NATHERSHA PAREEKUNJU MATHRAKKATTU vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/17984/2021HC KeralaKLHC01047406202124 September 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the intimations (Exts.P2 and P8) directing the deposit of 20% of the total demand were issued by the Income Tax Officer, not the Appellate Authority. The Court noted that the petitioner had not yet filed any application for stay before the Appellate Authority. It agreed with the revenue's submission that Appellate Authorities, being quasi-judicial bodies with discretionary powers, are not bound by office memorandums. The Court referred to the Delhi High Court judgment in "Turner General Entertainment Networks" case, observing that authorities must apply their mind independently of office memorandums when deciding stay applications. The Kerala High Court judgment (Ext.P9) was distinguished as being based on the peculiar facts of that case. The Court directed the petitioner, if advised, to move an appropriate application for stay before the Appellate Authority, which was to pass orders within two months. Liberty was also granted to the Appellate Authority to consider and pass orders on the appeal itself if deemed desirable.

What were the facts?

The petitioner, an NRI, challenged an assessment order (Ext.P1) and subsequent demand notices (Ext.P2, Ext.P6, Ext.P8) through a writ petition. The petitioner had already filed an appeal (Ext.P3) against the assessment order before the Commissioner of Income Tax (Appeals). The demand notices, issued by the Income Tax Officer (2nd respondent), directed the petitioner to deposit 20% of the total demand as a pre-deposit for granting a stay, citing an office memorandum from 2016, revised in 2017. The petitioner argued that these intimations were based on the office memorandum which stipulated a 20% pre-deposit for stay. The revenue contended that appellate authorities are quasi-judicial bodies and not bound by office memorandums.

What were the issues?

1. Whether the intimations directing the deposit of 20% of the total demand, based on a CBDT office memorandum, are binding on the petitioner pending his appeal before the appellate authority? (Question of law and fact, concerning the applicability of administrative instructions to quasi-judicial proceedings). Assessee's Contention: The petitioner argued that the intimations requiring a 20% pre-deposit for stay were based on the CBDT office memorandum of 2016 (revised 2017) and cited judgments from the High Court of Delhi in "Turner General Entertainment Networks India PVT.LTD. vs. Income Tax Officer" and a Kerala High Court judgment (Ext.P9) to support the proposition that appellate authorities grant stay only on such pre-deposits. Revenue's Contention: The revenue, through its Standing Counsel, argued that appellate authorities are quasi-judicial bodies exercising adjudicatory powers and are therefore not bound by office memorandums. They contended that any application for stay moved by the petitioner would be considered independently of such memorandums.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
WP(C) NO. 17984 OF 2021 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 24TH DAY OF SEPTEMBER 2021 / 2ND ASWINA, 1943 WP(C) NO. 17984 OF 2021 PETITIONER: NATHERSHA PAREEKUNJU MATHRAKKATTU AGED 48 YEARS S/O. PAREEKUNJU, PRESENTLY RESIDING AT FLAT NO.03, DIWANIYA STREET MATAR QADEEM, DOHA, QATAR, P.O. BOX 22487 PERMANENT ADDRESS AT MATHRAKKATTU HOUSE, PINARMUNDA, PERINGALA P.O., 683 565, ERNAKULAM DISTRICT, KERALA STATE. BY ADVS. S.SAJU A.V.SAJAN NEELANJANA NAIR POOJA SEBASTIAN RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (APPEALS) G-51, PARAPILLY LN, MANORAMA JUNCTION, GIRI NAGAR, PANAMPILLY NAGAR, KOCHI, KERALA 682 036. 2 THE INCOME TAX OFFICER CENTRAL REVENUE BUILDING, I S PRESS ROAD, KACHERIPADY, KOCHI, KERALA-682 018. BY ADVS. P.K.RAVINDRANATHA MENON (SR.) JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 17984 OF 2021 2 BECHU KURIAN THOMAS, J ................................................ W.P.(C) No.17984 of 2021 …........................................ Dated this the 24 TH day of September, 2021

JUDGMENT Petitioner claims to be an NRI against whom Ext.P1 order of assessment was issued by the 2nd respondent. Challenging Ext.P1, petitioner has preferred Ext.P3 appeal before the 1st respondent. Inspite of the aforesaid appeal, petitioner has filed this writ petition, challenging Ext.P1 assessment order as well as Ext.P2 and Ext.P6-demand notices apart from Ext.P8 communication. Ext.P2 and Ext.P8 are intimations directing the petitioner to deposit 20% of the total demand raised, based upon an office memorandum of 2016, for grant of stay of the demand notice issued to the petitioner.

