Delhi HC Refuses To Interfere In ITAT’s Order Dismissing Request Of Congress Party To Stay Recovery Proceedings
The Delhi High Court refused to interfere in the order of the Income Tax Appellate Tribunal (ITAT) by which it dismissed the request of Indian National Congress (INC) to stay the recovery proceedings.
The Congress Party/INC, a recognized national political party had challenged the order dated March 8 this year being passed by the ITAT rejecting its application for stay on the recovery of demand during the pendency of appeal.
A Division Bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav observed, “Whether the aforesaid circumstance would merit protective measures being granted in respect of the balance outstanding demand, and if so to what extent, is an issue which must necessarily be considered by the ITAT in the first instance it being the tribunal which is in seisin of the principal appeal. We thus refrain from rendering any conclusive opinion in this respect and leave this aspect open for the consideration of the ITAT.”
The Bench noted that the appeal was called on numerous dates prior to the initiation of coercive steps. It said that an assessee in default can neither be permitted nor expected to adopt such a casual or lackadaisical approach while faced with a tax demand which had remained outstanding right from 2021 and in respect of which no protective measures were sought or adopted for almost two years between 2021 and 2023.
Senior Advocates Vivek K. Tankha and Ravi Shankar Jandhyala represented the petitioner while Sr. SCs Zoheb Hossain and Vipul Agrawal represented the respondents.
Facts of the Case -
The case pertains to Assessment Year 2018-2019 an in respect of which the due date for submission of a return under Section 139(1) of the Income Tax Act, 1961 was December 31, 2018. INC filed its Return of Income in February 2019 declaring nil income after claiming exemption of Rs. 199,15,26,560/- under Section 13A of the Act. In the course of assessment, notices under Section 143(2) and 142(1) of the Act were issued on September 23, 2019 and January 27, 2020 respectively. INC was placed on notice and intimated on March 18, 2020 of a proposed demand of Rs. 94,44,94,212/- consequent to denial of its claim of exemption under Section 13A of the Act.
An order of assessment was framed and the Assessment Officer (AO) held against the INC with respect to a purported violation of clause (d) of the First Proviso to Section 13A. Challenging the order of assessment, INC moved CIT(A) and the application was disposed of by the AO with a direction to INC to deposit 20% of the outstanding tax liability. Congress failed to comply with the condition as imposed by AO and this led to moving a second application for stay before AO. That application was thus rendered infructuous and it approached ITAT. ITAT rejected the same and hence the matter was before the High Court.
The High Court in view of the facts and circumstances of the case said, “The petitioner appears to have fallen into deep slumber and stood reawakened only in January 2023 when a notice of demand came to be raised. Even though an appeal against the order of the CIT(A) came to be instituted before the ITAT in May 2023, it chose to move a stay application in that pending appeal only in February 2024. The problems that beset the petitioner today are thus, and to a large extent, of its own making. The ITAT, in our considered opinion, was consequently justified in rejecting the allegation of the action being either motivated or actuated by mala fides.”
The Court observed that merely because the AO had disposed of the stay application or the fact that the petitioner failed to comply with the conditions so imposed, would not detract from the right of the ITAT to independently consider whether appropriate interim measures were liable to be framed for the purposes of protecting the interest of the assessee and at the same time securitizing the outstanding demand.
“Notwithstanding the refrain of the ITAT and which had also taken note of the continued adjournments which were sought by the writ petitioner as well as it having turned down its offer for the appeal itself being put down for final hearing, we deem it appropriate to accord liberty to the writ petitioner to move a fresh application for stay before the ITAT bearing in mind the developments which have occurred in the meanwhile including that of an amount of Rs.65.94 crores having been recovered by the respondents pursuant to encashment of the bank drafts”, it noted.
Accordingly, the High Court disposed of the writ petition and provided liberty to petitioner to approach ITAT.
Cause Title- Indian National Congress v. Deputy Commissioner of Income Tax Central-19 & Ors. (Neutral Citation: 2024:DHC:2016-DB)
Appearance:
Petitioner: Senior Advocates Vivek K. Tankha, Ravi Shankar Jandhyala, Prasanna S., Vipul Tiwari, Inderdev Singh, Kanishka Singh, Nikhil Bhalla and Ms. Tarannu Cheema.
Respondents: Sr. SCs Zoheb Hossain, Vipul Agrawal, Jr. SCs Sanjeev Menon, Sakshi Shairwal, Abhipriya, Vivek Gurnani and Rajat Sen.
