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TMI Blog2014 (6) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order was passed on February 17, 2014, in the circumstances narrated below. 2. Sony Mobile was incorporated on April 23, 2007, as a subsidiary of Sony Ericson Mobile Communications of Sweden. It is engaged in the business of importing, buying and selling a wide range of mobile phones in India and providing after-sales support services. In respect of the assessment year 2009-10, it filed a return of income declaring a total income of Rs. 31.13 crores. The first respondent, i.e., the Assessing Officer, scrutinised the return after issuing notice under section 143(2) and referred the return to the Transfer Pricing Officer (TPO) requiring him to determine the arm's length price of the international transactions of the petitioner. The Transfer Pricing Officer recommended the adjustment of Rs. 70.15 crores on account of excess advertising, marketing and promotion expenses (AMP expenses) incurred by the petitioner in respect of the brand owned by the foreign parent company. A draft assessment order was accordingly prepared by the first respondent on March 26, 2013, proposing to make a transfer pricing adjustment of Rs. 70.15 crores on account of AMP expenses and disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y petition is rejected. The stay petition is, therefore, rejected. You are again requested to pay the outstanding demand immediately. In case of failure, coercive measures will be taken to recover the outstanding demand, without giving any opportunity of being heard." 5. On the same day on which he rejected the application filed by the petitioner, i.e., on February 17, 2014, the Deputy Commissioner, Circle 9(1), New Delhi, issued a notice under section 226(3) to the Branch Manager, Citi Bank (Parliament Street Branch) calling upon it to pay any amounts which Citi Bank had to pay the account holder, Sony Mobile. The relevant details of the amount of tax due from the petitioner were also given. Thus, the Citi Bank was garnished from making any payment of the monies which the petitioner had in its bank account with the said bank. 6. On February 19, 2014 (wrongly written as March 19, 2014) the Citi Bank wrote to the Deputy Commissioner of Income-tax reporting compliance and enclosing the demand draft in favour of the Deputy Commissioner of Income-tax, Circle 9(1), New Delhi, for an amount of Rs. 43,87,90,358. 7. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the first respondent did not dispose of the stay application filed before him. A garnishee order was passed under section 226(3) attaching the bank account of Sony India. The latter apprehends that as in the case of W. P. (C.) No. 1178 of 2014, in the present case too the first respondent may follow the same course and it may withdraw the disputed tax demand from the garnished bank accounts. 11. Both the appeals and the stay applications filed before the Tribunal are stated to be pending and no orders have been passed thereon. 12. The argument of the counsel for the petitioner in both the petitions is that the Assessing Officer was not justified in passing garnishee orders under section 226(3) of the Income-tax Act even while being aware that the petitioners have filed appeals and stay applications before the Tribunal. It is contended that the Assessing Officer has shown unseemly haste in withdrawing the money from the Citi Bank without waiting for the outcome of the stay applications filed before the Tribunal. According to the counsel for the petitioners, this shows lack of faith in the judicial process and should be deprecated. He accordingly requests that the respondents s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on an application made by the assessee before the expiry of the due date under sub-section (1), to extend the time for payment or allow the payment by instalments, subject to such conditions as he may think fit to impose in the circumstances of the case. Subsection (4) says that if the tax demand is not paid within the period of 30 days or within the extended period, the assessee shall be deemed to be in default. Sub-section (6) confers a discretion upon the Assessing Officer to be exercised subject to such conditions as he may think fit to impose in the circumstances of the case, to treat the assessee as not being in default in respect of the amount in dispute in the appeal, if an appeal has been presented by the assessee under section 246/246A even though the time for payment has expired; the discretion can be exercised by the Assessing Officer as long as the appeal remains undisposed of. 15. Technically section 220(3) requires an application for extension of time to pay the tax demanded or for permission to pay the same in instalments to be filed before the expiry of the due date for payment. In the present case, the petitioners filed the applications under section 220(3) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... play and an anxiety to ensure that a opportunity is not lost to the assessee to make alternative arrangements for clearing the tax dues, once the stay applications filed under section 220(3) are rejected. Taking away the amount of Rs. 43.87 crores from the bank account of the petitioner may perhaps not be legally faulted, but taking into account the haste with which the Assessing Officer acted in the present case it seems to us that there was an element of arbitrariness in the action of the Assessing Officer. In our opinion, since the stay applications filed by the petitioners are pending before the Tribunal, the more appropriate course would be to issue the following directions : (a) the Assessing Officer shall reverse the amount of Rs. 43.87 crores recovered from the bank account in Citi Bank and credit the same in the account of the petitioner; (b) the petitioner, however, will not be entitled to draw from the said bank account any amount that may reduce the balance in the account to an amount below Rs. 43.87 crores-in other words the petitioner shall maintain a balance of Rs. 43.87 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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