2023 (5) TMI 421 - HC - Income Tax

Stay of demand - grant the deposit order of a lesser amount than 20% - high-pitch demand - HELD THAT - The income of the petitioner as assessed by the Assessment Officer is more than the return income. It is also observed that the difference between the assessed income and the return income is ranging from 11% to 15%. As per the circulars and office memorandum issued by the respondent from time to time, particularly Instructions No.1914 dated 21.03.1996, 29.02.2016 and 31.07.2017, the demand raised by the revenue falls within the definition of high-pitch demand. As gone through the impugned order passed by the respondent No.1. It is revealed from the impugned order that the respondent No.1 quoted certain portions of the stay application filed on behalf of the petitioner and also the submissions filed on his behalf before it. After quoting certain portions of the stay application and submissions, the respondent No.1 has passed the impugned order without meeting out the contentions raised on behalf of the petitioner regarding undue hardships on account of his financial condition and the downfall in the export industries. As in LG Electronics India (P) Ltd. 2018 (7) TMI 1905 - SC ORDER has also ruled that administrative circulars issued by the revenue department from time to time on the subject will not operate as a fetter and the authority being a quasi-judicial authority can always grant deposit order of lesser amount than 20%. Respondent No.1 is completely guided by the administrative circulars issued by the revenue department and has failed to give any finding about the hardships pointed out by the petitioner and has also not taken into consideration the factors such as prima facie case, balance of convenience and irreparable loss while passing the impugned order. We are of the opinion that the impugned order is not liable to be sustained as the same is a nonspeaking and non-reasoned order. The matter is remanded to the respondent No.1 to pass a fresh order keeping in view the fact that being a quasi-judicial authority, it is open to it to grant the deposit order of a lesser amount than 20% while taking into consideration the facts and circumstances of the case particularly the hardships pointed out by the petitioner in stay application.

Summary

Issues:
The judgment involves a writ petition challenging an order passed by the respondent PCIT, Jaipur regarding the stay of recovery of demand for assessment years 2014-15, 2016-17, and 2020-21.

Brief Facts:
A survey under Section 133A of the Income Tax Act, 1961 was conducted at the petitioner's premises leading to reopening of assessments for the mentioned years. The petitioner filed an appeal before the Appellate Authority against the assessment orders. Significant demand amounts were raised against the petitioner based on the assessments.

Contentions and Arguments:
The petitioner claimed that the demand should be stayed until the appeal is disposed of, citing high-pitch demand and the quasi-judicial nature of the authority. The petitioner alleged that the impugned order was passed mechanically without considering relevant factors and was contrary to circulars issued by the revenue department. The petitioner argued that the authority could order a deposit amount lower than 20% of the demand.

Reply and Support:
The respondent justified the impugned order, stating that the assessments were made after the petitioner failed to provide satisfactory explanations. The respondent contended that the order was in line with circulars and office memorandums. Counsel for the respondents supported the order, stating that no interference was warranted.

Judgment:
The High Court found that the impugned order lacked reasoning and failed to address the hardships pointed out by the petitioner. Referring to relevant case law, the Court emphasized that the authority could grant a deposit order of a lesser amount than 20%. The Court held that the impugned order was not sustainable and quashed it, remanding the matter to the respondent to pass a fresh order considering all relevant factors and providing a hearing to the petitioner. The Court directed the respondent to do so expeditiously within six weeks.

Conclusion:
The writ petition was allowed, the impugned order was set aside, and the matter was remanded for a fresh decision by the respondent, emphasizing the authority's discretion to grant a deposit order of less than 20% based on individual case circumstances.