Madhya Pradesh High Court
Madhya Pradesh Audyogik Kendra Vikas ... vs Deputy Commissioner Of Income Tax on 13 November, 2017
Author: Alok Verma
Bench: Alok Verma
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HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
DIVISION BENCH: HON'BLE MR. JUSTICE S. C. SHARMA &
HON'BLE MR. JUSTICE ALOK VERMA
Writ Petition No.16010/2017
Madhya Pradesh Audyogik Kendra
Vikas Nigam Ltd.
Versus
Deputy Commissioner of Income Tax
Writ Petition No.16009/2017
SEZ Indore Ltd.
Versus
Deputy Commissioner of Income Tax
Mr. Manoj Munshi, learned counsel for the petitioner(s).
Ms. Veena Mandlik, learned counsel for the respondent.
Mr. A. S. Garg, learned Senior Counsel with Mr. Rishi Tiwari, learned
counsel for the intervener.
O R D E R
Delivered on this 13th November, 2017 (Indore) As per S. C. Sharma, J.
Regard being had to the similitude in the controversy involved in the present cases, the writ petitions were analogously heard and by a common order, they are being disposed of by this Court. Facts of Writ Petition No.16010/2017 are narrated hereunder.
02- The petitioner before this Court Madhya Pradesh Audyogik Kendra Vikas Nigam Limited a Company owned and controlled by State of Madhya Pradesh has filed this present petition being aggrieved by order dated 25/09/2017 and 04/10/2017 passed by respondent Deputy Commissioner of -2- 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 Rs.57,01,03,020/- and an assessment order has been passed under Section 143(3) of the Income Tax Act.
04- The total income of the petitioner has been assessed as per the assessment order amounting to Rs.1,26,99,79,660/-. Thereafter, a demand notice has been issued on 28/04/2017. The petitioner has preferred an appeal in the matter and at the same time an application has been preferred under Section 220(6) of the Income Tax Act, 1961 for stay of the demand subject to deposit of the 20% of the outstanding demand. 05- The petitioner's contention is that outstanding demand of Rs.57,85,56,110/- comes to Rs.11,57,11,222/- and as the petitioner has already deposited a sum of Rs.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 exercise of power conferred under Section 226(3) of the Income Tax Act, 1961 and the garnish notice to the Bank is bad in law in light of the CBDT circulars dated 31/07/2017 and 25/09/2017.
06- The petitioner has prayed for the following reliefs:-
"a. To quash the garnish notice dated 04/10/2017 issued by the -3- respondent to ICICI Bank for remittance of Rs.9,74,40,000/- being the 20% amount of demand, whereas the petitioner has already deposited the amount more than the required for availing stay.
b. To issue writ of mandamus directing the respondent to accept the deposit of Rs.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 relief deemed fit in the facts and circumstances of the case."
07- It is pertinent to note that an interim ex-parte order was passed on 05/10/2017 and the matter was listed on a mention slip before this Court. It is an ex-parte order. This Court has stayed the impugned notice dated 04/10/2017 and 25/09/2017 observing that there will be no coercive action against the petitioner Company.
08- A reply has been filed in the matter by the Income Tax Department and it has been stated by the Department that 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 assessment order directing the petitioner assessee to deposit a demand of Rs.48,71,99,640/- within 30 days. The petitioner assessee did not pay the outstanding -4- demand till the due date 28/05/2017. There upon, letters dated 14/08/2017 and 07/09/2017 were issued to the petitioner assessee to deposit the outstanding demand, however, there was no compliance. In response to the Stay Application filed by the petitioner assessee on 19/05/2017, an order dated 25/09/2017 was passed by the respondent 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 contention is that MPAKVN Ltd. and SEZ (Indore) Ltd. are separate legal entities. Their returns of income have been assessed separately. Separate demands under Income tax Act, 1961 were raised. The petitioner has clubbed the demand in both cases and then made a statement before the Hon'ble Court in its petition that 20% of the outstanding demand has been paid in both cases vide challan dated 11/12/2014 for Rs.12 Crores. As this challan was paid by MPAKVN against its tax liability as per its Return 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 -5- 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 payment of Rs.12 Crores has been paid by MPAKVN on 11/12/2014 as Self Assessment Tax against the incomes declared by the petitioner assessee in its return of income dated 30/11/2014 which clearly show that an amount of Rs.12,70,64,130/- is payable as per its returned income. The assessment in this case has been completed on 28/04/2017 and the demand of Rs.48,71,99,640/- was raised. Against the aforesaid demand of Rs.48,71,99,640/-, the petitioner assessee has not paid even a 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 Rs.12 Crores has already been paid against the assessments made in the petitioner assessees' cases, whereas, the fact is that the aforesaid amount of Rs.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 been further argued that the assessee did not pay the Self Assessment Tax payable Rs.12,70,64,130/- along with the return of income. The return was filed on 30/11/2014 whereas the Self Assessment Tax of Rs. 12 Crores was paid on 11/12/2014. Hence, in the demand notice U/s 156 issued along with the assessment order dated 28/04/2017, credit for the Self Assessment Tax paid on 11/12/2014 was left to be given. It has been further stated that the credit for the above Self Assessment Tax has been given vide order U/s 154 dated 09/10/2017 and the -6- revised demand payable by the petitioner assessee has been worked out at Rs.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 the parties, perused the record and the matter is being disposed of with the consent of the parties at admission stage itself.
