TMI Blog2021 (9) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... able manner. Here is a case wherein the assessee is sought to be deprived of a huge amount towards the refund. A huge amount towards refund is being declined on the ground that a demand is pending for the previous year - One assessee who has to recover significant amount towards the refunds and another who has not to recover the refunds would be put in two different categories because in the first case refund would be adjusted whereas in the second case, no such adjustment is possible. We are also not impressed by the submission canvassed on behalf of the Revenue as regards estoppel. First, there cannot be any estoppel against the statute. We may only observe that the writ applicant has raised issues relating to financial hardships. The writ applicant has pointed out that it has suffered losses in earlier four years - As decided in M/S JINDAL STEEL AND POWER LTD. [ 2016 (9) TMI 1194 - PUNJAB AND HARYANA HIGH COURT] CIT rightly did not grant a complete stay but considered the petitioner's application in the alternative for a stay subject to its paying 15% of the outstanding demand in terms of the Office Memorandum. Writ application succeeds and is hereby allowed. The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 till the final disposal of appeal by the Income Tax Appellate Tribunal. (E) Pending the admission, hearing and final disposal of this petition, prohibit the Respondent No.1 to recover any amount from the Petitioner No.1 or adjust any refunds arising to the Petitioner No.1 against the demand of A.Y.2012-13 or 2010-11. (F) Any other and further relief deemed just and proper be granted in the interest of justice. 2. The facts, giving rise to the present litigation, may be summarized as under; 2.1 The writ applicant filed its return of income for the A.Y. 2012-13 on 30th November, 2012. 2.2 The respondent passed the draft assessment order dated 31st March, 2016 under Section 143(3) read with Section 92CA read with Section 144C of the Income Tax Act (for short the Act ). 2.3 Against the aforesaid draft assessment order, the writ applicant made a reference dated 28th April, 2016 to the Dispute Resolution Panel under Section 144C of the Act. 2.4 The Dispute Resolution Panel vide its directions dated 30th December, 2016, by an large, confirmed all the additions/disallowances. 2.5 The respondent No.1 herein passed the final assessment order dated 23rd Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder for the A.Y. 2014-15 against the outstanding demands of the writ applicant No.1 for the A.Y.. 2012-13 and A.Y. 2010-11. 2.19 The writ applicant No.1, thereafter, preferred a stay application dated 1st July, 2019 under Section 254 of the Act before the ITAT for the purpose of getting the demand stayed. The ITAT disposed of the application vide its order dated 5th July, 2019 relegating the writ applicant to the respondent No.2. 2.20 The writ applicant No.1, vide letter dated 10th July, 2019 addressed to the respondent No.2 explained why the facts and the circumstances necessitated the grant of unconditional stay against the demand raised for A.Y.2012-13. 2.21 The respondent No.2, vide its letter dated 12th July, 2019, granted the relief and thereby stayed the demand with the condition to adjust the future refunds arising in favour of the writ applicant No.1 against the demand of A.Y. 2012-13. 2.22 The respondent No.1, vide order dated 12th July, 2019, while giving effect to the order of the CIT (A) adjusted the refund of ₹ 224 Crore for A.Y. 2014-15 as against the demand of the writ applicant No.1 for A.Y.2012-13. 2.23 In such circumstances, referred to abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Upward adjustment on account of transfer pricing 10,35,06,00,000 ITAT ITA No.195/Del/2013 50.80 5,25,84,22,916 2. Deduction under section VI A 80,95,76,144 ITAT ITA No.196/Del/2013 50.80 41,12,89,563 3. Deduction u/s.35(2AB) of the act 4,40,22,43,702 ITAT ITA No.1390/Ahd/2016 50.80 HC of Tax App. No.541/2017 Guj. S.C. SLP21485 of 2018 (Dismissed SLP of department) 2,23,64,75,099 4. Disallowances u/s.14A read with rule 8D 5,45,95,563 ITAT ITA No.1390/2016 50.80 (Ranbaxy Lab, Ltd. 2,77,36,224 5. Disallowance of Marked to Marker losses 6,67,29,40,000 S.C. Suzlon Energy Ltd. 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The amount of ₹ 785 Crore comes to 40% payment against the total demand of ₹ 2004 Crore and almost 90% payment against ₹ 872 Crore of the disputed demand. 8. Mr. Soparkar submitted that his client having already paid substantial tax, no further tax needs to be recovered. He would submit that unconditional stay may be granted until appropriate decision is taken by the First Appellate Authority, i.e, the ITAT. Mr. Soparkar further pointed out that the notices issued by the respondent No.1 for the purpose of further adjusting the refund of ₹ 336 Crore (A.Y.2012-13) and ₹ 318 Crore (A.Y.2010-11) respectively are erroneous inasmuch as the same would amount to recovering far more tax from his client as against the disputed issues in the assessment order. 