2020 (6) TMI 637 - HC - Income Tax

Stay petition - recovery proceedings - condition of deposit of 25% within a period of six months - HELD THAT - No doubt that in the instant case vide Ext.P3 stay application, petitioner has been directed to pay 25% of the total amount on or before 15.03.2020 and the balance amount has been stayed for a period of six months or till the disposal of the appeal whichever is earlier. The order in writ appeal cannot be said to be in knowledge or notice of CIT Appeal/the assessing officer while exercising power under Section 226(3). But despite that such types of orders are passed imposing a condition of payment of 20% or 25%. Be that as it may. The impugned order of stay Ext.P3 is hereby set aside and the 2nd respondent ie., Commissioner of Income Tax, Kozhikode is directed to hear the appeal within a period of six months as prescribed subject to condition that the petitioner would deposit 12.5% within a period of one month from today. In case the petitioner complies with the order, the appeal shall be heard, otherwise the competent authority ie. the Commissioner shall be at liberty to pass any appropriate order in accordance with law.

Summary

Issues:
1. Challenge to the order imposing a condition of payment of 25% for stay application against assessment order.
2. Impact of Covid-19 pandemic on the collection of government dues.
3. Validity of the order passed by the 2nd respondent Commissioner of Income Tax.

Issue 1: Challenge to the order imposing a condition of payment of 25% for stay application against assessment order

The petitioner challenged the order dated 03.03.2020 (Ext.P3) by the 2nd respondent, which required the petitioner to deposit 25% of the total amount within a specified time frame for a stay on the assessment order dated 30.11.2018. The petitioner argued that this condition was not justified, citing a previous Division Bench order that restricted the imposition of a 20% condition. The High Court acknowledged the inconsistency in imposing such conditions and set aside the impugned order, directing the Commissioner of Income Tax to hear the appeal within six months, with a revised deposit requirement of 12.5% within one month.

Issue 2: Impact of Covid-19 pandemic on the collection of government dues

The respondent, through Sri Christopher Abraham, highlighted the challenges posed by the Covid-19 pandemic on the government's ability to collect taxes efficiently. It was mentioned that due to the pandemic, the government was facing financial constraints in recovering tax dues. This aspect was considered by the Court in the context of the stay application and the subsequent decision to revise the deposit requirement, taking into account the extraordinary circumstances caused by the pandemic.

Issue 3: Validity of the order passed by the 2nd respondent Commissioner of Income Tax

The High Court observed that the order issued by the 2nd respondent Commissioner of Income Tax, Kozhikode, imposing the 25% deposit condition was not in line with the previous Division Bench order and lacked awareness of the same. The Court set aside the impugned order and directed the Commissioner to hear the appeal within six months, with a revised deposit requirement. The judgment emphasized the need for compliance with the revised deposit condition and granted the Commissioner the authority to take appropriate action in case of non-compliance, in accordance with the law. Ultimately, the writ petition was disposed of based on these considerations.