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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF AUGUST, 2018
BEFORE
THE HON’BLE MR. JUSTICE B. VEERAPPA
WRIT PETITION No.35603/2018(T-IT)
BETWEEN:
KOOCHIE PLAY SYSTEMS PVT. LTD., NO.23, 3RD FLOOR, FARAH WINSFORD, 133, INFANTRY ROAD, BENGALURU-560001. REP BY ITS MANAGING DIRECTOR, ROBEN DASS & DIRECTOR KALPANA DASS. ... PETITIONER
(BY SRI AKSHAYA B. M., ADVOCATE)
AND:
UNION OF INDIA REPRESENTED BY ITS SECRETARY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI 110001
DEPUTY COMMISSIONER INCOME TAX CIRCLE-4(1)(1) DARUSSALAM BUILDING, QUEENS ROAD, SHIVAJI NAGAR, BENGALURU, KARNATAKA-560001.
2 3. COMMISSIONER OF INCOME TAX (APPEAL)-9 ROOM NO.545, BMTC BUILDING 6TH BLOCK, KORAMANGALA BENGALURU, KARNATAKA 560095.
PRINCIPAL COMMISSIONER INCOME TAX CIRCLE 4 BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU-560095.
INCOME TAX OFFICER WARD 4(1)(2), ROOM NO.219. 2ND FLOOR, BMTC BUILDING, 6TH BLOCK, KORAMANGALA, BENGALURU-560095. ... RESPONDENTS (BY SRI K.V. ARAVIND, ADVOCATE)
****
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE R-2 AND 5 NOT TO ENFORCE RECOVERY OF THE DUES CONFIRMED VIDE ORDER DATED 15.3.2016 VIDE ANNEXURE-F BY THE R-2 TILL DISPOSAL OF THE APPEAL NO.ITA 146 BY THE R-3 ETC.,
THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R
The petitioner filed the present writ petition for a writ of certiorari to quash the demand notices dated 25.7.2018
3 and 31.7.2018 vide Annexures Y & Z(B) respectively issued by the 5th respondent for payment of additional 10% deposit and also for directing Respondent Nos.2 and 5 not to enforce recovery of the dues confirmed by the order dated 15.3.2016 as per Annexure-F by Respondent No.2, till disposal of the appeal No.ITA 146 by the Respondent No.3.
It is the case of the petitioner that petitioner – company is engaged in the business of manufacturing and installation of outdoor fitness equipment, outdoor flooring for sports etc., for the last seven years in India. The petitioner company had issued shares of the company to a public listed company i.e, Dainik Bhaskar Corporation Limited and two others. The petitioner took money from these investors and issued equity shares of the petitioner company in their favour and the said transaction was done in the Assessment year 2013-14. The return of income of the petitioner for the Assessment year 2013-14 was picked
4 up for scrutiny by Respondent NO.2 and details of the investors who subscribed to the hares of the petitioners were sought by Respondent No.2. The petitioner filed their replies, objections and provided the details of the investors and their credit worthiness, letter of allotment, board resolution, share valuation report, bank statements etc., to the Respondent No.2 to show that moneis were not income at the hands of the petitioner but the same was given towards subscription of shares of the petitioner.
The petitioner was given personal hearings before the Respondent No.2 wherein the petitioner reiterated the submissions made in the reply. The Respondent No.2 after hearing the petitioner passed an order dated 15.3.2016 rejecting the submissions of the petitioner and categorized the differential share premium amount of Rs.8,15,390/- as income from other sources under Section 56(2) of the Income Tax Act, 1961 and also additional share capital amounting to Rs.3,91,89,304/- as cash credit under Section
5 68 of the Income Tax Act, for computation of income of the petitioner for the assessment year 2013-14 and on the same day i.e., 15.3.2016 issued demand notice determining Rs.1,76,97,570/- as income tax payable by the petitioner. The petitioner preferred an appeal via online before the first appellate authority i.e, Commissioner of Income Tax (Appeals) i.e., Respondent No.3 on 15.4.2016 challenging the demand notice dated 15.3.2016 and the order passed by the Respondent No.2. The said appeal is pending for consideration and a stay application was preferred before the Respondent No.4. Despite the pendency of the appeals and stay applications, the Respondent No.5 issued repeated notices for payment of alleged tax and arrears. Therefore the petitioner was constrained to file Writ Petition No.45985/2017 before this Court and this Court after hearing both the parties by an order dated 9.10.2017 disposed of the petition directing the appellate authorities to dispose of the appeal expeditiously and further recorded
6 a finding that till the appellate authorities dispose of the stay applications, the lower assessing authority shall not take any coercive measures for recovery of the disputed demand against the petitioner – assessee.
