'HC Was Not Right' : Supreme Court Questions Delhi HC For Asking Congress To Approach ITAT To Stay Tax Recovery

The Division Bench of the High Court had refused to re-examine or reconsider the questions decided by the Income Tax Appellate Tribunal while rejecting the stay application.

“Having perused the judgment rendered by the ITAT, we find that it has accorded due consideration upon the merits of the challenge which stood raised. It would, therefore, be incorrect to accept the submission that the ITAT had failed to apply its judicial mind for the purposes of a prima facie evaluation of the questions which stood posited.,” the High Court said.

The Court took note of the fact that an amount of Rs. 65.94 crores has been recovered by the respondents. In view of this, the Court asked the party to approach the ITAT by way of a fresh stay application.

At the Supreme Court, the matter was placed before Justices B.V Nagarathna and N.K Singh. During the proceedings, Additional Solicitor General N. Venkataraman submitted that as far as this case is concerned, the matter is pending in ITAT. He said that the petitioner has refused to participate in the proceedings going on at the ITAT.

However, Justice Nagarathna said: “If you have recovered and they wanted an interim order....it is already before a superior forum.” Venkatraman countered this saying that only 48% was recovered before the High Court. Notwithstanding, Justice Nagarathna reiterated “Why should the HC tell them to go to the ITAT?...The High Court was not right in failing to exercise its jurisdiction”

At this, Venkatraman pleaded that the Court may not say. Moving on, he submitted that recovery has been done by 100 % and the matter could be disposed of by ITAT. He also stressed on para 27 of the impugned order to argue that instead of stay, the petitioner should have participated in the hearing. Para 27 reads as:

“Notwithstanding the refrain of the ITAT and which had also taken note of the continued adjournments which were sought by the writ petitioner as well as it having turned down its offer for the appeal itself being put down for final hearing, we deem it appropriate to accord liberty to the writ petitioner to move a fresh application for stay before the ITAT bearing in mind the developments which have occurred in the meanwhile including that of an amount of Rs.65.94 crores having been recovered by the respondents pursuant to encashment of the bank drafts.”

While issuing notice, the Supreme Court recorded that the pendency of this SLP shall not come in the way of ITAT adjudicating the appeal.

Senior advocate Vivek K. Tankha appeared for the INC.

Case Details: INDIAN NATIONAL CONGRESS v. Versus DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -19 AND ORS., Diary No. 12713-2024