9. In the last, Mr. Soparkar also took us through the observations made by the respondent No.1 while declining to grant unconditional stay. Those are as under; Issue Para and issue in order of CIT Submission 1. 12,13: Rate of tax computed should not be 50.80% but 31.5% or 34.62% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned senior standing counsel appearing for the Revenue. Mr. Patel raised a preliminary objection as regards the maintainability of the present writ application on the ground of alternative remedy. 12. Mr. Patel would submit that the writ applicant has a remedy of filing stay application before the Income Tax Appellate Tribunal. Mr. Patel submitted that the contention raised on behalf of the writ applicant that the impugned order is not appealable before the ITAT is devoid of any merit. Mr. Patel argued that the impugned order of PCIT is an administrative order, granting conditional stay against the recovery and the same cannot put fetters on the statutory and judicial power of the ITAT to grant appropriate stay. 13. Mr. Patel invited the attention of this Court to the provisions of Section 254(1) and(2A) of the Act, and Rule 35(A) of the Income Tax (Appellate Tribunal) Rules, 1963. Mr. Patel seeks to rely on the decision of the Supreme Court in the case of ITO vs. M.K. Mohammed Kunhi, (1969) 71 ITR 815 (SC). This judgment is relied upon in support of his contention that the ITAT has the power to grant stay pending the appeal before it. Mr. Patel also seeks to rely upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h impressed with the same. It is not that the CIT has not granted stay in favour of the writ applicant, but the same is conditional. It is highly doubtful whether such an order can be challenged in an appeal before the ITAT. We are not inclined to reject this writ application only on the ground of alternative remedy. 20. So far as the CBDT instructions are concerned, there is an underlying principle behind the same. The underlying principle is that pending the first appeal, the assessee may be afforded with some protection against coercive recovery on the condition of deposit of some money. In the aforesaid context, we may refer to one order passed by the ITAT (Kolkata) Bench C in the case of Organon (India) (P.) Ltd. vs. Deputy Commissioner of Income-tax, Circle 12(1), Kolkata, reported in (2018) 94 taxmann.com 421 (Kolkata-Trib.). We quote the order; By virtue of this stay application the assessee seeks to keep the demand of ₹ 6,16,12,850/- in abeyance raised for the assessment year 2013-14 pursuant to transfer pricing adjustment made in respect of advertising, marketing and promotion (AMP in short) expenses in the sum of ₹ 15,60,70,679/-. The Ld. AR arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior consent of the Administrative Commissioner of Income Tax having jurisdiction over this case in order to protect the interest of the revenue till the arrears are discharged for assessment year 2013-14. The Ld. AR stated that the appeal for the assessment year 2012-13 i.e, immediately preceding year, is listed for hearing on 02.05.2018 wherein similar issue is involved. Accordingly, we direct the Registry to list this case also along with appeal for assessment year 2012-13 on 02.05.2018. In view of the aforesaid findings, we are inclined to keep the demand in abeyance for a period of six months from today or till the disposal of the appeal whichever is earlier, subject to fulfillment of aforesaid conditions. In case, if the assessee fails to make remittance of 1.20 crores on or before 27.03.2018, the conditional stay granted herein would stand automatically vacated. 3. In the result, the stay application of the assessee is disopsed off accordingly. 21. So far as Section 245 of the Act is concerned, there need not be any debate as regards the power of the Department to adjust the refund, however, such power should be exercised in a reasonable manner. Here is a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est for lower installments on account of pressing financial position. The assessee shall make the payment by 20th day of each month and furnish the copy of the challan before the AO. On payment of 15% of outstanding demand as stated above, the assessee shall not be treated as the assessee in default in respect of the balance demand till the disposal of appeal of the learned CIT(A) and the AO shall not take any coercive measure to recover the said demand. However, the Assessing Officer is free to adjust any refund which may arise in favour of the assessee company in any assessment year. 6. In case the assessee company does not comply with the above directions and does not adhere to the above payments of installments, the AO shall be free to take steps as per law to recover the demand. 