Madhya Pradesh Audyogik Kendra Vikas Nigam Limited Thru.Shri Sarvesh Shrivastava vs. Additional Commissioner Of Income Tax (Rance 3)

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RP/108/2017HC Madhya Pradesh27 March 2017Author: HON'BLE SHRI JUSTICE S.C.SHARMA7 pages
For Petitioner: Manoj Munshi
AI SummaryAllowed

What did the High Court hold?

The Tribunal held that the subsequent orders dated March 25, 2017, issued by the Deputy Commissioner of Income Tax, demanding 15% of the outstanding demand from the assessees (Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd. and SEZ Indore Ltd.), indicated a modification of the original demand. The Tribunal considered the CBDT Circular dated February 29, 2016, and the judgments of the Supreme Court and various High Courts, including Catholic Syrian Bank Ltd., UCO Bank, Jindal Steel and Power Ltd., and Sesa Resources Ltd. These authorities established that CBDT circulars have the force of law and can mitigate the rigors of the law for the benefit of the assessee. The Tribunal concluded that once the department itself passed an order permitting the deposit of 15% of the demand, the previous order deserved modification. Therefore, the petitioners were permitted to deposit 15% of the outstanding demand, and their appeals would be heard on merits. The review petitions were allowed.

What were the facts?

The petitioners filed review petitions challenging an order dated January 12, 2017, which disposed of their applications for stay of demand under Section 220(6) of the Income Tax Act. The original applications were filed against an order dated November 8, 2016, passed by the Additional Commissioner, Range 3, Indore. The petitioners argued that a CBDT Circular dated February 29, 2016, was not considered. Subsequently, on March 25, 2017, the Deputy Commissioner of Income Tax, Indore, issued orders to Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd. and SEZ Indore Ltd. demanding 15% of their outstanding tax demands for various assessment years, totaling Rs. 51,98,64,120/- and Rs. 86,03,42,100/- respectively, by March 28, 2017, failing which coercive measures would be initiated.

What were the issues?

1. Whether the impugned order disposing of the stay applications under Section 220(6) of the Income Tax Act, 1961, should be modified in light of subsequent orders demanding 15% of the outstanding demand? Assessee's Contention: The assessee argued that the Central Board of Direct Taxes (CBDT) Circular dated February 29, 2016, was not considered in the original order. They further contended that based on various CBDT circulars and judgments from the Supreme Court and High Courts, they should be directed to deposit only 15% of the demand. They relied on the Supreme Court's decision in Catholic Syrian Bank Ltd. vs. Commissioner of Income Tax and UCO Bank, Calcutta vs. Commissioner of Income Tax, West Bengal, and the Punjab & Haryana High Court's decision in Jindal Steel and Power Ltd. vs. The Principal Commissioner of Income, Tax Gurgaon. The assessee also referred to the Bombay High Court's decision in Sesa Resources Ltd. vs. Asstt. Commissioner of Income Tax. Revenue's Contention: The judgment does not record any specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 220(6),Section 119,Section 226(3)

AI-generated summary — verify with the full judgment below

--- 1 --- R P No. 108/2017, 109/2017, 110/2017, 111/2017, 112/2017 and 113/2017 27/03/2017 Mr. Manoj Munshi, learned counsel for the petitioner. Ms. Veena Mandlik, learned counsel for the respondent. 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 R.P.No. 108/2017 are narrated hereunder. The present review petition has been filed for reviewing order dated 12/1/2017 passed in Writ Petition No. 7779, 7781, 7785, 7788, 7792 and 7794 of 2016. There was a common order passed in all the cases on 12/1/2017. . In fact, the petitions were filed against the order dated 8/11/2016 by which the applications for stay of demand u/S. 220(6) of the Income Tax Act was disposed of by the learned Additional Commissioner, Range 3, Indore. Mr. Manoj Munshi, learned counsel for the petitioner has argued before this Court that the Circular of the Central Board of Direct Taxes ('CBDT') was not taken into account ie., Circular dated 29/2/2016 while passing the impugned order. However, at the outset learned counsel for the petitioner has drawn attention of this Court towards the --- 2 --- order dated 25/3/2017 passed by the Deputy Commissioner of Income Tax, Indore in respect of total outstanding demand. The aforesaid order reads as under : DY. COMMISSIONER OF INCOME TAX, 3(1) INDORE Room No.306, Aayakar Bhawan Annexe, Opp. White Church, Indore F.No.DCIT-3(1)/IND/Revoery/2016-17 To, M/s. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Limited 1st Floor, Free Press Complex, 3/54, Press Complex Indore Sir/Madam, Sub. : Outstanding demand of Rs.51,98,64,120/- regarding. Ref.: 1 Letter of Pr. Secretary Government of MP Commerce, Industry and Employment department dated 23/03/2017. As per this office records the following demand is outstanding against you : S.No. Assessment Year Type of Demand Demand 1. 2009-10 Regular tax 4,60,55,300/- 2. 2010-11 Regular tax 66,68,120/- 3. 2011-12 Regular tax 21,75,17,180/- 4. 2012-13 Regular tax 13,72,93,950/- 5. 2013-14 Regular tax 11,23,29,570/- Total 51,98,64,120/-

2.

