2018 (1) TMI 813 - HC - Income Tax

Interest charged under Sections 234A, 234B and 234C - whether the petitioner should be compelled to pay a portion of the demand in terms of CBDT Circular for being entitled to an interim protection till the disposal of the appeal pending before the third respondent? - Held that - The interest charged under Sections 234A, 234B and 234C of the Act has remained the same, i.e. both in the order of assessment dated 30.03.2015 and the impugned order dated 17.10.2017. Therefore, this aspect has to be looked into and this can be canvassed by the assessee before the third respondent in the pending appeal. Even with regard to the demand of interest, the petitioner has complied with the condition and 20% of the amount has already been collected by the department. Thus, I find that the interest of revenue has been sufficiently safeguarded and the petitioner should be permitted to pursue their appeal without the second respondent insisting upon any further payment pursuant to the impugned order dated 17.10.2017. While permitting the petitioner to canvass the correctness of the impugned order before the third respondent in the pending appeal, there will be a direction to the respondents 2 and 3 not to insist upon any further payment of tax or interest as per the impugned order dated 17.10.2017 till the appeal filed by the petitioner is heard and disposed of by the third respondent on merits and in accordance with law, after affording an opportunity of personal hearing to the authorized representative of the petitioner.

Summary

Issues:
Challenge to order giving effect to ITAT remand order, reduction in tax liability, interest under Sections 234A, 234B, and 234C, petitioner's compliance with CBDT Circular, dispute over remaining tax balance, direction for further payment, interest reduction discrepancy.

Analysis:
The petitioner, as the legal heir, challenged the order implementing the ITAT remand order related to an appeal against the assessment order for the year 2007-2008. The petitioner filed an appeal against the impugned order before the third respondent, seeking interim protection due to a substantial demand issued post-remand. Additionally, a tax case appeal was filed against the ITAT order, with the revenue planning an appeal against the same as well.

The petitioner argued that while the tax payable was reduced in the impugned order, the corresponding reduction in interest under Sections 234A, 234B, and 234C was not granted, contending that the interest levy should be waived. The petitioner had already paid a significant portion of the tax demand, exceeding the 20% directed by the CBDT Circular for stay grant procedures.

The revenue insisted on the petitioner paying the remaining balance of the tax demand. However, the court declined to issue such a direction for two primary reasons. Firstly, there was a substantial reduction in the tax demand post-remand, pending consideration by the third respondent. Secondly, the interest charged remained the same despite the tax reduction, indicating a need for review. The court noted the petitioner's compliance with the 20% condition and deemed the revenue's interest adequately safeguarded, allowing the petitioner to pursue the appeal without further payment as per the impugned order.

Consequently, the court directed that no further tax or interest payment be insisted upon until the appeal is heard and disposed of by the third respondent, urging an expeditious resolution within four months. The writ petition was disposed of without costs, with the connected Miscellaneous Petition closed.