Delhi High Court: A petition was filed by the petitioner challenging the order dated 08-03-2024 passed by the Income Tax Appellate Tribunal rejecting its application for stay on the recovery of demand during the pendency of appeal assailing the order of assessment as framed by the Assessing Officer and which had subsequently been affirmed by the Commissioner of Income Tax (Appeals). A Division Bench of Yashwant Varma and Purushaindra Kumar Kaurav, JJ., found no ground to interfere with the impugned order and is at liberty to the petitioner to approach the ITAT by way of a fresh stay application bringing to its attention the change in circumstances.
The case revolves around the Indian National Congress (INC) and its tax dispute with the authorities. It began with a notice of demand issued on 06-07-2021, and subsequent rejection of the first application for complete stay on 28-10-2021. The petitioner, INC, allegedly took no concrete steps to address the outstanding demand until a demand letter was issued on 09-01-2023. Despite the dismissal of the appeal by the Commissioner of Income Tax (Appeals) CIT(A) on 28-03-2023, and the initiation of an appeal before the Income Tax Appellate Tribunal (ITAT) on 24-05-2023, a stay application was only filed on 14-02-2024. Despite the dismissal of its appeal by the CIT(A) and the initiation of an appeal before the ITAT, the petitioner failed to take prompt action to address the outstanding demand. This lack of proactive measures led to the filing of the petition seeking judicial intervention in the matter.
Counsel for INC contended that it had offered to securitize the outstanding demand before the ITAT, citing various decisions and orders related to an Office Memorandum issued by the Central Board of Direct Taxes. The petitioner also raised the issue of financial hardship, arguing that it should be considered in the evaluation of the case.
The Court observed that while the petitioner had raised certain arguments regarding the assessment order and payment of the outstanding demand, the focus of the submissions appeared to be concentrated on the merits of the case rather than on issues such as securitization and financial hardship. The Court also noted the petitioner’s failure to comply with the conditions imposed by the Assessing Officer (AO) and its lack of vigilance in pursuing legal remedies.
The Court remarked that “As we read the impugned order, we come to the firm conclusion that the ITAT has carefully examined the various contentions and challenges which stood raised and has expressed a prima facie opinion and which alone was required while considering an application for stay. We are also of the firm opinion that it would be wholly inappropriate for us at this stage to either re-examine or reconsider those questions in extenso bearing in mind the limited evaluation which the ITAT was liable to undertake coupled with the fact that the principal appeal is pending consideration before the ITAT.”
The Court upheld the decision of the ITAT to reject the petitioner’s arguments based on the Office Memorandum and financial hardship. It emphasized that while the 20% deposit mentioned in the Office Memorandum is not an inflexible rule, the authorities have discretion to determine the appropriate amount based on the facts of each case. The Court also acknowledged the recovery of a significant portion of the outstanding demand and granted the petitioner liberty to file a fresh stay application before the ITAT, considering the changed circumstances.
[Indian National Congress v. DCIT, 2024 SCC OnLine Del 1770, decided on 13-03-2024]
Advocates who appeared in this case :
Mr. Vivek K. Tankha & Mr. Ravi Shankar Jandhyala, Sr. Advs. with Mr. Prasanna S., Mr. Vipul Tiwari, Mr. Inderdev Singh, Ms. Kanishka Singh, Mr. Nikhil Bhalla and Ms. Tarannu Cheema, Advocates for INC
Mr. Zoheb Hossain, Mr. Vipul Agrawal Sr.SCs with Mr. Sanjeev Menon Ms. Sakshi Shairwal, Jr.SCs, Ms. Abhipriya, Mr. Vivek Gurnani and Mr. Rajat Sen, Advocates for respondents
