2018 (2) TMI 880 - HC - Income Tax

Tribunal exercise of it s power u/s 254(2A) - whether tribunal could not have directed the petitioner to make additional payments to furnish bank guarantees or to maintain balance in the bank account - Held that - The Hon ble Single Judge has recorded a finding that the Tribunal, while passing orders under Section 254 (2A) has followed this Court s order 2017 (11) TMI 1609 - KARNATAKA HIGH COURT , wherein, petitioner was directed to retain 20% of the tax demand in the bank. Keeping in view the said order, the Hon ble Single Judge has issued the directions extracted supra. Hon ble Single Judge has directed the petitioner to furnish bank guarantee equivalent to 25% of the tax demand for the assessment years 2009-10 and 2010-11. For the assessment year 2011-12, the Hon ble Single Judge has directed the petitioner to deposit 20% of tax demand, which would in all account for 50% of tax demand for the assessment year and to furnish a bank guarantee for 25% of the tax demand, in parity with orders made for assessment years 2009-10 and 2010-11. So far as the assessment year 2012-13 is concerned, the Hon ble Single Judge has modified Tribunal s order by directing the petitioner to furnish bank guarantee equivalent to 45% of the tax demand An order under Section 254 (2A) is a discretionary order. Therefore, in our considered view, both Tribunal s order as well as Hon ble Single Judge s order cannot be classified as those which any reasonable person cannot pass. Therefore, we see no error in the discretion exercised by the Tribunal and the Hon ble Single Judge in modifying Tribunal s order. Therefore, we refrain to interfere with the order impugned.

Summary

Issues:
Challenging order of the Single Judge in writ appeals regarding tax demands and bank guarantees.

Analysis:
The appellant challenged an order passed by the Single Judge regarding tax demands and bank guarantees. The Tribunal had directed the petitioner to deposit additional sums towards outstanding tax demands and retain a percentage of tax demand in the bank account. The Single Judge partially modified the Tribunal's order, directing the petitioner to furnish bank guarantees for different percentages of tax demands for various assessment years. The Single Judge also set a deadline for the Tribunal to dispose of the appeals. The appellant contended that the Tribunal exceeded its powers under Section 254(2A) of the Income Tax Act by imposing additional conditions for interim protection. The appellant argued that the Tribunal had already considered the matters and granted stay orders appropriately. The tax demands and amounts paid by the petitioner for different years were presented in a tabulated form.

The third proviso to Section 254(2A) specifies the time limit for the disposal of appeals and the consequences if the appeal is not disposed of within the stipulated period. The appellant had made partial payments towards tax demands for different assessment years. The Single Judge noted that the Tribunal had followed a previous court order while issuing directions to the petitioner. The Single Judge directed the petitioner to provide bank guarantees for specific percentages of tax demands for different assessment years based on previous court orders and the Tribunal's actions. The Single Judge's directions were in line with previous court orders and aimed at ensuring compliance with tax demands.

The court emphasized that an order under Section 254(2A) is discretionary. The court found no error in the discretion exercised by the Tribunal and the Single Judge in modifying the Tribunal's order. Therefore, the court decided not to interfere with the impugned order. Consequently, the appeals were dismissed, and pending interlocutory applications were also dismissed. No costs were awarded in the case.