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IN THE HIGH COURT OF CHHATTISGARH, BILASPUR
NARENDRA KUMAR VYAS, J.
M/s Shyam Oil Extractions Pvt. Ltd. - Appellant
Versus
Principal Commissioner, Income-Tax – Respondent
Writ Petition (T) No. 9 of 2024
Decided on : 14-02-2024
WAIVER OF PRE-DEPOSIT - INCOME TAX - Section 220(6) of the Income Tax Act - [Section 220(6)] - The court discussed the petitioner's challenge to the rejection of the application for waiver of pre-deposit of 20% of assessed tax liability under Section 220(6) of the Income Tax Act. The court also considered the installment facility granted to the petitioner and the legality of the orders passed by the revenue authorities.
Fact of the Case:
The petitioner, a company engaged in the business of oil extraction, challenged the high pitched assessment and sought waiver of pre-deposit of 20% of the assessed tax liability. The assessing officer passed the assessment order under Section 147 of the Income Tax Act, and a demand notice seeking payment of Rs. 13,84,43,552 was issued against the petitioner.
Finding of the Court:
The court found that the revenue authorities had considered the petitioner's application and granted installment facilities, and the petitioner had not demonstrated genuine hardship to warrant waiver of the pre-deposit. The court also noted that the petitioner had not availed the installment facilities granted to it.
Issues: The main issue was whether the petitioner was entitled to waive off the pre-deposit of 20% of the assessed tax liability, considering the installment facilities already granted by the revenue authorities.
Ratio Decidendi: The court held that the revenue authorities had considered the petitioner's grievances and exercised their discretionary power by granting installment facilities, and there was no irregularity or illegality committed by the revenue authorities.
Final Decision: The writ petition was dismissed, and no costs were awarded.
ORDER :
1. The present petition has been filed by the petitioner under Article 226 of the Constitution of India challenging the order passed by the learned Assistant Commissioner Income Tax, Bilaspur on 03.07.2023 in ITBA/COM/F/17/2023-24/1054092576(1) for the assessment year 2018-2019 (Annexure P/4) by which the learned Assistant Commissioner has rejected the application filed by the petitioner for waiver of pre-deposit of 20% of assessed tax liability under Section 220(6) of the Income Tax Act, however, granted installment facility to the petitioner to deposit Rs. 30,73,524/- per month which is payable before 15th of every month starting July, 2023 till March, 2024. The petitioner has also challenged the order passed by the learned Principal Commissioner of the Income Tax (central), Bhopal dated 11.12.2023 in ITBA/RCV/F/17/2023-24/1058657759(1) whereby the application for stay of demand filed by the petitioner has been rejected and also granted reduced installment facility amounting to Rs. 13,85,000/- payable in 20 months till such installment reaches 20% of the total tax liability amounting to Rs. 13,84,43,552/- or till disposal of the appeal by CIT(Appeals) whichever is earlier. The PCIT has further directed the petitioner to deposit first installment of Rs. 13,85,000/- on 20.12.2023 and remaining installments by 20th of every month from month of January, 2024 and has further directed that if the petitioner fails to avail the facility of installment granted to it, the same shall be treated as null and void.
2. The brief facts as projected by the petitioner are that the Petitioner is a company engaged in the business of oil extraction from ricebran. For the assessment year 2018-19, it filed its return of income showing its total income at Rs. 26,93,557/-. A notice u/s 148 of the Act was issued to the Petitioner Company on 31.03.2022 and in response to the notice, the Petitioner Company filed its response followed by revised returns and multiple responses to queries raised from time to time. On 28.03.2023, the Assessing Officer passed the assessment order under Section 147 of the Income Tax Act, 1961 (Annexure P/1).
Along with the above mentioned order, a demand notice dated 28.03.2023 under Section 156 seeking payment of Rs. 13,84,43,552/- was also issued against the Petitioner. The demand of tax made in pursuant to the order under Section 147 of Rs. 13,84,43,552/- which is 51 times higher than the original tax deposited at the time of filing the original return on 24.10.2018 which was Rs.26,93,557/-, as such, it is high pitched assessment. Against this assessment, the Petitioner filed an application for grant of stay against the recovery of outstanding demand under Section 220(6) of before ACIT, Central Circle, Bilaspur. In its application, the Petitioner contended that the assessment is an extremely high pitched assessment where even the payment of 20% of the total tax demand would not be possible as even 20% of the total tax demand comes to Rs. 2,76,88,710/- which is 10.27 times of the returned income. The Petitioner has also mentioned its financial difficulties in the said application. It has been further contended that if the Petitioner Company is forced to pay 20% of the huge tax demand, it would financially ruin the business.
3. It has also been contended that the said application was rejected on 03.07.2023 by the ACIT and directed the Petitioner to make partial payment of 20% of the tax demand with an arrangement where Petitioner Company was required to pay a monthly installment of Rs.30,73,524/- to be paid before 15th of every month starting from July, 2023 till March, 2024. Against the order of the ACIT, the Petitioner preferred an application dated 14.07.2023 before PCIT, Income Tax (Central), Bhopal. This application was rejected without assigning any reason for rejection. The cases of high pitched assessment are to be treated differently which are further affirmed by the instruction, F.No.225/101/2021/-ITA-II dated
The court emphasized that the revenue authorities have the discretion to grant deposit orders of a lesser amount than 20% pending appeal, and the circulars issued by the department cannot overwrite t....
Assessments deemed excessively high must consider genuine hardship, allowing stays without mandatory pre-payment when necessary to protect taxpayer interests.
Assessment orders must provide adequate reasoning and consider potential hardship; failure renders them unsustainable, necessitating reevaluation by tax authorities.
Authorities must provide reasoned decisions when rejecting stay applications and consider claims of financial hardship, ensuring compliance with principles of natural justice.
The Scheme of the Act provides that on passing of an assessment order under Section 143(3) of the Act, any sum is payable as tax, penalty or fine, then the Revenue would issues a notice of demand und....
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