Facts of the Case

  • The petitioner, CCTEB India Private Limited, faced tax demands for AYs 2019-20, 2020-21, and 2021-22, aggregating to approximately ₹56.48 crores.
  • The Principal Commissioner of Income Tax directed payment of ₹35.42 crores.
  • The petitioner had already filed an appeal before CIT(A) against the assessment order dated 29.07.2022.
  • The Revenue had provisionally attached fixed deposits worth approximately ₹42 crores under Section 281B.
  • During proceedings, most attachments were released, except one FD of about ₹2.14 crores.

Issues Involved

  1. Whether coercive recovery should continue during pendency of appeal before CIT(A).
  2. Whether the demand raised should be secured through full payment or limited deposit.
  3. Applicability of CBDT guidelines prescribing 20% of demand for stay of recovery.
  4. Validity and extent of attachment under Section 281B during appellate proceedings.

Petitioner’s Arguments

  • The petitioner argued that:
    • It had already filed a valid appeal before CIT(A).
    • The Revenue’s insistence on substantial deposit was excessive and unjustified.
    • Adequate financial capacity existed to satisfy demand if ultimately unsuccessful.
    • Coercive recovery and attachment during pendency of appeal was unreasonable.

Respondent’s Arguments

  • The Revenue contended that:
    • Fixed deposits were attached under Section 281B to safeguard revenue interest.
    • A substantial tax demand was outstanding.
    • Partial security already existed through attached deposits.
    • Compliance with deposit requirements was necessary before granting relief.

Court Order / Findings

  • The Court applied the CBDT guideline and held that:
    • 20% of the total demand is sufficient to secure the Revenue’s interest.
    • Since ₹2.14 crores was already secured, the petitioner was directed to deposit the balance amount to reach 20%, i.e., ₹11.29 crores.
    • The petitioner was granted 4 weeks to deposit the remaining amount.
    • Upon deposit:
      • No coercive measures shall be taken.
      • Appeal before CIT(A) to be decided on merits.
  • The writ petitions were disposed of in these terms.

Important Clarifications by the Court

  • CBDT’s 20% deposit rule is a guiding standard for granting stay.
  • Revenue’s interest can be protected without insisting on full recovery.
  • Attachment under Section 281B must be proportionate and justified.
  • Appellate remedy should not be frustrated by excessive recovery measures.

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

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