Facts of the Case

The petitioner, CCTEB India Private Limited, filed writ petitions concerning Assessment Years 2019–20, 2020–21, and 2021–22.

A total demand of approximately ₹56.48 crores was raised by the revenue authorities. The Principal Commissioner of Income Tax (PCIT) directed the petitioner to deposit ₹35.42 crores.

The petitioner had already filed an appeal before the Commissioner of Income Tax (Appeals) against the assessment order dated 29.07.2022.

Meanwhile, the revenue had provisionally attached fixed deposits worth around ₹42 crores under Section 281B of the Act.

Issues Involved

  1. Whether the revenue authorities were justified in insisting on a substantial deposit despite the petitioner’s financial capacity.
  2. Whether provisional attachment under Section 281B should continue during the pendency of appeal.
  3. What is the appropriate percentage of demand to be deposited for grant of stay.

Petitioner’s Arguments

  • The petitioner contended that the demand raised was excessive and under challenge before CIT(A).
  • It argued that coercive recovery measures were unwarranted, especially when sufficient assets existed to secure the demand.
  • The petitioner emphasized that it had the financial capacity to satisfy the demand if it ultimately failed on merits.

Respondent’s Arguments

  • The revenue submitted that fixed deposits worth approximately ₹42 crores had already been attached under Section 281B.
  • It argued that attachment was necessary to safeguard the interest of the revenue.
  • The department maintained that partial payment of demand was justified pending appeal.

Court’s Findings / Order

  • The Court held that 20% of the total demand would suffice in line with CBDT guidelines.
  • Since ₹2.14 crores were already secured, the petitioner was directed to deposit the balance amount to reach 20% (₹11.29 crores total).
  • Time of 4 weeks was granted for deposit.
  • The bank was directed to transfer the attached fixed deposit amount to the revenue.
  • Upon such deposit, no coercive steps shall be taken against the petitioner.
  • The CIT(A) was directed to decide the appeal on merits expeditiously.
  • The writ petitions were disposed of accordingly.

Important Clarifications

  • The Court reaffirmed that CBDT’s 20% deposit rule is a guiding standard in stay matters.
  • Attachment under Section 281B should not be excessive when adequate security exists.
  • Protection from coercive recovery is conditional upon compliance with deposit directions.
  • Pendency of appeal must be respected with balanced protection to both taxpayer and revenue.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/RAS19072023CW78542023_142754.pdf

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