38. IN HIGH COURT OF DELHI AT NEW DELHI Date of Decision:04.03.2020 W.P.(C.) No. 10289/2019 M/S INDUS TOWERS LTD Petitioner Through: Mr. Balbir Singh, Sr. Adv. with Mr. Sachit Jolly, Mr. Rohit Garg and Mr. Siddharth Joshi, Advs. versus ASSISTANT COMMISSIONER OF INCOME -TAX CIRCLE 12(1) & ANR. Respondent Through: Mr. Raghvendra Singh,Sr. Standing Counsel with Ms. Easha Kadian Mr. Rajat Kumar, Add. Commissioner of Income Tax, Mr. Ankur, Asst. Commissioner of Income Tax CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA VIPIN SANGHI, J. (ORAL) C.M. No. 42494/2019 1. Exemption allowed, subject to all just exceptions. 2. application stands disposed of. W.P.(C.) No. 10289/2019 Page 1 of 9 W.P.(C) 10289/2019 and C.M. No. 42493/2019 3. We have heard learned senior counsel for petitioner as well as learned senior standing counsel for respondent. On 23.09.2019, we had passed following order in petition: Issue notice. Mr. Raghvendra Singh accepts notice. Counter- affidavit be filed within six weeks. Rejoinder be filed before next date of hearing. We have heard learned Senior counsel for petitioner as well as learned senior standing counsel for department at substantial length on interplay of Section 220(6) and Office Memorandum dated 29.02.2016 issued on subject of partial modification of Instruction No. 1914 dated 21.03.1996 to provide for guidelines for stay of demand at first appeal stage. While Section 220(6) uses expression amount in dispute, Office Memorandum dated 29.02.2016 uses expression demand disputed before CIT(A), demand in dispute and disputed demand. expression used in aforesaid office memorandum require interpretation in light of Section 220(1) and 220(6). issue is, whether, in terms of O.M. dated 29.02.2016, petitioner is required to deposit 20% of demand raised by respondent of Rs. 690.73 crore, or 20% of tax on amount in dispute. submission of learned senior counsel for petitioner is that 20% of tax on amount in dispute (i.e. amount assessed minus amount returned) already stands paid/ credited. issue raised in this petition would require deeper consideration. Considering aforesaid, we restrain respondents from taking any coercive action against petitioner for recovery of demanded amount. This is subject to condition that petitioner shall not seek any adjournment of hearing of appeal pending before CIT (A). Ld. CIT (A) may W.P.(C.) No. 10289/2019 Page 2 of 9 proceed to adjudicate appeal uninfluenced by this order. In case, said appeal is decided before next date, we make it clear that this interim order shall merge in order that CIT(A) may pass. List on 17.01.2020. 4. This order had been passed by us on basis of tabulation placed before us by learned senior counsel for petitioner on said date, which is on record. said tabulation is relevant, and reads as follows: TAX CALCULATION AS PER ASSESSED INCOME PARTICULARS AMOUNT(IN INR) Pg. No. in WP Assessed Income 1994,56,00,448 1123 Retuned Income 210,24,62,383 941 Tax on Assessed 662,54,29,843 1123 Income (A) Less: Tax on Retuned 69,83,85,442 1130 Income (B) Tax on Disputed 592,70,44,401 - Demand (C=A- B) Add: Interest [U/s 229,94,31,675 1123, 1124 234B+ 234D] [D] Total Disputed Demand 822,64,76,076 E=C+D 20% of Disputed Demand Payable 164,52,95,215 F= 20% of E W.P.(C.) No. 10289/2019 Page 3 of 9 Prepaid Taxes Paid (TDS + Advance 639,91,60,888 1123 Tax) TDS 597,80,60,888 Adv. Tax 42,11,00,00,000 (G) Less: Prepaid taxes 394,73,92,362 982 refunded to petitioner (H) Less: Tax on admitted 69,83,85,442 1130 liability (Returned Income) (I) Total Prepaid taxes lying with Revenue 175,33,83,084 J= G-H-I Therefore, total prepaid taxes lying with Revenue are in excess of 20% of disputed demand. (emphasis supplied) 5. From aforesaid tabulation, it would be seen that sum and substance of submission of petitioner was that income tax on returned income of Rs. 210,24,62,383/- amounted to Rs. 69,83,85,442/-. On this basis, petitioner claimed that tax disputed demand came to Rs. 592,70,44,401/-. petitioner added to said last figure, amount of interest under Section 234B and 234D which was stated in computation as Rs. 229,94,31,675/-, and total disputed demand was projected as Rs.822,64,76,076/-. In terms of impugned order whereby W.P.(C.) No. 10289/2019 Page 4 of 9 Assessing Officer required petitioner to deposit 20% of disputed amount, amount to be deposited was worked out at Rs. 164,52,95,215/-. 6. petitioner, on basis of aforesaid tabulation claimed adjustment/ credit to tune of Rs.175,33,83,084/-. said figure was arrived at after deducting from prepaid taxes of Rs. 639,91,60,888/-, prepaid tax refund of Rs. 394,73,92,362/- and tax on admitted liability (returned income) of Rs. 69,83,85,442/-. Thus, projection of petitioner was that prepaid taxes lying with revenue were to tune of Rs.175,33,83,084/-, and said amount was much more than 20% of disputed demand payable at Rs. 164,52,95,215/-. 7. Impressed by said submission, we had restrained respondents from taking any coercive action against petitioner for recovery of demanded amount. Being conscious of fact that our interim protection to petitioner should not be misused, we had also put petitioner to condition that petitioner shall not seek any adjournment of hearing of appeal pending before CIT (A). We also directed that final order that CIT (A) may pass, would prevail and our interim order would merge in said order. 8. Mr. Raghvendra Singh, learned senior standing counsel for respondent revenue has, firstly, submitted that petitioner disobeyed direction of this Court inasmuch, as, petitioner sought adjournments before CIT (A) on two occasions. Notice of hearing under Section 250 of Income Tax Act was issued on 28.01.2020, fixing hearing on 04.02.2020. On 04.02.2020, Mr. Hitesh Arora, Senior Manager Tax and W.P.