16- This Court has carefully gone through the impugned letter issued by the Income Tax Department. Undisputedly, the petitioner Company has filed a return of income electronically on 30/11/2014 declaring total income at Rs.57,01,03,020/-. Thereafter, notices were issued as the case was selected for scrutiny under Section 143(2) and 142(1) of the Act of 1961 on 01/09/2015. An assessment order was passed under Section 143(3) of the Income Tax Act, 1961 and against the declared income of Rs.57,01,03,020/-, the income assessed is at Rs.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 the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition 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 is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first -7- appeal on payment of 15% of the disputed demand, unless the case falls in the category 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 survey operation, etc.) or,
(b) 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 lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr.
CIT/CIT, who after 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 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 (C) above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be. (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 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 required for granting stay and subject to the provisions of section 245."
18- The CBDT has issued Office Memorandum providing guidelines for stay of demand at the first appellate stage which is again a partial modification of the first circular dated 21/03/1996 and the second circular dated 29/02/2016. Office Memorandum -8- dated 31/07/2017 reads as under:-
"F.No. 404/72/93-ITCC (FTS:284146) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 31st July, 2017 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 modification of Instruction No.1914, wherein inter alia, vide para 4(A) it had been laid down that in a case where the outstanding demand is disputed 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) thereunder. Similar references to the standard rate of 15% have also been made in succeeding paragraphs therein.
2. The matter has been reviewed by the Board 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% of the disputed demand in the aforesaid O.M dated 29.2.2016 hereby stand modified to 20% of the disputed demand. Other guidelines contained in the O.M. Dated 29.2.2016 shall remain unchanged. These modifications may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance.
(A.K.Sinha) Director (ITCC) 23092939 All Pr. Chief Commissioners/Pr. Directors General of Income Tax/Chief Commissioners / Directors General of Income Tax Copy to:
1. Chairman and 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 -9- Kendra Vikas Nigam Limited, Indore and SEZ Indore Ltd. (Writ Petition No.16009/2017) are two separate entity. The return filed by both the companies have been assessed separately. Separate demand have been raised under the Act of 1961. The facts also reveal that the amount paid by the present petition of Rs.12 Crores has been paid by MPAKVN on 11/12/2014 as Self Assessment Tax against the income declared by the petitioner assessee in its return dated 30/11/2014 which clearly shows that an amount of Rs.12,70,64,130/- is payable as per its returned income.
20- The assessment in this case has been completed on 28/04/2017 and demand was raised to the tune of Rs.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 Rs.12 Crores is concerned, the aforesaid amount of Rs.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 not paid Self Assessment Tax payable Rs.12,70,64,130/- along with return of the income tax. The return of the income was filed on 30/11/2014 whereas Self Assessment Tax of Rs.12 Crores was paid on 11/12/2014. The records further reveal that in the demand notice under Section 156 issued along with the assessment order dated 28/04/2017, credit for the Self Assessment Tax paid on 11/12/2014 was left to be given. The credit for the above Self Assessment Tax was given vide order dated under 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
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Rs.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 order. The issue regarding levy of tax of lease premium is not a subject matter of the present writ petition.
23- The issue has to be decided by the authorities where an appeal is pending i.e. CIT(Appeal) and as the assessee has failed to pay 20% of the outstanding dues, this Court is of the opinion that the Department was justified in issuing a demand notice and was also justified in issuing letter dated 04/10/2017. 24- The ICICI Bank has filed an application for intervention and the same is also allowed. The Bank has 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 there was some confusion in respect of interim order passed by this Court, nothing prevented the ICICI Bank to approach this Court. Merely because the learned counsel for the Company has given a legal notice to initiate contempt proceedings, the ICICI Bank has permitted withdrawal of the amount and therefore, in the considered
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opinion of this Court, the Income Tax Department shall certainly be free to take appropriate steps against the ICICI Bank strictly in accordance with law.
25- This Court 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. 26- In other connected matter i.e. Writ Petition No.16009/2017 also as facts are similar and as the petitioner Company is a subsidiary of the M.P. Audyogik Kendra Vikas Nigam Ltd. the order passed by this Court in the present writ petition shall govern the connected writ petition also and the net result is both the writ petition stands dismissed.
Certified Copy as per rules.
(S. C. SHARMA) (ALOK VERMA)
JUDGE JUDGE
Tej
Tej Prakash Vyas
2017.11.14
16:55:07 -08'00'