TaxTMI 
TaxTMI 
2015 (3) TMI 276
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....declaring a total income of Rs.NIL, inter alia, in the computation of income, the assessee had shown at a loss of Rs. 26,12,03,142/-. In the assessment proceedings under Section 143 of the Income-tax Act, 1961 (in short, the Act), a notice under Section 143(2) of the Act was issued on 6.9.2011 and also notice under Section 142(1), dated 15.7.2014 along with questionnaire was issued by the Assessing Officer. Pursuant to the same, the petitioner s representatives appeared and submitted the details. During the course of scrutiny proceedings, it is reflected that the assess had entered into international transaction with its associated enterprises abroad and the value of the same exceeds Rs. 15 Crores, hence, after obtaining approval from the Commissioner of Income Tax, Large Taxpayer Unit, Chennai, the case was referred to Transfer Pricing Officer-I, Chennai for determining arms length price of the international transactions of the assess company for the assessment year 2010-2011. Thereafter, the Transfer Pricing Officer-V, Chennai has given a finding that an adjustment of Rs. 11,32,55,061/- has been proposed in the case of petitioner company and accordingly, held that an upward adjus....
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....espect of entire outstanding demand of Rs. 10,00,00,000/-. Aggrieved over the same, the petitioner has come forward with the present writ petition. 4. On 09.02.2015, after hearing both sides, this Court passed the following: The 1st respondent is directed to proceed with the matter till the final orders are passed in this writ petition and the amount need not be insisted upon. The 1st respondent is also directed to proceed with the matter on day-to-day basis and the pendency of this writ petition is not a bar for it to decide the matter on merits. Call after two weeks for orders. 5. Heard the learned counsel and perused the entire materials available on record. 6. At the out set, it is curious enough to note that the petitioner has not challenged the order of the first respondent, dated 28.1.2015, who granted partial stay in respect of total outstanding demand, but only sought for mandamus, to direct the respondents to stay the entire disputed outstanding demand of Rs. 10,00,00,000/- pending disposal of the appeal. As the said order has not been challenged, it could be presumed that the petitioner has accepted the said order, of-course, partially. However, while the sai....
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....decided on merits, which he submitted that was likely to succeed in toto as the penalty levied by the Authority was not justified at all. He, however, further submitted that till such appeal is decided on merits and if no stay is granted against such recovery, the very purpose of filing of the appeal would be frustrated and the petitioner company already in financial crises, would not be in a position to comply with the conditions imposed by the authority granting partial stay. 8. On the other hand, the learned counsel appearing for the Revenue would contend that the authority, while exercising his discretionary power, has rightly imposed the penalty and though as per the statute the maximum penalty leviable is 300% which comes to Rs. 23,85,94,851/-, however considering the facts of the case, imposed minimum penalty at Rs. 10,00,00,000/- and considering this fact as well as the other issues, the authority has rightly rejected to grant stay of outstanding amount, which requires no interference. 9. Though the learned counsel raised very many contentions regarding the imposition of penalty which according to him, does not warrant in the circumstances under which, the assessee ha....
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.... It is implied that once the authority, having satisfied with the facts and circumstances of the case in appeal, treated the assessee as not a defaulter for a particular amount, it is automatic that stay in respect of such amount has been granted. Therefore, the legislature has left it to the discretion of the authority in the matter of imposing the conditions on the assessee while treating him as not a defaulter. The discretionary power conferred upon the authority is in effect and substance one to give or not to give stay and it works both ways depending upon the manner in which it is exercised. If the authority treats the assessee as not being in default, the assessee will not be proceeded against till the appeal is disposed of and the State will be restrained to collect the amount till the outcome of the appeal. If he refuses to exercise his discretion, the assessee will be subjected to coercive process and the State will be in a position to recover the tax immediately. 13. In the land mark decision delivered on 11.03.1968, the three Judges bench of Hon'ble Supreme Court in the case of ITO versus M.K.Mohammed reported in AIR 1969 SC 430, in unanimous opinion authored by ....
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....ory by allowing the recovery proceedings to continue during the pendency of the appeal. 14. Therefore, the power under Clause (6) of Section 220 is indeed a discretionary one. However, it is one coupled with a duty to be exercised judiciously and reasonably, based on relevant grounds. It should not be exercised arbitrarily or capriciously or based on matters extraneous or irrelevant. The Income-tax Officer should apply his mind to the facts and circumstances of the case relevant to the exercise of the discretion, in all its aspects. He has also to remember that he is not the final arbiter of the disputes involved but only the first amongst the statutory authorities. Questions of fact and of law are open for decision before the two appellate authorities, both of whom possess plenary powers. In exercising his power, the Income-tax Officer should not act as a mere tax-gatherer but as a quasi-judicial authority vested with the power of mitigating hardship to the assessee. The Income-tax Officer should divorce himself from his position as the authority who made the assessment and consider the matter in all its facets, from the point of view of the assessee without at the same time sa....
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....ed. The Courts, certainly will not allow discretionary power to assume the garb of arbitrary power. The Courts have to ensure that discretion is exercised strictly within the conditionalities laid down by the law while exercising such discretion. 17. It is worthwhile to refer the observation regarding the subject matter discretion made in the decision reported in Vatcha Sreeramamurthy versus ITO reported in 1956 (30) ITR 252 , reads thus, The scope of a discretionary power conferred on a public authority is the subject matter of treatises and decisions. In Maxwell on the Interpretation of Statutes, both edition, the following passage appears at page 239 : "Statutes which authorise persons to do act for the benefit of other, or as it is sometimes said for the public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory. In inaction that they may or shall if they think fit or shall have power. or that it shall be lawful for them to do such acts a statute appears to use the language of mere permission but it has been so often decided as to have become an axiom that in such cases ....
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....ise his discretion honestly and objectively. There is also an essential distinction between refusal to exercise the discretion and the manner of its exercise. If the authority fails to discharge his duty by refusing to exercise his discretion when facts calling for its exercise exist, or, if he exercises discretion under the circumstances mentioned above, which is not an exercise of desecration in law, the Court will compel him to do so. If the authority concerned exercises his discretion honestly and in the spirit of the statute, no mandamus will be issued directing him to exercise his discretion in a particular way. See Lord Krishna Sugar Mills Ltd. v. Income-tax Officer, Ambala, Julius v. Bishop of Oxford, Allcroft v. Lord Bishop of London. 18. In the above said decision, the assessee therein, had to file a writ petition because the realisation of the tax assessed had not been stayed during the pendency of an appeal before the Tribunal. The controversy centred in that case mainly on the scope of the discretionary power conferred by Section 45 of the Indian Income Tax Act, 1922, on the Income Tax Officer. It was held that a writ petition to compel the Income Tax Officer to ....