21. It is clear that the stay was granted subject to the assessee paying the said amounts which constituted 15% of the total demand and nothing more. There is, however, a dispute regarding the last sentence in paragraph-5. It entitles the Assessing Officer to adjust any refund which may arise in favour of the assessee company in any assessment year . The petitioner contends that this libert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 993 the Department has a right to do so. This was not a clarification. 23. We will assume that the Department's interpretation of the orders is correct. In any event the order dated 26.08.2016 does not construe the further Office Memorandum dated 29.02.2016. The Office Memorandum forms a part of the original instruction No. 1914 dated 02.02.1993. This is clear from paragraphs-1 and 4 thereof. Paragraph-4 expressly states that the modified guidelines contained in the Office Memorandum were being issued in partial modification of the instruction No.1914 . Instruction No. 1914 dated 02.02.1993 as clarified by instruction No.1914 dated 21.03.1996 must, therefore, be read together with the Office memorandum dated 29.02.2016. 24. It is necessary now to interpret the Office Memorandum dated 29.02.2016. Under clause-4A where the outstanding demand is disputed before the CIT(A), the Assessing Officer shall grant a stay of the demand on payment of 15% of the disputed demand unless the case falls in para-B of Clause-4. In the case before us, the demand is disputed before the CIT(A). The present case does not fall under para(B) either. Clause-4(B)(a) provides that in a situati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-C(e) of the original instructions dated 02.02.1993 stood modified by para-4(e)(iii) of the Office Memorandum. 27. As we observed earlier in the present case by the impugned order dated 14.06.2016 the petitioner was required to deposit 15% of the outstanding demand, namely, ₹ 41.64 crores. This figure attained finality. At the cost of repetition, the Assessing Officer did not refer the matter to the Administrative Pr.CIT for an amount higher than 15% of the amount to be deposited as a condition for stay. This in fact indicates that the last sentence in paragraph 5 of the order dated 14.06.2016 granted the Assessing Officer the right to adjust any refund which may arise in favour of the assessee in respect and to the extent of the said 15% of the demand only. In any event, even if it entitles the Assessing Officer to adjust any refund against the entire tax demand, it would be contrary to the instructions of the CBDT contained in the Office Memorandum dated 29.02.2016. 28. Lastly, Mr. Putney submitted that the Assessing Officer has unbridled powers under section 220(6) of the Act. However, in view of the circular dated 02.02.1993 as clarified by the circular dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances and the submissions made. The impugned demand is for ₹ 16,90,79,380/-. Admittedly, the petitioner has challenged the said demand in an appeal, which is pending before the CIT (A). According to the respondents, the impugned order refusing to grant stay is passed on the administrative side. Be that as it may, the O.M. dated 29.02.2016, to the extent relevant, reads thus: 4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a precondition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914: (A) In a case where the outstanding demand isdisputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) hereunder: (B) .. (C) .. (D) .. (E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,: (i) require an undertaking from the assessee that he will cooperate in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,53,61,907/- (15% of the total demand of ₹ 16,90,79,380/-) being adjusted out of the refund, which is due for the Assessment Years 2006-07 and 2007- 08. 12. Thus, the petition is partly allowed. The impugned communication/order, rejecting the application for stay, is set aside. There shall be interim stay of the impugned demand, pending disposal of the appeal before the CIT (A), on condition of an amount of ₹ 2,53,61,907/-, from out of the refund for the Assessment Years 2006-07 and 2007-08, being retained towards 15% of the amount as stipulated in O.M. Dated 29.02.2016. This shall be subject to the final order that may be passed in the appeal. In the circumstances, there shall be no order as to costs. 25. We may also refer to a decision rendered by this High Court in the case of Vodafone India Service P. Ltd. vs. Union of India, (2020) 113 taxmann.com 120 (Gujarat), wherein the following has been observed; 7. Before adverting to the merits of the case, reference may be made to the provisions of subsection (6) of section 220 of the Act, which reads thus: 220. When tax payable and when assessee deemed in default- (6) Where an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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