TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 369
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....tral Board of Direct Taxes (CBDT) and, further, it has been stated that recovery letter dated 25.01.2023 has been issued for compliance of payment on or before 31.01.2023. (ii) For issuance of an appropriate writ/order/direction, including Writ of Mandamus, directing Respondent No. 2 not to enforce and realize the outstanding demand pursuant to assessment order dated 30.09.2022 [Annexure-2] passed in respect of Assessment Year 2020-21 during the pendency and adjudication of the Appeal filed by Petitioner before Respondent No. 4. (iii) For issuance of an appropriate writ/order/direction, including Writ of Mandamus, directing the Respondent No. 4 to hear and expeditiously dispose of the Appeal filed by the Petitioner vide Acknowledgment No. 194608230081122 dated 08.11.2022 [Annexure-3] pertaining to Assessment Year 2020-21. (iv) For issuance of any other appropriate writ(s)/order(s)/ direction(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case. 2. Petitioner, in the writ application, has specifically pleaded that against the order passed by the Assessing Officer directing the Petitioner to make payment of 20% of the disputed demand, Petitio....
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....) Ghatkuri Iron Ore Mines and (ii) Bihar Iron Ore Mines. Both the mines are situated in the District of West Singhbhum, at Chaibasa. 7. Pursuant to the order passed by the Hon'ble Apex Court in the case of Common Cause Vs. Union of India, reported in (2017) 9 SCC 499, the District Mining Officer directed the Petitioner to make payment of compensation towards damage to environment to the tune of Rs. 182,63,48,630/- with respect to Ghatkuri Mines, and, an amount of compensation of Rs. 19,55,12,041 pertaining to Bihar Iron Ore Mines. Since Petitioner maintained its books of account under the Mercantile System of accounting and, therefore, in its books of account for the Financial Year 2019-20 pertaining to Assessment Year 2020-21, the Petitioner claimed the aforesaid compensation amount of Rs. 202,18,60,671/- as allowable expenses under Section 37(1) of the Income Tax Act, 1961 and, accordingly, reflected a net loss of Rs. 129,26,59,785/- in its Return under Section 139(1) of the Act for the Assessment Year 2020-21. 8. The case of the Petitioner was selected for scrutiny under Section 143(3) of the Act and show cause notices were issued to the Petitioner to show cause as to why the ....
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....tioner even filed a Review application before Respondent No. 1-Principal Commissioner of Income Tax and, in the Review application, Petitioner raised several grounds for assailing the order of conditional stay passed by the Assessing Officer. Reliance was also placed by the Petitioner in its Review application to several judicial pronouncements. 10. The Reviewing Authority, vide order dated 24.02.2023, passed an order directing the Petitioner to pay Rs. 5.00 crores by 15.03.2023 and further issued direction for payment of Rs. 10.00 lakh from April, 2023 till disposal of the Appeal and it was further ordered that if the said amount is paid by the Petitioner, no coercive action shall be taken for recovery by the Assessing Officer. It is in the backdrop of the said fact that present writ application has been filed challenging the order dated 31.01.2023 passed by the Assessing Officer under Section 220(6) of the Act and the order dated 24.02.2023 passed by Respondent No. 1-PCIT. 11. Mr. Sumeet Gadodia, Advocate, assisted by Mr. Ranjeet Kushwaha, Advocate has assailed the impugned order and has contended, inter alia, that the impugned order dated 31.01.2023 passed by the Assessing Off....
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.... directed the Petitioner to make payment of an amount of Rs. 5.00 Crores by 15.03.2023 and Rs. 10.00 Lakhs per month from April, 2023 till disposal of the Appeal. 13. The Petitioner, during the course of argument, also invited our attention to the prima facie merit of the case of the Petitioner by placing reliance upon the provisions of Section 37(1) of the Act and the Judgment of the Hon'ble Apex Court in the case of Common Cause (supra). The Petitioner, while referring to the provisions of Section 37(1) of the Act, including Explanation-1 thereof, has contended inter alia that expenditure towards compensation amount claimed by the Petitioner in its Return for the Assessment Year 2020-21 has been wrongly denied by the Assessing Officer by placing reliance upon Explanation-1 of Section-37. It has been submitted that Explanation-1 of Section 37 disallows the deduction or allowance towards expenditure if the said expenditure is incurred by the assessee for any purpose which is an offence or which is prohibited by law. Section 37(1) of the Act, for ready reference, is quoted herein-under:- 37. General.- (1) Any expenditure (not being expenditure of the nature described in section....
