2019 (6) TMI 404 - HC - Income Tax

Stay of demand - deposit of 20% of the amount of tax determined for the assessment year 2013-14 - HELD THAT - Relief was granted staying the recovery, subject to condition of the appellant depositing 10% of the tax demanded within six weeks from the date of the judgment and another 10% within six weeks thereafter. It was made clear that, in default of payment, the stay granted will be deemed to have been vacated. There was also a direction issued to the appellate authority to consider and dispose of the appeal as expeditiously as possible, at any rate within a period of six months. It is aggrieved by the said judgment, the above writ appeal is filed. Upon hearing arguments of the counsel for the appellant and Sri. Christopher Abraham, learned counsel for the respondents, we are not persuaded to interfere with the judgment impugned. Having confronted with the situation, learned counsel for the appellant sought indulgence of this Court to extend the period stipulated for deposit of the first instalment by a further period of one month from today. The appellant is a Co-operative Bank and the liability for payment of the amount, prima facie, cannot be disputed. However, we are inclined to show indulgence in extending the time limit stipulated, in order to facilitate deposit of the amount to satisfy the condition. Judgement modified to the extent of allowing deposit of 20% of the disputed amount under demand within a period of six weeks from today.

Summary

Issues:
1. Challenge to the direction for deposit of 20% of tax determined for the assessment year 2013-14 pending disposal of statutory appeal.
2. Challenge to the Notice under Section 221(1) of the Income Tax Act, 1961 for non-compliance with the condition of deposit.
3. Seeking direction for disposal of the appeal by the appellate authority.
4. Request for extension of the period stipulated for deposit of the first installment.

Analysis:
1. The appellant challenged the direction to deposit 20% of the tax determined for the assessment year 2013-14 pending the disposal of the statutory appeal. The appellate authority had initially granted interim stay subject to a condition of depositing 30% of the demand, which the appellant failed to comply with. The High Court, in response to the writ petition, reduced the amount to 20% and granted relief, staying the recovery on the condition that the appellant deposits 10% of the tax demanded within six weeks from the judgment and another 10% within six weeks thereafter. The Court also directed the appellate authority to dispose of the appeal expeditiously within six months.

2. The appellant also challenged the Notice under Section 221(1) of the Income Tax Act, 1961 issued due to non-compliance with the deposit condition. The High Court, after hearing arguments from both parties, decided not to interfere with the impugned judgment. The appellant requested an extension of the period for depositing the first installment, which the Court considered in light of the appellant being a Co-operative Bank and extended the time limit to facilitate the deposit.

3. The High Court acknowledged the liability of the Co-operative Bank for the payment, which prima facie could not be disputed. Despite this, the Court showed indulgence by modifying the impugned judgment to allow the deposit of 20% of the disputed amount within six weeks from the date of the judgment. This modification aimed to facilitate the appellant in meeting the condition set by the appellate authority.

4. In conclusion, the High Court modified the impugned judgment to allow the deposit of 20% of the disputed amount within six weeks from the judgment date, considering the appellant's status as a Co-operative Bank and the need to facilitate compliance with the deposit condition. The writ appeal was disposed of accordingly.