It is further case of the petitioner that subsequently the appellate authority disposed of the stay application on 10.11.2017 and directed the petitioner to pay 10% of the disputed demand by 30.11.2017 subject to which the balance demand would be stayed till disposal of appeal. The petitioner has paid 10% of the demand on 28.6.2018. The appeal is still pending for consideration. In the meanwhile, the Respondent No.5 issued Annexure-Y and Annexure-ZB demanding that as per the Board’s Instruction No.1914 dated 21.3.1996 vide Office Memorandum dated 31.7.2017, the petitioner required to pay 20% of the disputed demand pending before CIT(A)-4. Therefore petitioner is before this Court mainly contending that he has already paid 10% of the demand in pursuance of the
7 interim order dated 10.11.2017 passed by the appellate authority and therefore till the appeal is disposed of, the 5th respondent cannot demand balance amount.
I have heard the learned counsel for the parties to the lis.
Sri Akshay B.M., learned counsel for the petitioner reiterating the grounds urged in the petition contended that the petitioner already paid 10% of the demand in terms of the interim order dated 10.11.2017 passed by the appellate authority on 28.6.2018. Therefore till the appeal is disposed of, the respondent cannot demand another 10% because of the Board’s resolution. Therefore he sought to quash the impugned demand notices by allowing the writ petition.
Sri K.V. Aravind, learned standing counsel on taking notice for respondents contended that the petitioner has
8 paid 10% of the outstanding demand of Rs.17,75,000/- for the Assessment year 2013-14 in terms of the interim order dated 10.11.2017 passed by the appellate authority. But, in terms of the modified Board’s Instruction, the petitioner is required to pay 20% of the disputed demand and hence he is required to pay remaining 10% of the disputed demand. Therefore he sought to justify the impugned demand notices issued by Respondent NO.5.
Having heard the learned counsel for the parties, it is an undisputed fact that this Court by an order dated 9.10.2017 made in Writ Petition No.45985/2017 while disposing of the writ petition directed the Appellate Authority to dispose of the application and till such disposal of the stay application, the Lower Appellate Authority or the concerned Authorities, shall not take any coercive measures for recovery of the disputed demand made by the assessee- petitioner.
It is also not in dispute that subsequent to the orders passed by this Court, the Lower appellate Authority disposed of the application on 10.11.2017 staying payment of balance demand till disposal of appeal or 28.2.2018, whichever is earlier subject to payment to payment 10% of the disputed demand by 30.11.2017. But the petitioner deposited only last leg of 10% on 28.6.2018. It is also not in dispute that in view of the modified Board’s Instruction No.1914 dated 21.3.1996, vide office memorandum dated 31.7.2017, the petitioner was required to pay 20% of the disputed demand pending disposal of CIT(A)-4 before the Appellate Authority.
Having heard the learned Counsel for the parties at length, this Court is of the considered opinion that if the petitioner is directed to pay 5% of the disputed demand made in the impugned orders as per Annexures-Y, and Z(B) dated 25.7.2018 and 31.7.2018 respectively, it is suffice in the interest of both the parties and it is expected that the
10 Lower Appellate Authority shall dispose of the appeal which is reserved for judgment at the earliest.
In view of the above, writ petition is disposed of directing the petitioner to deposit 5% of the disputed demand made in the impugned orders as per Annexures-Y, and Z(B) dated 25.7.2018 and 31.7.2018 respectively by the 5th respondent within two weeks from the date of receipt of copy of this order, and the Appellate Authority to dispose of the appeal at the earliest. It shall not demand further, till disposal of the appeal on merits in accordance with law.
Sd/-
JUDGE
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