(C.) No. 10289/2019 Page 5 of 9 Ms. Ashu Aggarwal, DGM (Taxation) had requested for time to file papers/ documents. said request was allowed and matter was adjourned to 26.02.2020 by CIT (A). Admittedly, thereafter, communication was submitted by petitioner to CIT (A) stating that appeal in respect of assessment year 2010-11 raising same issues, was already pending before another CIT (A), which had been heard and, therefore, hearing in present appeal be adjourned to await decision in said appeal. That communication is also dated 04.02.2020. On 26.02.2020, it appears that matter was adjourned to 15.04.2020, though it is not clear that said adjournment was sought by petitioner. Mr. Balbir Singh, learned senior counsel for petitioner, on instructions, states that adjournment was granted due to non-availability of CIT (A) on said date. 9. Though Mr. Balbir Singh has sought to explain that proceedings were adjourned to 04.02.2020, since it was understood that decision in appeal for Assessment Year 2010-11 should be awaited, in our view, that was no justification for petitioner to have not proceeded to argue appeal when same was listed before CIT (A) on 04.02.2020. This is because we had passed our order restraining petitioner from taking adjournments in appeal before CIT (A), as early as on 23.09.2019. If petitioner desired that appeal for relevant Assessment Year 2011- 12 be either heard along with appeal for AY 2010-11, or that decision in said earlier appeal be awaited, it was for petitioner to approach this Court to seek modification of condition imposed vide our order dated 23.09.2019. petitioner could not have disregarded condition imposed upon it by us in our order dated 23.09.2019, and W.P.(C.) No. 10289/2019 Page 6 of 9 continued to enjoy stay granted by us due to pendency of appeal for earlier assessment year. 10. We may have overlooked aforesaid infraction of condition and taken lenient view of matter in view of explanation furnished by Mr. Balbir Singh, learned senior counsel for petitioner. However, we find that there is much more serious issue raised by Mr. Raghvendra Singh, learned senior standing counsel for Revenue. issue raised is that of gross suppression and misstatement by petitioner, which led to false projection of outstanding liability/ refund due from/ to petitioner. 11. It is pointed out by Mr. Raghvendra Singh that petitioner was required to file consolidated return in respect of merged entity i.e. petitioner, which was filed by petitioner for assessment year 2011- 12. petitioner had, in said return, computed net taxable income (loss) as Rs.( )11,977,945,558/-. assessment order computes taxable income after making several additions and disallowances, Rs. 1994,56,00,488/- which is under challenge before CIT (A). Pertinently, even if consolidated financial statement furnished by petitioner were to be accepted as true and correct, Minimum Alternate Tax (MAT) liability worked out by petitioner itself is Rs.2,247,073,334/-. Pertinently, petitioner itself computed book profit at Rs.1127,45,45,714/- and on that basis, petitioner would be liable to pay tax of Rs. 2,247,073,334/-. This is minimum tax liability that petitioner would have to incur. It could be higher, if additions/ W.P.(C.) No. 10289/2019 Page 7 of 9 disallowances result in net taxable income increasing. 12. Even if Assessing Officer were to accept consolidated return, as filed by petitioner, or said appeal were to be accepted by CIT (A), admittedly, its liability would be to tune of Rs.2,247,073,334/-. However, petitioner, while circulating aforesaid tabulation at initial hearing of petition, projected Tax on Returned Income as Rs. 69,83,85,442/- on assumption that its returned income was Rs. 210,24,62,383/-, and without accounting for several additions and disallowances made by Assessing Officer. Pertinently, in Assessment order, figure of Rs. 69,83,85,442/- is nowhere to be seen. If petitioner were to be fair to Court, petitioner would have reflected amount of Rs. 2,247,073,334/ which was minimum tax liability of petitioner, assuming that its return based on consolidated financial statement, were to be accepted. 13. Similarly, against column indicating Tax on admitted liability (Returned Income) , said amount of Rs. 2,247,073,334/- would have been reflected, which would have completely changed equation that was projected before us by petitioner. 14. explanation furnished by Mr. Balbir Singh, learned senior counsel for petitioner for not disclosing MAT tax liability, is that Assessing Officer had not accepted return on MAT basis and, therefore, said amount was not reflected. 15. We do not find any weight in this submission. Since, MAT W.P.(C.) No. 10289/2019 Page 8 of 9 liability, even according to petitioner, was higher of two figures i.e. tax on net taxable income (as returned by petitioner), and MAT amount, petitioner could not have run away from fact that its liability was, at least, if not more than Rs. 2,247,073,334/-. Thus, we were clearly misled by petitioner at preliminary hearing of petition which led to our passing interim order. 16. Considering fact that petitioner has invoked discretionary extraordinary writ jurisdiction of this Court, petitioner was expected to approach this Court with clean hands, which, unfortunately, we find is completely lacking in present case. We are, therefore, not inclined to exercise our discretionary writ jurisdiction in favour of such petitioner. Accordingly, we dismiss this petition with costs quantified at Rs. 5 lakhs to be paid to Delhi High Court Advocates Welfare Trust. costs should be paid within two weeks from today. VIPIN SANGHI, J SANJEEV NARULA, J MARCH 04, 2020 N.Khanna W.P.(C.) No. 10289/2019 Page 9 of 9 Indus Towers Ltd. v. Assistant Commissioner of Income-tax, Circle-12(1) & Anr