MEDIA WORLD PRINT AND MEDIA SERVICE, vs. INCOME TAX OFFICER,

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WP(C)/17108/2022HC KeralaKLHC01034646202209 June 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that Ext.P7 order is liable to be set aside. The Court reasoned that Section 220(6) of the Income Tax Act does not inherently require any mandatory pre-deposit for considering an application for stay. While the revenue pointed to circulars and instructions from the CBDT, the Court's primary focus was on the statutory provision. The Court directed the Assessing Officer (1st respondent) to pass fresh orders on the petitioner's stay application (Ext.P6) after affording the petitioner an opportunity of hearing. The petitioner was permitted to produce materials to establish financial stringency, which the Assessing Officer was to consider. Until fresh orders were passed on the stay application, any demand against the petitioner was to be kept in abeyance. The Court did not expressly leave any issue undecided.

What were the facts?

The petitioner, Media World Print and Media Service, filed a writ petition before the High Court of Kerala challenging an order (Ext.P7) passed by the Assessing Officer under Section 220(6) of the Income Tax Act. This order directed the petitioner to produce proof of payment of 20% of the demand as a condition for considering their application for stay. The petitioner contended that there is no provision in the Income Tax Act mandating such a pre-deposit for a stay application. The Assessing Officer insisted on the deposit based on certain circulars and instructions issued by the Central Board of Direct Taxes. The petitioner further argued that they are unable to make the deposit due to financial stringency and that requiring it would cause them great prejudice, as they believe they have a strong case in appeal.

What were the issues?

1. Whether the Assessing Officer's order (Ext.P7) directing a pre-deposit of 20% of the demand as a condition for considering a stay application under Section 220(6) of the Income Tax Act, 1961, is legal and sustainable, given that the provision itself does not mandate such a deposit. Assessee's Contentions: - The order Ext.P7 is illegal and unsustainable. - There is no provision in the Income Tax Act that mandates a pre-deposit of 20% of the demand for granting a stay under Section 220(6). - The petitioner is unable to make the deposit due to financial stringency and would suffer great prejudice if the deposit is insisted upon. Revenue's Contentions: - While Section 220(6) itself does not mandate a pre-deposit, such a pre-deposit is insisted upon under certain circulars and instructions issued by the Central Board of Direct Taxes.

Which sections of the Income-tax Act were involved?

Section 220(6)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 9TH DAY OF JUNE 2022 / 19TH JYAISHTA, 1944 WP(C) NO. 17108 OF 2022 PETITIONER/S: MEDIA WORLD PRINT AND MEDIA SERVICE, DOOR NO.13/789/38/1B, DEE PEE PLAZA BUILDING KOKKALA, TRISSUR-680021, REPRESENTED BY MANAGING PARTNER VIJAYAN C.A, AGED 39 YEARS, S/O APPU NAIR, RESIDING AT CHEPPAYIL HOUSE, SHASTHRI NAGAR NADATHARA P.O, NADATHARA, THRISSUR, KERALA-680751. BY ADVS. O.A.NURIYA NEBIL NIZAR FASNA T.Y RESPONDENT/S: 1 INCOME TAX OFFICER, OFFICE OF THE INCOME TAX OFFICER WARD 2(1), TRISSUR, PIN:680 001 . 2 PRINCIPAL COMMISSIONER OF INCOME TAX, OFFICE OF INCOME TAX, KOZHIKODE, PIN: 673001. 3 ADDL.R3.COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS ASSESSMENT CENTRE, ROOM NO. 356 C.R. BUILDING, IP ESTATE, NEW DELHI, PIN-110002. (ADDL. R3 IMPLEADED AS PER ORDER DATED 3-6-2022 IN IA 1/2022). SRI. JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 17108 OF 2022 2

JUDGMENT

Petitioner has approached this Court, challenging Ext.P7 order, passed by the Assessing Officer under Section 220(6) of the Income Tax Act, directing the petitioner to produce proof of payment of 20% of the demand as a condition for considering the grant of stay under the said provision.

2.

Ms. Nuriya O.A, the learned counsel appearing for the petitioner would submit that Ext.P7 order is illegal and unsustainable. It is submitted that there is no provision in the Income Tax Act which mandates that an application for stay under Section 220(6) of the said Act can be granted only upon deposit of 20% of the demand.

3.

Sri. Jose Joseph, learned Standing Counsel appearing for the respondents would submit that while the provision itself does not mandate any pre-deposit, such pre- deposit is insisted upon under certain circulars and instructions issued by the Central Board of of Direct Taxes.

4.

Learned counsel appearing for the petitioner submits that the petitioner is not in a position to make the deposit as demanded in Ext.P7 on account of financial stringency etc. It is submitted that the petitioner has a good case in appeal and if the petitioner is required to deposit 20%

WP(C) NO. 17108 OF 2022 3 of the demand as a condition for grant of stay under Section 220(6) of the Income Tax Act, the petitioner will be put to great prejudice.

5.

Having regard to the facts and circumstances of the case and taking note of the fact that Section 220(6) of the Income Tax Act does not require any mandatory pre-deposit, I am of the opinion that Ext.P7 is liable to be set aside with a direction to the 1st respondent to pass fresh orders on the application for stay (Ext.P6) submitted by the petitioner after affording an opportunity of hearing to the petitioner. It is open to the petitioner to produce such material as may be necessary to establish financial stringency before the 1st respondent. If the petitioner files any additional material before the 1st respondent, the same shall also be taken into consideration before passing fresh orders on the application for stay (Ext.P6) filed by the petitioner. Petitioner shall also be afforded an opportunity of hearing before fresh orders are passed. Till such time as fresh orders are passed on Ext.P6, any demand against the petitioner shall be kept in abeyance.

The writ petition is disposed of as above. GOPINATH P., JUDGE ajt

WP(C) NO. 17108 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 17108/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER SO PASSED DATED 31.03.2022 FOR YEAR 2017-18. Exhibit P2 TRUE COPY OF RECTIFICATION APPLICATION DATED 11.04.2022. Exhibit P3 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE NATIONAL FACELESS ASSESSMENT CENTRE (NFAC) DATED 30.04.2022. Exhibit P4 TRUE COPY OF RECTIFICATION ORDER DATED 04.05.2022. Exhibit P5 TRUE COPY OF DEMAND NOTICE DATED 04.05.2022. Exhibit P6 TRUE COPY OF STAY APPLICATION DATED 13.05.2022. Exhibit P7 TRUE COPY OF THE ORDER DATED 17.05.2022 Exhibit P8 TRUE COPY OF THE OFFICE MEMORANDUM UNDER F.NO.404/72/93-ITCC DATED 29.02.2016 Exhibit P9 TRUE COPY OF THE OFFICE MEMORANDUM UNDER F.NO.404/72/93-ITCC DATED 31.07.2017. Exhibit P10 TRUE COPY OF BALANCE SHEET AS AT 31.03.2019. Exhibit P11 TRUE COPY OF THE REVIEW APPLICATION FILED BY PETITIONER DATED 18.05.2022. Exhibit P12 TRUE COPY OF THE JUDGMENT DATED 01,03.2019 Exhibit P13 TRUE COPY OF THE JUDGMENT DATED 27.03.2018 . Exhibit P14 TRUE COPY OF THE JUDGMENT DATED 24.06.2019.

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