2018 (9) TMI 358 - HC - Income Tax

Payment of disputed demand - petitioner as required to pay 20% of the disputed demand pending disposal of CIT(A)-4 before the Appellate Authority- Held that - Having heard the learned Counsel for the parties at length, this Court is of the considered opinion that if the petitioner is directed to pay 5% of the disputed demand made in the impugned orders as per Annexures-Y, and Z(B) dated 25.7.2018 and 31.7.2018 respectively, it is suffice in the interest of both the parties and it is expected that the Lower Appellate Authority shall dispose of the appeal which is reserved for judgment at the earliest. Writ petition is disposed of directing the petitioner to deposit 5% of the disputed demand made in the impugned orders as per Annexures-Y, and Z(B) dated 25.7.2018 and 31.7.2018 respectively by the 5th respondent within two weeks from the date of receipt of copy of this order

Summary

Issues:
Petition to quash demand notices for additional deposit and to prevent recovery of confirmed dues till appeal disposal.

Analysis:
The petitioner, a company engaged in manufacturing outdoor fitness equipment, faced scrutiny by Respondent No.2 for issuing shares to investors. Respondent No.2 categorized share premium as income and issued a demand notice for income tax. An appeal was filed challenging this order, with a stay application pending. Despite this, Respondent No.5 issued repeated notices for payment, leading to a previous writ petition directing no coercive measures until appeal disposal.

Subsequently, the appellate authority directed the petitioner to pay 10% of the disputed demand, which was done. However, new demands were made by Respondent No.5 based on modified instructions, requiring 20% payment. The petitioner argued that the previous 10% payment sufficed until appeal disposal, seeking to quash the new demands.

Both parties presented their arguments, with the petitioner contending that the 10% payment already made should cover the demand until appeal resolution. Respondent contended that as per modified instructions, 20% payment was required, justifying the new demands.

The court noted previous orders directing no coercive measures until appeal disposal and the subsequent directive for 10% payment by the petitioner. Considering the circumstances, the court directed the petitioner to deposit 5% of the disputed demand in the new orders within two weeks, expecting the appeal to be resolved promptly without further demands until its disposal.