2023 (10) TMI 708 - HC - Income Tax

Recovery proceedings - conditional stay order passed - petitioner is directed to pre-deposit 20% of the demanded tax for entertaining the Appeal - HELD THAT - As the petitioner is engaged in the manufacturer of Handloom Sarees, this Court is of the view that the impugned order passed by the first respondent/Appellate Authority requiring the petitioner to pay 20% of the tax demand is on the higher side. Therefore, this Court directs the petitioner to deposit Rs. 10,00,000/- instead of 20% (which come around Rs. 47,89,456/-) of the impugned demand ordered by the Appellate Authority within a period of eight weeks, which starts from today. Upon such payment made by the petitioner, the third respondent/Commissioner of Income Tax (Appeals) is directed to entertain the appeal. Writ Petition is disposed of on the aforesaid terms.

Summary

Issues involved:
The petitioner challenged the order passed by the Principal Commercial of Income Tax-I, Appellate Authority in a Petition for Stay regarding tax liability and penalty proceedings under the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Tax liability determination and penalty proceedings
The Income Tax Officer passed an assessment order determining a tax liability for the assessment year 2018-19 under best judgment assessment due to the petitioner's failure to file returns. Penalty proceedings were initiated under Sections 270A, 271 AAC, and 272 A(1)(d) of the Income Tax Act, 1961. A total demand of Rs. 2,44,47,282/- was determined against the petitioner.

Issue 2: Challenge to the order of the Appellate Authority
The petitioner filed an Appeal against the assessment order and also filed a Petition for Stay. The Appellate Authority directed the petitioner to pre-deposit 20% of the tax demanded, amounting to Rs. 47,89,456/-. The petitioner found this condition onerous and filed a Writ Petition seeking to quash the said condition.

Court's Decision:
After considering the arguments from both parties, the Court found that the grievance of the petitioner was related to the conditional stay order requiring a 20% pre-deposit of the tax demand. The Court noted the petitioner's business of manufacturing handloom sarees and deemed the pre-deposit amount of Rs. 47,89,456/- as high. Therefore, the Court directed the petitioner to deposit Rs. 10,00,000/- within eight weeks instead of the original 20% demanded by the Appellate Authority. Upon this payment, the Commissioner of Income Tax (Appeals) was instructed to entertain the appeal.

The Writ Petition was disposed of with no costs, and the connected Miscellaneous Petition was closed.