2024 (2) TMI 846 - HC - Income Tax

Entitlement to waive off the pre-deposit of 20% of the assessed tax liability being high pitched assessment - AO and PCIT have already granted monthly installment facility to the petitioner -genuine hardship substantiated or not? - HELD THAT - As revenue authorities have considered the grievances of the petitioner by granting monthly installment Rs. 13,85,000/- from December, 2023 and the record of the case would clearly demonstrate that petitioner neither submitted his genuine hardship at the time of filing of the application under Section 220(6) of the Income Tax Act before ACIT or before PCIT. Even before this Court very vague statements have been made. The petitioner has not substantiated genuine hardship by placing materials, evidence regarding its financial crisis, if any, suffered by the petitioner or losses which has ruined the business completely. The revenue authorities have considered the application submitted by the petitioner and granted relief to the petitioner by directing monthly installment of Rs. 13,85,000/- which cannot be said to be arbitrary or suffers from non-application of mind. Even the record would show that the assessment order for the assessment year 2018-19 was passed on 28.03.2023 and more than 10 months have been lapsed, the petitioner is not taking recourse by filing an application for stay before the CIT(A) who is empowered under Section 246 of the Income Tax Act to waive the pre-deposit of 20%. Thus, considering that the ACIT and PCIT have exercised their discretionary power by granting installment facilities 9 and 20 installments respectively, we not find that any irregularity or illegality has been committed by the revenue authorities. Accordingly, the writ petition deserves to be and is hereby dismissed.

Summary

Issues Involved:

1. Waiver of pre-deposit of 20% of assessed tax liability.
2. Legality of high-pitched assessment.
3. Adequacy of installment facilities granted by revenue authorities.

Summary:

Issue 1: Waiver of pre-deposit of 20% of assessed tax liability

The petitioner challenged the order of the Assistant Commissioner of Income Tax (ACIT) rejecting the waiver of pre-deposit of 20% of the assessed tax liability under Section 220(6) of the Income Tax Act. The petitioner argued that the assessment was high-pitched, making it financially impossible to pay even 20% of the total tax demand, which amounted to Rs. 2,76,88,710/-, 10.27 times the returned income.

Issue 2: Legality of high-pitched assessment

The petitioner contended that the assessment was excessively high, as the tax demand of Rs. 13,84,43,552/- was 51 times higher than the original tax deposited. The petitioner cited various judgments and circulars, including CBDT Circular No. 96 and the circular dated 23.04.2022, which provide guidelines for dealing with high-pitched assessments. The petitioner argued that the revenue authorities did not consider these circulars, which are binding on them.

Issue 3: Adequacy of installment facilities granted by revenue authorities

The ACIT granted installment facilities to the petitioner, requiring a monthly payment of Rs. 30,73,524/-. The Principal Commissioner of Income Tax (PCIT) later reduced this amount to Rs. 13,85,000/- per month for 20 months. The petitioner argued that these orders were arbitrary and did not consider the financial difficulties faced by the company. The revenue authorities, however, maintained that the assessment was based on substantial evidence, including a survey under Section 133(A) and transactions with related parties.

Judgment:

The court held that the revenue authorities had exercised their discretionary powers judiciously by granting installment facilities. The court noted that the petitioner had not provided sufficient evidence of genuine financial hardship to justify a waiver of the 20% pre-deposit requirement. The court also observed that the petitioner had not sought relief from the appellate authority, which has the power to grant such waivers.

The court found no arbitrariness or illegality in the orders of the ACIT and PCIT, and dismissed the petition. The court emphasized that public interest and the need for liquid cash for governmental functions outweigh the petitioner's request for interim relief.

Conclusion:

The petition was dismissed, and the court upheld the installment facilities granted by the revenue authorities, finding no merit in the petitioner's claims of high-pitched assessment and financial hardship. The court reiterated the importance of following statutory procedures and the discretionary powers of revenue authorities in tax matters.