2018 (5) TMI 589 - HC - Income Tax

Requirement to deposit 20% of the disputed demand amount - Held that - Order set-aside for the reason that no speaking order is passed by the authorities while directing the petitioner-assessee to deposit 20% of the demand amount, mechanically referring to CBDT instruction No.1914 dated 21-03-1996. In the light of the judgment of this Court in the case of Flipkart India (P.) Ltd.,(2017 (3) TMI 802 - KARNATAKA HIGH COURT), the Income Tax Officer i.e. the Assessing Authority has to examine the applicability of the instructions of Circular No.1914 in as much as whether the assessment is unreasonably highpitched or whether any genuine hardship would be caused to the assessee in case the assessee were required to deposit 20% of the disputed demand amount. Without any application of mind, the AA has demanded 20% of the demand amount while disposing of the said application. Surprisingly, though the review petition was filed before the Principal Commissioner of Income tax, Income Tax Officer has passed the order which is wholly without jurisdiction. - Matter is remitted to respondent No.1 to re- consider the application for stay in accordance with law in an expedite manner.

Summary

Issues:
Challenging interim order and appeal disposal delay.

Analysis:
The petitioner challenged the interim order and appeal disposal delay by the 1st respondent. The petitioner, an assessee under the Income Tax Act, claimed deduction under Section 35AD. Appeals for assessment years 2012-2013 and 2015-2016 were pending before the Commissioner of Income Tax (Appeals). The Assessing Officer rejected the deduction claim for 2012-13 and declined mandatory depreciation for 2013-14. The petitioner was directed to pay 20% of the demand, leading to the current challenge. The petitioner argued that Circular No.1914 guidelines were not followed, and the Assessing Officer's decision lacked reasoning. The order directing payment and rejecting the review petition were deemed void and illegal. The petitioner emphasized the need for proper assessment based on genuine hardship and high-pitched demands.

The court found the orders at Annexures K and M to be deficient as they lacked detailed reasoning and failed to apply Circular No.1914 guidelines appropriately. The Assessing Officer's decision to demand 20% without proper examination was considered invalid. The order rejecting the review petition by the Income Tax Officer, instead of the competent Principal Commissioner, was declared null and void. Therefore, Annexures K and M were quashed, and the matter was remitted for reconsideration in accordance with the law. The court highlighted that orders passed without jurisdiction are nullities in the eyes of the law. The Appellate Authority was directed to expedite the stay application review process.

Regarding the pending appeals before the Appellate Authority-CIT(A), the court acknowledged the delay and directed expedited disposal within six months from the date of the court order. While the court usually refrains from setting time frames for appeal disposal, it deemed it necessary in this case for the interests of justice. The writ petitions were disposed of with these directives to ensure a fair and timely resolution of the petitioner's appeals.