You are hereby requested to deposit 15% of outstanding demand ie., of Rs.7,79,79,618/-. Out of which 2.5 crore has been deposited by you as such please deposit the remaining demand of Rs.5,29,79,618/- and produce counterfoil of challan on or before 28/03/2017 at 11:00 A.M., in the Office of undersigned, failing which coercive measures to recover the demand by invoking various provisions of Chapter XVII-D of the IT Act, 1961 shall be initiated (P. K. Singi) Dy. Commissioner of Income Tax Circle 3(1), Indore The aforesaid order was passed in the case of Madhya Pradesh Audyogik Kendra Viikas Nigam Ltd., and a similar --- 3 --- order has been passed in respect of M/s. SEZ, Indore Ltd., The same reads as under : DY. COMMISSIONER OF INCOME TAX, 3(1) INDORE Room No.306, Aayakar Bhawan Annexe, Opp. White Church, Indore F.No.DCIT-3(1)/IND/Revoery/2016-17 To, M/s. SEZ Indore Limited 1st Floor, Free Press Complex, 3/54, Press Complex Indore Sir/Madam, Sub. : Outstanding demand of Rs.86,03,42,100/- regarding. Ref.: 1 Letter of Pr. Secretary Government of MP Commerce, Industry and Employment department dated 23/03/2017. As per this office records the following demand is outstanding against you : S.No. Assessment Year Type of Demand Demand 1. 2008-09 Regular tax 46,89,75,710/- 2. 2011-12 Regular tax 16,67,79,390/- 3. 2013-14 Regular tax 22,45,87,000/-

4.

Total 86,03,42,100/-

2.

You are hereby requested to deposit 15% of outstanding demand ie., of Rs.12,90,51,315/- and produce counterfoil of challan on or before 28/03/2017 at 11:00 A.M., in the Office of undersigned, failing which coercive measures to recover the demand by invoking various provisions of Chapter XVII-D of the IT Act, 1961 shall be initiated (P. K. Singi) Dy. Commissioner of Income Tax Circle 3(1), Indore Meaning thereby, the Department has passed an order directing the assessee to deposit 15% of the total outstanding demand. This Court is of the considered opinion that once the Department has passed an order permitting the assessee to deposit 15% of the demand, the order passed by this Court --- 4 --- dated 12/1/2017 deserves to be modified. The petitioners are permitted to deposit 15% of the outstanding demand and the appeal shall be heard on merits. At this stage, Mr. Munshi has argued before this Court that the circular issued by the CBDT dt. 21/8/1996, 6/3/1998 and 16/1/1999 have been considered by the Hon'ble supreme Court and, therefore, in the light of the judgments delivered by the Hon'ble Supreme Court and various High Courts, the petitioner be directed to deposit only 15% of the (2012) 3 SCC 784. The Hon'ble Supreme Court in paragraph 18 has dealt with the effect of Circular issued by the CBDT. Paragraph 18 of the aforesaid judgment, reads as under:

18.

Now, we shall proceed to examine the effect of the circulars which are in force and are issued by the Central Board of Direct Taxes (for short, `the Board') in exercise of the power vested in it under Section 119 of the Act. Circulars can be issued by the Board to explain or tone down the rigours of law and to ensure fair enforcement of its provisions. These circulars have the force of law and are binding on the income tax authorities, though they cannot be enforced adversely against the assessee. Normally, these circulars cannot be ignored. A circular may not override or detract from the --- 5 --- provisions of the Act but it can seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act. {Refer to UCO Bank, Calcutta v.Commissioner of Income Tax, W.B. (1999) 4 SCC 599]}. Hon'ble the Supreme Court in the case of UCO Bank, in [2017] 391 ITR 42 (P&H), has permitted the assessee to deposit 15% of the total demand in similar circumstances during the pendency of the appeal. Paragraph 27 and 30 of the aforesaid judgment reads as under :

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 infact 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 --- 6 --- others (W.P.No. 117/2017, decided on 2/2/2017), in paragraph 7 has held as under :

7.

We have heard the submissions of the learned Counsel andwe have also gone through the records. For the reasons stated in the said Judgment of this Court in the case of Andrew Communications India Pvt. Ltd. (supra) and as it is not in dispute that the facts thereinare identical to the facts in the present case, we have no reason to take a contrary view in the present petition. Admittedly, 15% of the disputed amount has already been recovered by the respondent- Revenue and such amount is covered by the Office Memorandum dated 29th February, 2016 issued by the CBDT. In such circumstances we find that the respondents were not justified to pass the impugned attachment Notices under Section 226(3) of the Act. The claim of the petitioner, at this stage, seeking refund of the amounts attached pursuant to such directions, is not at all justified and cannot be granted in the present petition. In the light of the Office Memorandum issued by the CBDT, especially keeping in view the fact that the dispute is between Government of India and Company / Department --- 7 --- owned and controlled by the State Government and also in the light of the order dt. 25/3/2017, is of the opinion that in case the assessee deposits 15% of the outstanding demand, all the appeala shall be heard on merits. With the aforesaid, the present review petitions stand allowed and disposed of. (S. C. SHARMA) J U D G E (RAJEEV KUMAR DUBEY) J U D G E KR

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