Orissa High Court
Essar Enterprises vs Central Board Of Direct Taxes ..... ... on 5 December, 2023
Bench: B.R. Sarangi, Murahari Sri Raman
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C). No.38476 of 2023
Essar Enterprises, Sundargarh. ..... Petitioner
Mr. R.P. Kar, Sr. Advocate
along with Mr. C. Parida, Advocate
Vs.
Central Board of Direct Taxes ..... Opposite parties
(CBDT), New Delhi & Ors. Mr. S.S. Mohapatra, Sr. Standing
Counsel
CORAM:
ACTING CHIEF JUSTICE DR. B.R. SARANGI
MR. JUSTICE MURAHARI SRI RAMAN
ORDER
05.12.2023 Order No. This matter is taken up through hybrid mode.
012. Heard Mr. R.P. Kar, learned Senior Counsel along with Mr. C. Parida, learned counsel appearing for the petitioner and Mr. S.S. Mohapatra, learned Senior Standing Counsel appearing for the opposite party-Income Tax Department.
3. Mr. R.P. Kar, learned Senior Counsel appearing for the petitioner contended that the Central Board of Direct Taxes (CBDT) circular is administrative in nature for guidance and, as such, on the basis of an administrative circular, the opposite parties cannot call upon the petitioner to pay 20% of the total demanded amount and refuse to grant stay. To substantiate his contentions, he has relied upon the decision of the Delhi High Court in LG Electronics India Private Limited v. PR. Commissioner of Income Tax & Ors. (W.P.(C) No.6778 of 2017, disposed of on 08.08.2017).
Page 1 of 44. Mr. S.S. Mohapatra, learned Senior Standing Counsel appearing for the opposite party-Income Tax Department vehemently contended that since huge amount is pending, the petitioner has to pay the same on the basis of the CBDT guidelines. Therefore, the stay of 20% of the demand amount, as claimed by the petitioner, cannot be considered by the authority.
5. Considering the contentions raised by learned counsel for the parties and after going through the records, this Court finds that admittedly for the assessment year 2018-19, a total demand of Rs.2,77,04,503/- was raised on 29.03.2023 against the petitioner on completion of assessment under Section 147 read with Section 144B of the Income Tax Act, 1961. The petitioner preferred appeal before the CIT (Appeals) and as per CBDT guidelines, the petitioner has to pay at least 20% of the total demand for stay of demand. As the demand amount has not been deposited by the petitioner, his prayer for full stay against the recovery of demand has been rejected.
6. In LG Electronics India Private Limited (supra), Delhi High Court, while setting aside the order passed by the Principal Commissioner of Income Tax, directed the very same authority to hear the application of the petitioner therein once again on merits and without reference to the OM dated 31st July, 2017, which, on the face of it, appears to curtail his discretion and accordingly directed the Principal Commissioner of Income Tax to dispose of the application with a reasoned order not later than two weeks from the date of receipt of the order. Against the said order, the Income Tax Department preferred SLP(C) No.19027 of 2018 @ Diary No.18927 of 2018, which was registered as Civil Appeal Page 2 of 4 No.6850 of 2018 and the apex Court vide order dated 20.07.2018 passed the following order:
"Delay condoned.
Leave granted.
Having heard Shri Vikramjit Banerjee, learned ASG appearing on behalf of the appellant, and giving credence to the fact that he has argued before us that the administrative Circular will not operate as a fetter on the Commissioner since it is a quasi judicial authority, we only need to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal."
In view of the above order, it appears that the administrative Circular will not operate as a fetter on the Commissioner since it is a quasi judicial authority and, as such, it is required to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal.
7. In view of such position, since the CBDT guidelines basing upon which 20% of the demand amount has been raised to grant stay, that is not conclusive one. Rather it is an administrative circular which operates as a fetter on the Commissioner, who is a quasi judicial authority, he has to act in accordance with the provisions of law. Therefore, the outright rejection to grant stay of demand raised for the assessment year 2018-19 by the Principal commissioner of Income Tax, Sambalpur vide order dated 26.10.2023 under Annexure-1 cannot be sustained in the eye of law. Therefore, the order dated 26.10.2023 under Annexure-1 passed by the Principal commissioner of Income Tax, Sambalpur is liable to be quashed and is hereby quashed. Accordingly, this Court remits the matter to the Principal commissioner of Income Tax, Sambalpur to rehear the case of the petitioner in consonance Page 3 of 4 with the direction of the apex Court in LG Electronics India Pvt. Ltd. (supra) and pass appropriate order after giving opportunity of hearing to all the parties.
8. Accordingly, the writ petition stands disposed of.
(DR. B.R. SARANGI) ACTING CHIEF JUSTICE (M.S. RAMAN) JUDGE Alok Signature Not Verified Digitally Signed Signed by: ALOK RANJAN SETHY Designation: Secretary Reason: Authentication Location: orissa high court Date: 06-Dec-2023 16:21:55 Page 4 of 4