Facts of the Case

The petitioner, M/s Expeditors International of Washington, Inc., filed a writ petition challenging an order dated 14 July 2022 passed by the Income Tax Appellate Tribunal under Section 254 of the Income Tax Act, 1961.

The Tribunal had directed the petitioner to deposit Rs. 5 crores against an outstanding tax demand for the Assessment Year 2018–19.

The petitioner contended that the additions forming the basis of the demand had already been decided in its favour in its own case for the preceding seven assessment years by the Tribunal.

Issues Involved

  1. Whether the Tribunal was justified in directing deposit of Rs. 5 crores despite prior favourable decisions for the assessee on identical issues.
  2. Whether recovery proceedings can be sustained when the disputed issues are already covered in favour of the assessee.
  3. Applicability of CBDT Instruction No. 1914 dated 02 February 1993 regarding stay of demand.

Petitioner’s Arguments

  • The impugned order was arbitrary and unsustainable in law.
  • The additions on which the demand was raised were already settled in favour of the petitioner in earlier years.
  • As per consistent Tribunal rulings in petitioner’s own case, no coercive recovery should be initiated.
  • CBDT guidelines clearly provide that stay should be granted where issues are already decided in favour of the assessee.

Respondent’s Arguments

  • For grant of stay, the petitioner must establish:
    • Prima facie case
    • Balance of convenience
    • Irreparable injury
  • Reliance was placed on the Supreme Court judgment in Assistant Collector of Central Excise vs Dunlop India Ltd. (1985) 1 SCC 260, emphasizing strict principles for granting stay.

Court’s Findings / Order

  • The Court observed that it was undisputed that the issues involved had already been decided in favour of the petitioner in earlier assessment years.
  • CBDT Instruction No. 1914 clearly provides that complete stay should be granted where the issue is covered in favour of the assessee.
  • The Court further held that recovery of demand in such circumstances is wholly unwarranted.
  • The condition imposed by the Tribunal requiring deposit of Rs. 5 crores was set aside.
  • The Tribunal was directed to hear the appeal expeditiously.

Important Clarification

  • The judgment reinforces that precedent in assessee’s own case carries strong persuasive value.
  • CBDT Instructions are binding on tax authorities and must be followed while considering stay applications.
  • The ruling limits arbitrary imposition of pre-deposit conditions where issues are already settled.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2876-DB/MMH29072022CW110322022_205351.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.