CORTEVA AGRISCIENCE SEEDS PVT LTD (FORMERLY KNOWN AS PHI SEEDS PVT LTD) vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(2) NEW DELHI

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W.P.(C)/499/2024HC DelhiDLHC01000789202412 January 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The Delhi High Court disposed of the writ petition with several directions. It granted liberty to the petitioner to approach the ITAT immediately for expeditious consideration and disposal of its stay applications in the pending appeals, requesting the ITAT to deal with them urgently. For a period of two weeks, the respondent was directed not to encash the demand draft, or if already presented, its proceeds would abide by the ITAT's orders on the stay applications. The encashment of the demand draft and further recovery rights were made subject to the ITAT's directions on the stay applications. Until the ITAT disposes of the stay applications, the petitioner must ensure its bank accounts maintain a credit balance of Rs. 79,81,80,766/-. The impugned garnishee notices were stayed pending the ITAT's decision on the stay applications, subject to the petitioner's compliance.

What were the facts?

The petitioner, Corteva Agriscience Seeds Pvt Ltd, assails garnishee notices dated January 9, 2024, issued by the Deputy Commissioner of Income Tax under Section 226 of the Income Tax Act, 1961, which led to the freezing of its bank accounts. The total outstanding demand is Rs. 178,66,80,962/- for assessment years 2016-17, 2012-13, 2013-14, and 2014-15, including tax, penalty under Section 271(1)(c), and interest under Section 220(2). The petitioner's appeals against the assessment and penalty orders were dismissed by the CIT(A). Appeals are pending before the ITAT since December 20, 2019. The revenue had already taken over a demand draft of Rs. 98,85,00,196/-. The petitioner sought a stay on encashment of the demand draft pending ITAT's decision on stay applications, subject to maintaining a credit balance of Rs. 79,81,80,766/- in its bank accounts.

What were the issues?

1. Whether the garnishee notices dated January 9, 2024, issued under Section 226 of the Income Tax Act, 1961, are valid and enforceable pending the disposal of appeals before the Income Tax Appellate Tribunal (ITAT)? The assessee (petitioner) contended that the garnishee notices and freezing of bank accounts were premature and oppressive, especially since appeals against the assessment and penalty orders were pending before the ITAT. They argued that the revenue should be restrained from encashing a demand draft of Rs. 98,85,00,196/- and that their bank accounts should not be further depleted, provided they maintain a specified credit balance. The assessee sought liberty to approach the ITAT for urgent stay orders. The revenue (respondent) argued that recovery actions were initiated consequent to the dismissal of appeals by the CIT(A) and within the limited contours of Section 220(6) of the Act. They stated that the demand draft had already been deposited for encashment.

Which sections of the Income-tax Act were involved?

Section 226,Section 271(1)(c),Section 220(2),Section 220(6)

AI-generated summary — verify with the full judgment below

$~59 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 499/2024 CORTEVA AGRISCIENCE SEEDS PVT LTD (FORMERLY KNOWN AS PHI SEEDS PVT LTD) ..... Petitioner Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Aditya Vohra, Adv. versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(2) NEW DELHI ..... Respondent Through: Mr. Sanjay Kumar & Ms. Easha, Advs. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV O R D E R % 12.01.2024 CM APPL. 2211/2024 (Exemption) 1. Allowed, subject to all just exceptions. 2. Application is disposed of. W.P.(C) 499/2024 & CM APPL. 2210/2024 3. The writ petitioner assails the garnishee notices dated 09 January 2024 which has been issued by the respondent under Section 226 of the Income Tax Act, 1961 [“Act”] and pursuant to which the petitioner’s bank accounts maintained with the Standard Chartered Bank and Citi Bank have come to be freezed. 4. Mr. Vohra, learned senior counsel for the appellant has drawn our attention to the break-up of the total outstanding demand and which is set out in a tabular form hereunder: AY Section Outstanding This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/05/2024 at 13:05:30

demand (in Rs.) 2016-17 Order under Section 143(3) 50,08,19,932 2016-17 Penalty order under section 271(1)(c) 99,77,25,958 2012-13 Interest under section 220(2) 12,07,35,972 2013-14 Interest under section 220(2) 11,04,89,400 2014-15 Interest under section 220(2) 5,69,09,700 Total 178,66,80,962/- 5. Undisputedly, the writ petitioner has been unsuccessful up to the stage of the Commissioner of Income Tax (Appeals) [“CIT(A)”] insofar as the original order of assessment is concerned, with the CIT (A) having dismissed its appeals on 23 October 2019. Subsequently, penalty orders came to be drawn by the Assessing Officer on 05 January 2022 in terms of Section 271(1)(c) of the Act. The aforesaid order has also come to be affirmed by the CIT (A) vide an order dated 23 March 2023. 6. We are however informed that appeals have been preferred by the petitioner against the aforesaid orders and are presently pending before the Income Tax Appellate Tribunal [“ITAT”]. The first of those appeals was instituted as far back as 20 December 2019. 7. The respondent appears to have proceeded further to effect recoveries of the outstanding demand consequent to the dismissal of the appeals by the CIT(A) and being constrained by the limited contours of Section 220(6) of the Act. 8. Mr. Vohra further apprises the Court that in furtherance of the demand which is outstanding, the respondent has also taken over a demand draft of a sum of Rs. 98,85,00,196/-. According to learned senior counsel, the aforesaid demand draft is yet to be encashed by the Department. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/05/2024 at 13:05:30

9.

Mr. Kumar, learned counsel for the respondent, however, on instructions has apprised us that the said demand draft has already been deposited for encashment. 10. It is in the aforesaid backdrop that a prayer is made that pending the right of the petitioner to take emergent steps before the ITAT to press its applications for stay, the respondent may be restrained from encashing the demand draft which is held, subject to the petitioner ensuring that its bank accounts which form the subject matter of seizure maintain a credit balance of Rs. 79,81,80,766/- [i.e. Rs. 178,66,80,962/- - Rs. 98,85,00,196/-]. 11. In view of the aforesaid, we dispose of the writ petition with the following directions: a.We accord liberty to the petitioner to approach the ITAT forthwith and take appropriate orders for expeditious consideration and disposal of the stay applications in the pending appeals. We further request the ITAT to take up the stay applications and dispose them of with due expedition. b.For a period of two weeks, we direct the respondent not to encash the aforenoted demand draft which has been recovered, if not already presented for encashment. In case the demand draft has already been submitted, the proceeds thereof shall abide by the orders that the ITAT may pass on the stay applications moved by the petitioner. c.The encashment of the demand draft as well as the further rights of the respondent to effect recoveries from the petitioner shall abide by any direction that the ITAT may pass on the stay applications. d.Till such time as the ITAT disposes of the stay applications, the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/05/2024 at 13:05:30

petitioner shall ensure that the concerned bank accounts maintain a credit balance of Rs. 79,81,80,766/- at all times. e.Subject to compliance with the above and pending further orders to be passed by the ITAT, the impugned garnishee notices dated 09 January 2024 shall remain stayed. 12. Dasti under the signatures of the Court Master. YASHWANT VARMA, J. PURUSHAINDRA KUMAR KAURAV, J. JANUARY 12, 2024/kk This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/05/2024 at 13:05:30

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