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April 28, 2023

Department subject to the Apex Court’s explanation in the LG Electronics case

Department subject to the Apex Court’s explanation in the LG Electronics case

The petitioner takes issue with the Assessing Officer’s decision of February 7, 2023, instructing the petitioner to pay 20% of the tax demand before filing a stay petition to request a stay on the tax demand.

The petitioner asserts that he submitted an application in accordance with Section 246 of the Income Tax Act of 1961 and affixed all the supporting materials. Without taking into account the pertinent information, the Assessing Officer issued a completely silent mechanical ruling, offering no justification for why the petitioner’s request could not be granted.

The decision made by the Supreme Court in Principal Commissioner of Income Tax v. M/s. L. G. Electronics India Private Limited, reported in (2018) 18 SCC 447, has been relied upon.

A knowledgeable lawyer speaking on behalf of the respondent authorities rejects the petitioner’s proposal. It has been claimed that in light of the modified Income Tax law, a deposit of 20% of the tax amount is required before the appeal is heard.

Furthermore, it has been claimed that there is a provision for preferring a review of the decision made. Due to the law’s amended provision, the ratio established in the matter of L. G. Electronics (previous) will not be applicable. Additionally, the most recent CBDT circular has been mentioned.

I have listened to the arguments put forward by both side.

When addressing a similar provision, the Hon. Supreme Court specifically stated that the administrative circular would not act as a constraint on the Commissioner. The Court went on to say that it would always be possible for the authorities to issue deposit orders for less than 20% of the total sum, pending appeal, depending on the specifics of each case.

The explanation in the aforementioned order of the Honoured Supreme Court shall be binding upon the respondent authorities.

The contested denial does not show that the Assessing Officer gave the reasons stated in the application under Section 220(6) of the Income Tax Act, 1961, any consideration. The command seems to be passed mechanically when no thought is put into it.

The contested order from February 7, 2023 is annulled in light of the aforementioned facts.

The Assessing Officer has been given the go-ahead to reconsider the subject in light of the Hon’ble Supreme Court’s decision in the case of L.G. Electronics (previous) and after taking into account the evidence that the assessee has provided.

After this order is communicated, a decision must be made as soon as possible, but definitely within a fortnight.

The writ petition has been dismissed.

If requested, an urgent photostat certified copy of this order should be sent to the parties as soon as practicable.

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