as expeditiously as possible and preferably within three months.

There seems not challenge on the order of the High Court rejecting the WP and levying costs of Rs. five lakh. Or these were not pressed.

From reading of the judgment, it appears that  on behalf of assesse, a practical approach was adopted  before the Supreme Court.

The same approach could have been adopted before the High Court, seeking apology for the misstatements made about tax demands and just sought directions to the CIT(A)

As per author, what is applicable before Courts in WP, is equally applicable in matter of other petitions , appeal ,cases etc. The petitioner must state facts correctly and it should not be left to opposite party to point out wrong statements.