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....sed order stipulating, inter alia, that 20% of the amount is required to be paid as a pre-condition for stay. It has been further submitted by learned counsel for revenue that the Petitioner has already preferred an Appeal before the Appellate Court and the issue raised by the Petitioner in the instant writ application touching the merits of the Assessment Order may not be looked into by this Court in view of pendency of the Appeal of the Petitioner. However, he fairly submitted before the Court that the order passed by Reviewing Authority dated 24.02.2023 is not a defendable order as no reason has been assigned in the said order. 16. We have heard the learned Counsels for the parties and have carefully gone through the materials on record. For the purpose of determination of the instant writ application, provision of Section 220 of the Income Tax Act is relevant which is quoted hereinafter for ready reference:- 220. When tax payable and when assessee deemed in default. (1) Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within thirty days of the service of the notice at the place and to the person me....
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....ich the amount is paid. Provided also that in respect of any period commencing on or before the 31st day of March, 1989 , and ending after that date, such interest shall, in respect of so much of such period as falls after that date, be calculated at the rate of one and one-half per cent for every month or part of a month.] (2A) Notwithstanding anything contained in sub- section (2), the Chief Commissioner or Commissioner] may] reduce or waive the amount of interest paid or payable by an assessee under the said sub- section if he is satisfied that- (i) payment of such amount has caused or would cause genuine hardship to the assessee; (ii) default in the payment of the amount on which interest has been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee; and (iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him. Provided that the order accepting or rejecting the application of the assesse, either in full of in part, shall be passed within a period of twelve months from the end of the month in which the application is received; Pro....
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....Where an assessee has been assessed in respect of income arising outside India in a country the laws of which prohibit or restrict the remittance of money to India, the Assessing Officer shall not treat the assessee as in default in respect of that part of the tax which is due in respect of that amount of his income which, by reason of such prohibition or restriction, cannot be brought into India, and shall continue to treat the assessee as not in default in respect of such part of the tax until the prohibition or restriction is removed. Explanation.- For the purposes of this section, income shall be deemed to have been brought into India if it has been utilised or could have been utilised for the purposes of any expenditure actually incurred by the assessee outside India or if the income, whether capitalised or not, has been brought into India in any form. 17. A plain reading of the provisions of sub-section (4) of Section 220 would indicate that if the amount is not paid within the time limit under Sub-section (1) or within the extended time under Sub-section (3), as the case may be, assessee would be deemed to be in default. The legal fiction of 'deemed to be in default' has ....
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.... be), 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. Thus, 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 sacrificing the interests of the Revenue. 21. The question as to what are the matters relevant and what should go into the making of the decision by the Income-tax Officer in such circumstances has been explained in the case of Aluminium Corporation ....
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....the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection : deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons." 24. In the case of U.P. State Road Transport Corporation v. Mohd. Ismail : (1991) 3 SCC 239, while dealing with the case of non-exercise of discretion by the authority, Hon'ble Apex Court expounded on the contours of discretion as also on limitations on the powers of the Courts when the matter is of the discretion of the competent authority, in the following terms:- "12. The High Court was equally in error in directing the Corporation to offer alternative job to drivers who are found to be medically unfit before dispensing with their services. The court cannot dictate the decision of the statutory authority that ought to be made in the exercise of d....
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....f public office, when exercising discretion conferred by the statute, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The requirements of reasonableness, rationality, impartiality, fairness and equity are inherent in any exercise of discretion; such an exercise can never be according to the private opinion. 26. We are of the view that the authorities should keep in mind the following parameters while deciding a stay application preferred by an assessee pending appeal to the First Appellate Authority which has been elaborately laid down by the Bombay High Court in the case of Kec International Ltd. v. B.R. Balakrishnan, (2001) 251 ITR 158/119 Taxman 974; (a) While considering the stay application, the authority concerned will at least briefly set out the case of the assessee. (b) In cases where the assessed income under the impugned order far exceeds the returned income, the authority will consider whether the assessee has made out a case for unconditional stay. If not, whether looking to the questions involved in appeal, a part of the amount should be ordered to be deposited for which purpose, some short ....
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....efore unsustainable in law. 8. For the above reasons, the impugned order is set aside and a direction is issued that the Petitioner's application will once again be heard by the PCIT on merits and without reference to the O.M dated 31st July, 2017, which, on the face of it, appears to curtail his discretion. The PCIT will dispose of the application with a reasoned order not later than two weeks from the date of receipt of this order. 9. The CIT (A) shall also consider the request of the Petitioner for an expeditious disposal of the appeal." The aforesaid order was challenged before the Hon'ble Apex Court in Civil Appeal No. 6850 of 2018 (Principal Commissioner of Income Tax v. M/s. LG Electronics India Pvt. Ltd.) and the Hon'ble Apex Court vide order dated 20th July, 2018 held as under:- "Having heard Shri Vikramjit Banerjee, learned ASG appearing on behalf of the appellant, and giving credence to the fact that he has argued before us that the administrative Circular will not operate as a fetter on the commissioner since it is a quasi judicial authority, we only need to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual....