Quashed

M/s Navanatha Educational Society v. The Income Tax Officer

Telangana HC19 Apr 2022WP/15850/2022

Case brief

AI extract

What is this about?

Petitioner challenged an Income Tax Officer's order requiring a 20% deposit pending appeal, claiming it was devoid of reasons and contrary to natural justice. Court held the order void and quashed it, remanding for a reasoned decision.

What did the court decide?

Impugned intimation and order directing payment of 20% deposit are set aside and quashed; matter remanded to respondent for fresh decision within 30 days after hearing petitioner.

M/s Navanatha Educational Society Vs The Income… — Writ and Judicial Review | Telangana HC (2022)

¶1

¶2

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)

¶3

TUESDAY ,THE NINETEENTH DAY OF APRIL TWO THOUSAND AND TWENTY TWO

¶4

PRESENT

¶5

THE HONOURABLE SRI JUSTICE UJJAL^BHUYAN

¶6

THE HONOURABLE MRS JUSTICE SUREPALLI^NANDA

¶7

WR lT PETITION NO: 15850 OF 2022

¶8

Between:

¶9

M/s Navanatha Educational Society,^{C/o Narendra Degree College,Survey} No.. 21 , 46311 , 46312, Perkit, Armoor, Nizamabad^{District -503 224'} Telangana. Represented by its Secretary^{cum Correspondent,Mr. Dasari} Shankar, S/o lMr. D.Rajaram.

¶10

...PETITIONER

¶11

AND

¶12

The lncome Tax Officer, Ward^- 1, Nizamabad,^{lncomeTax Office, 6-2-15613'} Subhash Nagar, Nizamabad^- 503 002,^Telangana

¶13

The Principal Commissioner of lncome^{Tax - 2, Hyderabad'Signature} Towers, Sy. No.. 6(P) of Kondapur,^{Sy. No". 37(P)of Kothaguda, Opposite} Botanicbl Gardens, Serilingampally^{M-andal, Ranga Reddy District, Hyderabad} - 500 084, Telangana

¶14

The National Faceless Appeal^{Centre(NFAC), Delhi, lncome Tax} Department, Ministry of Finance, Government^{of lndia}

¶15

The State Bank of lndia, Main^{Branch,Armoor, Nizamabad District- 503 224}

¶16

...RESPONDENTS

¶17

Petition under Article 226 of^{lhe Constitutionof lndia praying that in the} circumstances stated in the affidavit filed^{therewith, the High Court maybe} pleased to issue a writ, order or Direction, one, more^{particularly in the nature of} Mandamus declaring.

¶18

a.the order of the^'l st Respondent^{(served on 07.03-2022),in directing the} Petitioner to^pay 20^percentage of^{the disputed demand,pending disposalof the} appeal of the Petitioner before^{the 4th Respondent, for the Assessment Year 2017} - 18, as arbitrary, illegal, bad in law, bereft of^{any reasons, violative of principlesof} natural^justice and to consequently^{set-asidethe same and grant stay of any} recovery,^pending disposal of the^{Petitionersappeal before the 1st Appellate} Authority, in the interests of^{justice, and}

¶19

. b.the notice u/s 226(3) ot the lncome Tax Act, 1961, dated 2311112021, issued by the^'1 st Respondent to the bankers of the Petitioner, i.e., the 4th Respondent herein, as arbitrary, illegal, bad in law, violative of^principles of natural justice and to consequently set-aside the same in the interests of justice, and to pass

¶20

lA NO: 1 OF 2022

¶21

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit flled in support of the petition, the High Court may be pleased to suspend the notices uls 226(3) of the lncome Tax Act, 1961, dated 2311112021 , issued by the 1 st Respondent to the bankers of the Petitioner, i.e., the 4th Respondent herein, pending disposal of the above Writ Petition.

¶22

lA NO:2 OF 2022

¶23

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of all further proceedings, including any recovery,^pending disposal of the above Writ Petition;

¶24

Counsel for the Petitioner:SRl. A V A SIVA KARTIKEYA

¶25

Counsel for the Respondent Nos. 1 to 3: SRl. A RADHA KRISHNA, SC FOR lT

¶26

Counsel for the Respondent No. 4: SRI A.MURALI

¶27

The Court made the following:

¶28

THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA

¶29

WRIT PETITION No. 15850 of 2022

¶30

ORDER: (Per Hon'ble Si Justice Ujjal Bhuyan)

¶31

Heard Mr.A.V.A. Siva Kartikeya, learned counsel for^the petitioner and Mr. A.Radha Krishna, learned Standing Counsel Income Tax Department for respondent^Nos. i^{to 3.}

¶32

By filing this petition, under Article 226 ol tbe Constitution of India, petitioner^{seeks quashing of undated} communication of respondent No.l^{(at page} 62^{of paper} book).

¶33

Be it stated that petitioner is an assessee under the Income Tax Act, 1961(briefly referred to hereinafter^as 'the Act). For the assessment year 2Ol7-1.8,^respondent No.1 passed assessment order dated¹⁷ .12.2019 under Section 144 of the Act. Aggrieved by the aforesaid order^of assessment, petitioner has preferred appeal^before respondent No.3. The appeal is stated to be^pending. During the pendency of the appeal, petitioner filed a^petition for stay of the demand on O4.O2.2O22. By the^impugned

¶34

2 UB, J &, SN, J W.P.No.1585O of 2022

¶35

intimation, respondent No.1 granted stay of the demand subject to deposit of 2O%o thereof. This order is impugned in the present proceedings.

¶36

3.1. Impugned intimation reads as under:

¶37

" As directed by the Pr.Commissioner of Income Tax-2, Hyderabad it is hereby informed that as per the Board circular, 2OYo of the outstanding demand for the assessment year 20i7-2018 is to be paid on or before 2a.O3.2O22 to stay the Collection of Demand."

¶38

From a perusal of the above, we {ind that respondent No.t had acted on a direction of respondent No.2, who had informed that as per circular of the Central Board of Direct Taxes (CBDT) stay can be granted subject to payment of 2OYo of the demand.

¶39

Respondent No.l, while dealing with a petition for stay of demand under Section 22O (61 of the Act, acts as a quasi-judicial authority. Being a quasi-judicial authority, he is expected to apply his own mind and pass a reasoned order either rejecting the prayer for stay or granting stay with or without conditions.

¶40

A perusal of the impugned intimation would go to show that the same is devoid of reasons. All that has

¶41

3 UB,J&SN,J W.P.No.15850 of 2022

¶42

\ 1

¶43

fi \

¶44

been mentioned^{by respondentNo.1 is that respondentNo'2} had informed him^{about the circular of the CBDT, which} provides for^{granting stay of demand subject to payment of} 2Oo/o of the outstanding^{demand'Accordingly, the order} was passed.

¶45

7 . Supreme Court^{in Principal Commissionerof} Income Tax v.^{L.G.ElecronicsIndia Pvt Ltd, decidedon} 2O.O7.2O1a has held^{that administrativecircularof the} CBDT would^{not operate as a fetter on the authorityacting} in a quasi-judicial^{mannerdischarging quasi-judicial} function. In that^{case, SupremeCourt clari{ied that it} would be open to^{the authorities on the facts of individual} cases to^{grantdepositorders of a lesser amount than 2Oo/o} ' pending disPosal of the^aPPeal'

¶46

¶47

That being the^{position, and ondue} consideration, impugned^{intimation(at page 62 of the paper} book) is hereby set^{aside and quashed' Consequently} matter is remanded^{back to respondentNo'1 for taking a} fresh decision on^{the stay petitionof the petitioner dated} O4.O2.2O22, in^{accordancewith law, and after hearingthe} petitioner.

¶48

4 UB,J&SN,J W.P.No. 1585O of 2022

¶49

¶50

¶51

8.1. The above exercise shall be carried out within^a

¶52

period of thirty (30) days from the date of receipt of a copy of this order.

¶53

However, during this period of thirty (30) days, respondents shall not take coercive steps against the petitioner.

¶54

At this stage, learned counsel for the^petitioner submits that the petitioner's bank accounts have been attached pursuant to the assessment order.

¶55

We make it clear that attachment of^petitioner's bank accounts would be subject to such order that may^be passed by respondent No.1 in terms of the present order.

¶56

This disposes of the Writ Petition.^However,

¶57

there shall be no order as to costs.

¶58

As a sequel, miscellaleous applications^pending,

¶59

if any, in this Writ Petition, shall stand^closed.

¶60

SD/-B.SAT,YAVATHI ASSISTANT REGISTRAR

¶61

//TRUE COPY// L-l "-' SECTION OFFICER

¶62

To,

¶63

1 The lncome Tax Officer, Ward^{- 1, Nizamabad, lncomeTax Office, 6-2-15613'} Subhash Nagar, Nizamabad^{- 503 002, Telangana}

¶64

2 The Principai Commissioner^{of lncomeTax-2,Hyderabad, Signature} Towers, Sy. No.. 6(P) of^{Kondapur,Sy. No.. 37(P)of Kothaguda, Opposite} Botanical 6ardens, Serilingampally^{Mandal, Ranga Reddy District, Hyderabad} - 500 084, Telangana

¶65

¶66

¶67