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Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd., SEZ Indore Ltd. Versus Deputy Commissioner of Income Tax

2017 (11) TMI 920 - MADHYA PRADESH HIGH COURT

Recovery of dues - Obligation to pay only 20% of the outstanding dues - validity of garnish notice to the ICICI Bank - Held that:- The assessee in light of the circulars issued by CBDT was under an obligation to pay only 20% of the outstanding dues and as the same was not done, the department has started proceeding under Section 226(3) of the Income Tax Act, 1961. In the considered opinion of this Court, the department has rightly raised a demand by passing a speaking order. The issue regarding .....

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s been heard by this Court. It has been stated by the ICICI Bank that on 05/10/2017, this Court has passed an interim order and it has been observed that there will be no coercive action against the petitioner Company and a legal notice was given by the lawyer of the petitioner Company to the ICICI Bank under the provisions of Contempt of Courts Act, 1971. The ICICI Bank in order to avoid any contempt has permitted transaction in the account which was freezed. It is really strange that in case t .....

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in light of the aforesaid as 20% of the demand has not been deposited by the petitioner Company, is of the opinion that no case for interference is made out in the matter and accordingly, the admission is declined. - Writ Petition No.16010/2017, Writ Petition No.16009/2017 - Dated:- 13-11-2017 - S. C. Sharma And Alok Verma, JJ. Mr. Manoj Munshi, learned counsel for the petitioner Ms. Veena Mandlik, learned counsel for the respondent Mr. A. S. Garg, learned Senior Counsel with Mr. Rishi Tiwari, l .....

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aggrieved by order dated 25/09/2017 and 04/10/2017 passed by respondent Deputy Commissioner of Income Tax, Circle 3(1), Income Tax Department, Indore. 03- The facts of the case reveal that the petitioner Company has developed industrial area near Pithampur, Sagore, Special Economic Zones on the land of the State Government as stated in the writ petition. For the assessment year 2014-15, the petitioner has declared total income of ₹ 57,01,03,020/- and an assessment order has been passed un .....

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that outstanding demand of ₹ 57,85,56,110/- comes to ₹ 11,57,11,222/- and as the petitioner has already deposited a sum of ₹ 12,00,00,000/- through ICICI Bank for the assessment year 2014-15 and the same has been brought to the notice of the respondent on 04/10/2017. It has been contended that the petitioner is not required to deposit any further amount. The petitioner's grievance is that the respondent Income Tax Department has issued a letter to the ICICI Bank in exercis .....

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To issue writ of mandamus directing the respondent to accept the deposit of ₹ 12,00,00,000/- (Rupees twelve crores) being more than 20% of the outstanding demand as per demand notice as compliance of CBDT Circular dated 29.02.2016 and 31.07.2017 and the saty order dated 25.09.2017 passed by the respondent. c. To direct the Respondent not to take any coercive action against the Petitioner for realization of the demand as per demand notice dated 28.04.2017 (Annexure - P/3). d. Any other rel .....

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on 28.04.2017, the Respondent AO passed assessment order in the case of M/s MPAKVN U/s 143(3) of the Income Tax Act, 1961, by making the following additions under different heads to the returned income by the Petitioner assessee. 1. Amount accrued but not booked in income 2. Land premium treated as revenue receipt 3. Disallowance u/s 40(a)(ia) 4. Disallowance of Government Grant 5. Disallowance of deduction claimed u/s 80IAB 09- A Demand Notice U/s 156 dated 28/04/2017 was issued along with the .....

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t directing the petitioner to deposit at least 20% of the outstanding demand on or before 03/10/2017 in view of revised CBDT Instruction dated 31/07/2017. 10- Learned counsel for the respondent submits that as the petitioner assessee failed to pay the demand as directed, vide Order U/s 226(3) dated 04/10/2017, the Bank accounts of the petitioner assessee were attached. The petitioner assessee has willfully misquoted the facts and has made a factual matrix which is untenable legally. 11- Her cont .....

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urn of Income, the credit for the same could not have been legally given to SEZ Indore Ltd. 12- It has been further stated that there is no provision under the Income Tax Act, 1961 for amalgamation of the demands raised against two separate legal entities. The petitioner assessee has thus, deliberately misled this Court that more than 20% of the demand has been paid in case of SEZ Indore Ltd. too, whereas not a single penny has been paid towards the same. 13- He has further stated that the above .....

