TaxTMI 
TaxTMI 
2017 (3) TMI 802
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....allenged the order dated 25.1.2016, whereby the Prl.Commissioner of Income Tax ('Prl. CIT' for short), has confirmed the order dated 23.11.2016, passed by the Assistant Commissioner, and has directed the petitioner to deposit 15% of the total disputed demand amount within one month from the date of receipt of the order. 2. Briefly the facts of the case are that the petitioner is a Private Limited Company, incorporated under the Companies Act, 1956. The petitioner entered the E-Commerce sector; it is engaged inter alia in the business of wholesale distribution of books, mobiles, media, computers, gaming consoles, and other related accessories. The petitioner submitted its Income Tax Return on 1.10.2014, for the Assessment Year 2014-15, wherein it declared a loss of Rs. 3,58,81,84,343/-. According to the petitioner, in order to enter the E-commerce sector, and in order to secure a market, the petitioner is selling the goods at prices lower than the purchase price. Thus, ever since the beginning of its business in the year 2011, it has been suffering losses for the Assessment Years 2012-13, 2013-14, 2014-15, and also for the Assessment Year 2015-16. 3. On 28.10.2016, the pet....
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....4' for short). The Circular No.1914 deals with "Collection and Recovery of the Income Tax". Instruction No.2-B of Circular No.1914 also deals with the "Stay Petitions", which could be filed before the Assessing Officer, while an appeal is to be filed before the Appellate Authority. Instruction No.2-C of Circular No.1914 deals with the "Guidelines for staying the demand". According to the learned Senior Counsel, a decision in the matter of stay of demand shall normally be taken by the Assessing Officer, who is the immediate superior. However, a higher superior authority is empowered to interfere with the decision of the Assessing Officer in certain extraneous circumstances, namely if the assessment order appears to be "unreasonably highpitched", or "where genuine hardship is likely to be caused to the assessee". Moreover, according to Instruction No.2-C of Circular No.1914, certain guidelines have been provided by the said Circular, which clearly demarcate the circumstances in which the stay can be granted. Secondly, the Circular No.1914 was partially modified by the Circular dated 29.2.2016. However, the Circular No.1914 was never superceded, in toto, by the subsequent Circula....
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....016, the Assessing Officer has opined that "no case of hardship exist", the said opinion is merely a conclusion, which unsupported by any reason. Therefore, this part of the impugned orders dated 23.11.2016 is a non-speaking order. Lastly, even the order dated 25.1.2017 is legally unsustainable. For, the learned Prl. CIT has failed to see the inter-relationship between the two Circulars mentioned above. Further, the learned Prl. CIT has relied upon a judgment of this Court in the case of M/s.Teleradiology Solutions Pvt. Ltd., v. DCIT Circle-12(4) & Others (Writ Petition NO.26370/2015, decided by this Court on 18.04.2016). But, the said judgment does not deal with the issue which was raised before the Prl. CIT. Hence, the impugned orders deserve to be interfered with by this Court. 7. On the other hand, Mr. K. V. Aravind, the learned counsel for the Revenue, has pleaded that the Circular dated 29.2.2016 had superceded the Circular No.1914 in toto, as it was later in time, and a new procedure was prescribed for streamlining the process of granting of stay. According to him, the assessee would be entitled to deposit less than 15% of the disputed demand amount, provided "where additi....
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....ed as Instruction No.2-B(iii) is as under : " 2-B (iii) :- The decision in the matter of stay of demand should normally be taken by Assessing Officer/TRO and his immediate superior. A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances e.g. where the assessment order appears to be unreasonably highpitched or where genuine hardship is likely to be caused to the assessee. The higher authorities should discourage the assessee from filing review petitions before them as a matter of routine or in a frivolous manner to gain time for withholding payment of taxes." 12. The third part, marked as '2-C', deals with "Guidelines for staying the demand". This part stipulates the conditions under which the demand can be stayed; it also deals with certain conditions which the Assessing Officer is free to impose upon the assessee. 13. However, interestingly, the Circular No.1914 does not standardize the quantum of lumpsum payment required to be made by the assessee, as a pre-condition of stay of disputed demand before CIT (A). Since the Circular No.1914 is silent on this aspect, the vacuum has been filled up by Circular dated 29.2.....
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.... or the assessee filing such review, as the case may be. (E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,- (i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; (ii) reserve the right review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or Court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245." 14. Instruction No.4 uses the words "partial modification of Instruction No.1914". Thus, obviously Circular dated 29.2.2016 has left Instruction No.2-B(iii) contained in Circular No.1914 absolutely untouched. In fact, Circular dated 29.2.2016 merely prescribed the percentage of the disputed demand that needs to be deposited by the assessee. 15. According to Instruction No.4(A) of Circular dated 29.2.2016, it is a g....
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....petitioner has been constantly claiming that it has suffered loss from the very inception of its business, from 2011 to 2016, the least that the Assessing Officer was required to do was to elaborately discuss as to whether "genuine hardship" would be caused to the petitioner in case the petitioner were directed to pay 15% of the disputed demand amount or not? Yet the Assessing Officer has failed to do so. Therefore, this part of the order, naturally, suffers from being a non-speaking order. Hence, the said orders are legally unsustainable. 18. A bare perusal of the order dated 25.1.2017 also reveals that the Prl. CIT has failed to appreciate the co-relation between Circular No.1914, and Circular dated 29.2.2016. The Prl. CIT has failed to notice the fact that the latter Circular has only "partially modified" the former Circular, and has not totally superceded it. The Prl. CIT has also ignored the fact that Instruction No.2-B(iii) contained in Circular No.1914 continues to exist independently of and in spite of the Circular dated 29.2.2016. Therefore, it has failed to consider the issue whether the assessment orders suffers from being "unreasonably highpitched", or whether "any gen....