2.

As mentioned earlier, Petitioner has already preferred Ext. P3 appeal before the WP(C) NO. 17984 OF 2021 3 first respondent and it is during the pendency of the said appeal that petitioner was served with Ext.P2 and P8 intimations. Reliance was placed by the 2nd respondent on the office memorandum No.F404/72-93-ITCC issued by the CBDT dated 29/2/2016 and its subsequent revision on 31/7/2017, to direct the deposit of 20% of the demand for staying the proceedings for recovery of the tax imposed.

3.

O.M. dated 29/2/2016 referred to above, was revised on 31/7/2017 wherein the quantum of deposit was increased to 20% from 15% for granting a stay of the demand made by 22/1/2019. He canvasses for the proposition

WP(C) NO. 17984 OF 2021 4 that in view of the office memorandum, the Appellate Authorities are granting stay only on deposit of 20% of the entire demand and that too as a pre-deposit.

5.

The learned Standing Counsel Adv.Sri.Jose Joseph on the other hand submits that, the Appellate Authorities are quasi- judicial bodies exercising the power of adjudication and hence the office memorandum are not binding upon them. According to the learned Standing Counsel, if the petitioner moves the Appellate Authority seeking stay of the order impugned, the same is bound to be considered, dehors any office memorandum, directing predeposits.

6.

Having considered the submissions of the Adv. Saju S Nair learned counsel for the petitioner, as well as the learned Standing counsel, Adv. Jose Joseph, this Court is of the opinion that Exts.P2 and P8 directing deposit of 20% of the total demand are both made by the WP(C) NO. 17984 OF 2021 5 Income Tax Officer and not by the Appellate authority. Petitioner has not yet moved any application for stay of the assessment order in the pending appeal, before the 2nd respondent. As rightly pointed out by the learned Standing counsel, the Appellate Authorities are not bound by any office memorandum issued by the department,

since

they

are exercising adjudicatory powers and possess discretionary powers.

7.

In considering the grant of stay pending appeal, the High Court of Delhi had clearly

observed

in Turner

General Entertainment Networks case (supra) that while, the authorities concerned have to apply their mind to decide such applications and pass appropriate orders independent of the office memorandum. The judgment of the High Court of Kerala, produced as Ext.P9, stands on a different footing since, in that case, this Court had directed the consideration of the WP(C) NO. 17984 OF 2021 6 appeal without insisting on any deposit due to the peculiar nature of the facts involved in that case.

8.

In view of the above deliberations, I am of the opinion that the petitioner, if he is so advised, ought to move an appropriate application for stay before the Appellate Authority. If such an application is preferred, needless to say, the appellate authority shall pass appropriate orders within a period of two months from the date of receipt of such an application. Further, if the Appellate Authority feels it desirable to consider and pass orders on the appeal itself, liberty is granted to the Appellate Authority to do so. The writ petition is disposed of accordingly. BECHU KURIAN THOMAS JUDGE AJM

WP(C) NO. 17984 OF 2021 7

Appendix — schedule of exhibits
APPENDIX OF WP(C) 17984/2021 PETITIONER’S EXHIBITS: Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER OF THE 2ND RESPONDENT DATED 18.12.2019. Exhibit P2 TRUE COPY OF THE DEMAND NOTICE OF THE 2ND RESPONDENT DATED 10.2.2020. Exhibit P3 TRUE COPY OF FORM NO.35 APPEAL TO COMMISSIONER OF INCOME TAX (APPEALS) DATED 17.1.2020. Exhibit P4 TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT DATED 29.5.2020. Exhibit P5 TRUE COPY OF THE SHOW CAUSE NOTICE ISSUED BY THE 2ND RESPONDENT DATED 29.5.2020. Exhibit P6 TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 2ND RESPONDENT DATED 14.7.2021. Exhibit P7 TRUE COPY OF THE EMAIL COMMUNICATION SENT BY THE PETITIONER TO THE 2ND RESPONDENT DATED NIL. Exhibit P8 TRUE COPY OF THE LETTER ISSUED BY THE 2ND RESPONDENT DATED 23.7.2021. Exhibit P9 TRUE COPY OF THE JUDGMENT IN WPC NO.10227 OF 2020 (C) DATED 25.5.2020. RESPONDENT’S EXHIBITS : NIL AJM // TRUE COPY // PA TO JUDGE

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