The Telangana High Court held that the CIT (A) is a quasi judicial authority and is not bound by the administrative circulars issued by the Central Board of Direct Taxes (CBDT).
The division bench of Justice Ujjal Bhuyan and Justice Surepalli Nanda has remanded the matter back to the CIT (A) for a fresh decision on the prayer for stay of the petitioner in accordance with law after complying with the principles of natural justice.
The petitioner is an assessee under the Income Tax Act, 1961. For the assessment year 2017–18, the department passed an assessment order under Section 143(3) of the Income Tax Act, 1961, making certain additions under Section 69A of the Income Tax Act, 1961. By the assessment order, against the returned income of the petitioner of Rs. 1,78,860.00, the assessed income of the petitioner was assessed at Rs. 1,50,03,952.
The petitioner was aggrieved by the order and preferred the appeal before the CIT (A). In the meantime, respondents issued demand notices, which were followed by garnishee notices. The petitioner had filed a stay petition before the CIT (A), which was not considered while the petitioner faced demand with garnishee notices.
The petition then approached the High Court. The High Court ordered that the stay petition should be decided within a period of six weeks. The demand imposed by the assessment order will be stayed.
The CIT (A) thereafter passed a long order granting a conditional stay. The CIT (A) was guided by the office memorandum dated July 31, 2017 of the Central Board of Direct Taxes (CBDT). As per the office memorandum, the stay may be granted in cases where appeals are pending, subject to payment of 20% of the disputed demand. Thus, following the CBDT office memorandum dated 31.07.2017, the order was passed.
The petitioner was displeased with an order issued by the CIT(A) stating that the petitioner would not be considered in default if it paid 20% of the outstanding demand on or before March 20, 2022.
The court relied on the decision of the Supreme Court in the case of Principal Commissioner of Income Tax vs. L.G. Electronics India Private Ltd., in which it was observed that an administrative circular would not operate as a factor on the Commissioner since it is a quasi-judicial authority. The Supreme Court held that it would be open to the authorities on the facts of individual cases to grant deposit orders of a lesser amount than 20% pending appeal.
Case Title: APR Jewellers Private Limited Versus The Commissioner of Income Tax
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