2024 (5) TMI 1475 - HC - Income Tax

Conditional stay order directing payment of 20% of total tax demand for multiple assessment years under the Income Tax Act, 1961 - also given the appellant a facility of payment of that 20% in seven equal instalments HELD THAT - We take note of the submission of the learned counsel for the appellant that the appellant is facing financial difficulties, more so when the company has ceased to function with effect from 01.04.2018. Taking note of the said submission of appellant, we feel that in the interests of justice, the appellant can be granted some time to discharge the liability of 20% of the total tax demand for the various assessment years as directed by the 1st respondent in Ext.P5 order that was impugned in the writ petition. Accordingly, the impugned judgment of Single Judge, as also the direction in Ext.P5 order that was impugned in the writ petition, are modified to the limited extent of permitting the appellant herein to discharge the liability of payment of 20% of the total tax demand as directed by the 1st respondent in Ext.P5 order, in seven equal successive monthly instalments commencing from 15.06.2024. It is made clear that if the appellant commits default in any single instalment, he will lose the benefit of this judgment, as also the benefit of the stay order granted by the 1st respondent-Appellate Authority, and the entire amount of tax and interest confirmed against the appellant by the assessment orders in question will then become immediately payable.

Summary

Issues:
Challenge to conditional stay order directing payment of 20% of total tax demand for multiple assessment years under the Income Tax Act, 1961.

Analysis:
The appellant challenged a conditional stay order issued by the 1st respondent-Appellate Authority, directing payment of 20% of the total tax demand for various assessment years under the Income Tax Act, 1961. The learned Single Judge dismissed the writ petition, upholding the conditional order of stay. The appellant was granted time to pay the first instalment by a specified date and directed to ensure payment of the last instalment by a later date. The appellant, through the writ appeal, contended that the Single Judge should have interfered with the conditional order, especially considering the lack of reasons provided for the payment directive and the appellant's financial difficulties.

Upon hearing both parties, the High Court observed that the 1st respondent had only directed payment of 20% of the total tax demand for the assessment years and had provided instalments for payment. The Court noted the delay in filing the writ appeal and the appellant's financial challenges, acknowledging that the company had ceased operations. In the interest of justice, the Court modified the impugned judgment and directed the appellant to pay the 20% liability in seven monthly instalments starting from a specified date. The Court warned that failure to pay any instalment would result in the immediate payment of the entire tax and interest amount confirmed in the assessment orders.

In conclusion, the writ appeal challenging the conditional stay order was disposed of by modifying the judgment to allow the appellant to pay the 20% liability in instalments. The Court emphasized that default in any instalment would lead to the loss of benefits granted by the judgment and the Appellate Authority's stay order, making the entire tax and interest amount immediately payable.