2014 (9) TMI 551 - HC - Income Tax

High Court eases stay conditions for capital gains appeal, considering financial hardship of petitioner

Syed Chagan Zuleikha Memorial Trust Versus The Income Tax Officer

The High Court modified the condition imposed by the second respondent for granting stay pending disposal of an appeal regarding a capital gains ... Grant of stay pending for disposal – Higher amount ordered for pre-deposit – Held that:- The facts cannot come under the category of an unreasonably high pitched assessment - the financial hardship of the assessee has been taken into consideration - the assessee is a public charitable trust and also if the bank statement is looked into, it cannot be thought that assessee will be able to make payment of 25% of the demand – thus, the assessee is directed to deposit 10% of the demand – Partial stay granted. Issues:Challenge to condition imposed for grant of stay pending disposal of appeal.Analysis:The petitioner challenged a condition imposed by the second respondent for the grant of stay pending disposal of an appeal. The petitioner sold a property, and capital gains were assessed, leading to a demand for a sum of &8377; 2,89,04,250. Initially, the Assessing Officer rejected the stay petition, but upon reconsideration, imposed a condition for the petitioner to pay 50% of the demand. The petitioner then appealed before the second respondent, who modified the condition to pay 25% of the demand due to the petitioner's financial crunch. The petitioner, dissatisfied with the modification, approached the High Court.In the High Court, the petitioner's counsel cited decisions from the Delhi High Court and the Bombay High Court to argue against the imposition of any condition due to the petitioner's financial hardship. The petitioner's inability to pay the demanded sum was highlighted through a bank statement. The court noted that while the case did not involve an unreasonably high assessment, the financial hardship of the petitioner was considered. The court acknowledged the petitioner's status as a public charitable trust and examined the bank statement to determine the petitioner's ability to make the payment.After careful consideration, the court modified the impugned order. The petitioner was directed to deposit 10% of the demand by a specified date and provide a bank guarantee for the remaining 15%. Compliance with these conditions would result in an interim stay pending the appeal's disposal before the second respondent. The court concluded the judgment without imposing any costs, closing the matter.