The Delhi High Court has recently denied relief to the assessee from the payment of the compulsory 20% deposit in the Bogus Cash Credit Case.
The petitioner, Jindal ITF Ltd. filed a writ petition seeking quashing of the order passed by the respondents, Principal Commissioner of Income and Deputy Commissioner of Income Tax and to further direct him to forebear from taking any coercive steps/actions against the petitioner for recovery of tax and also for removing lien marks on the bank accounts of the petitioner.
The court in order to determine the issue emphasised on the meaning of Section 68 of the Income Tax Act which elaborates on cash credits.
The petitioner contended that the respondents erroneously assumed that the pre-deposit of twenty percent of the outstanding amount was mandatorily required in view of the instructions and office memorandum issued by the Central Board of Direct Taxes (CBDT) dated December 2, 1993, modified by office memorandum (OM) dated February 29, 2016, and July 31, 2017.
The respondent contended that the order passed by respondent authority is an exhaustive order and it is not exclusively based on circulars or instructions.
The division bench consisting of Justice Manmohan and Justice Sanjeev Narula observed that the present matter is not a case of mechanical reliance on circulars/office memorandums and it is a case where proof of identity of the loan depositors, the capacity of the creditors to advance loans and genuineness of transaction is in serious dispute. The Court further observed that the stay application has been decided on merits and all the submissions made by the petitioner have been considered by the authorities.
While dismissing the application relying on the decision of the Apex Court, the division bench held “it is open to the statutory authorities to grant relief to deposit an amount lesser than twenty percent of the facts of the case so warrant. However, on the facts of the present case, as determined by the Assessing Officer, a prima facie case is not made out and such relief is not warranted.”To Read the full text of the Order CLICK HERE