2025 (2) TMI 657 - HC - Income Tax

Stay of demand - Petitioner challenged orders granting interim reliefs staying the recovery of 80% of the demanded tax amount subject to the deposit of 20% of the tax amount - HELD THAT - We find that more than adequate opportunity was granted to the Petitioner to submit genuine proof of financial hardships. However no such evidence was adduced by the Petitioner. PCIT has observed that the Petitioner is a very reputed big builder and various projects are currently being done. Learned counsel for the Petitioner whilst not denying this fact did submit that loans and advances have been obtained from multiple parties and there are certain confirmations placed on record regarding the unexplained receipts. This is with respect neither here nor there. Learned counsel for the Petitioner submitted that financial hardships were only one of the grounds in support of the plea for an unconditional stay. He submitted that the Petitioner relied upon the decisions of this Court which substantially enhanced the chances of success in the appeal. If the Petitioner is a very reputed big builder undertaking various projects we find it difficult to believe that the Petitioner is unable to even pay 20% of the tax amount amounting to approximately Rs.3.2 crores to secure a stay on the recovery of the balance amount. The Petitioner has also not been candid with the authorities. Despite more than adequate opportunities full details regarding the Petitioner s financial health were not disclosed. Based on some alleged contradictions between the orders made by the AO and PCIT no case is made out for the grant of an unconditional stay. Petitioner does not wish to pay any amount and secure an unconditional stay. There is no response to our query about how much amount the Petitioner was willing to deposit. Considering the merits of the grounds raised and the decisions relied upon by the Petitioner at least prima facie we cannot subscribe to the view that the Petitioner has some cast iron case entitling it to an unconditional stay. On perusing the reasoning of the assessment order good and adequate reasons have been given for insisting upon the Petitioner paying at least 20% demanded tax amount. There is no perversity in the reasoning which has ultimately been confirmed by the PCIT. In this petition we do not exercise any appellate jurisdiction. Going by the parameters of the judicial review we are satisfied that no case is made out warranting interference.

Summary

The High Court considered a case where the Petitioner challenged orders granting interim reliefs staying the recovery of 80% of the demanded tax amount, subject to the deposit of 20% of the tax amount. The Petitioner argued for an unconditional stay, citing financial hardships and relying on decisions of the Court. The Respondents defended the orders, stating that the Petitioner failed to prove financial hardship and was required to deposit 20% of the tax demand. The Court analyzed the evidence and arguments presented by both parties and made the following determinations:**Issues Presented and Considered:**1. Whether the Petitioner was entitled to an unconditional stay on the recovery of tax amount.2. Whether the Petitioner adequately proved financial hardships.3. Whether the decisions relied upon by the Petitioner supported their case for an unconditional stay.**Issue-Wise Detailed Analysis:****Relevant Legal Framework and Precedents:**- The Court considered the CBDT Circulars and the requirement for the deposit of 20% of the tax amount.- The Court also referred to previous decisions on similar cases.**Court's Interpretation and Reasoning:**- The Court found that the Petitioner did not provide genuine proof of financial hardships despite ample opportunity.- The Court noted the Petitioner's reputation as a big builder but questioned their inability to pay 20% of the tax amount.- The Court highlighted the lack of full disclosure regarding the Petitioner's financial health and the absence of a clear willingness to deposit any amount.**Key Evidence and Findings:**- The Petitioner failed to submit evidence of financial hardships.- The Petitioner's reputation as a big builder was considered in relation to their ability to pay the required amount.- The Court noted the lack of candidness and full disclosure by the Petitioner.**Application of Law to Facts:**- The Court applied the legal requirement for a deposit of 20% of the tax amount based on the assessment order.- The Court assessed the merits of the Petitioner's arguments and found no basis for an unconditional stay.**Treatment of Competing Arguments:**- The Respondents argued that the Petitioner did not fulfill the requirement to deposit 20% of the tax demand.- The Petitioner contended for an unconditional stay based on financial hardships and previous Court decisions.**Conclusions:**- The Court found no merit in the Petitioner's arguments and dismissed the petition without costs.- The Court determined that the Petitioner did not establish a strong case for an unconditional stay based on the evidence and arguments presented.**Significant Holdings:**- The Court upheld the requirement for the Petitioner to deposit 20% of the demanded tax amount.- The Court emphasized the importance of full disclosure and compliance with legal obligations in seeking relief from tax demands.In conclusion, the High Court dismissed the Petitioner's challenge to the orders granting interim reliefs, emphasizing the need for compliance with legal requirements and the lack of sufficient evidence to support the Petitioner's claims of financial hardships.