Holding Recovery of Demand Does Not Require Advance Payment of the Demand

Case Details: Dabur India Ltd. v. Commissioner of Income-tax (TDS) - [2023] 146 taxmann.com 315 (Delhi)

Judiciary and Counsel Details

• • Manmohan & Ms Manmeet Pritam Singh Arora, JJ.
  • M.P. Rastogi, Manu K. Giri & K.N. Ahuja, Advs. for the Petitioner.
  • Puneet Rai, Sr. Standing Counsel & Ms Adeeba Mujahid, Adv. for the Respondent.

Facts of the Case

Assessee-company distributed goods as free samples to its stockists under sales promotion scheme treating it as a trade incentive. Upon scrutiny, the Assessing Officer (AO) contended that the free samples distributed are considered as brokerage/commission under section 194H and non-deduction of such tax depicted the assessee as “assessee-in-default”.

Consequent to such an order, the assessee preferred an appeal to the CIT(A) for granting a stay of the demand. However, such stay application was dismissed by the authority vide a non-speaking order based on the reason that the assessee didn’t pay the required 20% pre-deposit of the disputed demand and did not produce any cogent reasons for such non-payment.

Subsequent to such dismissal, the assessee filed a writ petition to the Delhi High Court.

High Court Held

The Court held that the pre-requisite of payment of 20% of the disputed demand is not a necessary requirement during the first appeal in all cases. This requirement can be waived in certain cases if required.

Further, a reference was made to the Office Memorandum dated 29th February 2016 in which it was pointed out that the additions were deleted by the higher authorities on the same issue and the appeals were decided in favour of assessee.

In the present scenario, the stay application was dismissed by the authority by a non-speaking order. Also, the three basic principles were neglected i.e., the prima facie case, the balance of convenience, and irreparable injury.

Therefore, the matter was remanded back to the CIT(A) for fresh consideration and ordered to provide personal hearing to the assessee.

List of Cases Reviewed

• • Pr. CIT v. LG Electronics India (P.) Ltd. [2018] 18 SCC 447 (para 7) followed.

List of Cases Referred to

• • CIT v. Jai Drinks (P.) Ltd. [2011] 10 taxmann.com 115/198 Taxman 271/336 ITR 383 (Delhi) (para 3)
  • Pr. CIT v. LG Electronics India (P.) Ltd. [2018] 18 SCC 447 (para 7).