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single penny. It has been further contended that the petitioner assessee has grossly misrepresented the facts by claiming before this Court that an amount of ₹ 12 Crores has already been paid against the assessments made in the petitioner assessees cases, whereas, the fact is that the aforesaid amount of ₹ 12 Crores was paid by the assessee voluntarily on 11/12/2014 against incomes declared in the return of income, whereas, the assessment demand was raised on 28/04/2017. 14- It has .....

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been given vide order U/s 154 dated 09/10/2017 and the revised demand payable by the petitioner assessee has been worked out at ₹ 33,39,03,850/- vide demand notice dated 09/10/2017. However, such Rectification of Demand raised vide assessment order does not partake the nature of payment of demand against the assessment order passed and is merely giving credit of Prepaid Self Assessment Tax. A prayer has been made for dismissal of the both the writ petitions. 15- Heard learned counsel for t .....

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2015. An assessment order was passed under Section 143(3) of the Income Tax Act, 1961 and against the declared income of ₹ 57,01,03,020/-, the income assessed is at ₹ 1,26,99,79,660/-. 17- The CBDT circular dated 29/02/2016 does empower the Department to stay the demand till the disposal of the first appeal on payment of 15% of disputed demand. Relevant paragraph of circular issued by Central Board of Direct Taxes (CBDT) in paragraph No.4 reads as under:- 4. In order to streamline th .....

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ry discussed in para (B) hereunder. (B) In a situation where, (a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier year or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or .....

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r considering all relevant facts shall decide the quantum/proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand. (C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer. (D) The assessing officer shall dispose of a stay petition within .....

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assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled. (ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand to the extent of the amount requir .....

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17 OFFICE MEMORANDUM Subject: Partial modification of Instruction No.1914 dated 21.3.1996 to provide for guidelines for stay of demand at the first appeal stage. Reference: Board s O.M. of even number dated 29.2.2016 Instruction No. 1914 dated 21.3.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. Vide O.M. No.404/72/93-ITCC dated 29.2.2016 revised guidelines were issued in partial .....

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rd in the light of feedback received from field authorities. In view of the Board's efforts to contain over pitched assessments through several measures resulting in fairer and more reasonable assessment orders, the standard rate of 15% of the disputed demand is found to be on lower side. Accordingly, it has been decided that the standard rate prescribed in O.M. Dated 29.2.2016 be revised to 20% of the disputed demand, where the demand is contested before CIT(A). Thus all references to 15% o .....

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all Members of CBDT. 2. All Joint Secretaries and Commissioners in CBDT 3. Pr. DGIT (Systems), Pr. DGIT (NADT) and Pr. DGIT (Admn.) 4. Additional Directors General (Recovery) and (PR, P&P). 5. Web Managers of irsofficersonline.gov.in and incometaxindia.gov.in for placing on the respective portals. 6. Office of Controller & Auditor General of India (30 copies). 19- The facts of the case reveal that M. P. Audyogik Kendra Vikas Nigam Limited, Indore and SEZ Indore Ltd. (Writ Petition No.160 .....

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he assessment in this case has been completed on 28/04/2017 and demand was raised to the tune of ₹ 48,71,99,640/-. The facts also reveal that assessee against the aforesaid demand has not paid a single rupee. So far as payment of ₹ 12 Crores is concerned, the aforesaid amount of ₹ 12 Crores was paid by assessee voluntarily on 11/12/2014 against the income declared in the return of income whereas the assessment demand was raised on 28/04/2017. 21- Undisputedly, the assessee did .....

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Section 154 of the Income Tax Act, 1961 dated 09/10/2017 and the revised demand payable by the assessee has been worked out at ₹ 33,39,03,850/-. 22- The assessee in light of the circulars issued by CBDT was under an obligation to pay only 20% of the outstanding dues and as the same was not done, the department has started proceeding under Section 226(3) of the Income Tax Act, 1961. In the considered opinion of this Court, the department has rightly raised a demand by passing a speaking or .....

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