Petitioner's Deposit Requirement Reduced to 10% with Immovable Security Condition

The court reduced the petitioner's deposit requirement from 20% to 10% of the demand, with the condition of providing immovable security for the remaining amount. The petitioner must comply by 31st July 2019, or the relief granted will be withdrawn.

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Issues Involved:
1. Legality of the impugned orders dated 26.03.2019, 11.02.2019, and 10.05.2019.
2. Requirement to deposit 20% of the demand amount for appeal consideration.
3. Financial incapacity of the petitioner to pay 20% of the demand.
4. High-pitched assessment and its implications.
5. Discretionary powers of the tax authorities in granting stay of demand.

Detailed Analysis:

1. Legality of the Impugned Orders:
The petitioner challenged the orders dated 26.03.2019, 11.02.2019, and 10.05.2019, claiming they were illegal, invalid, null, and void. The orders required the petitioner to deposit 20% of the demand amount to stay the recovery proceedings. The court scrutinized these orders and found that the authorities acted within their discretionary powers as per the guidelines issued by the CBDT (Central Board of Direct Taxes). The court did not find any legal infirmity in the impugned orders.

2. Requirement to Deposit 20% of the Demand Amount:
The petitioner argued against the requirement to deposit 20% of the total demand, citing financial incapacity and the high-pitched nature of the assessment. The court referred to the CBDT's circulars, particularly the one issued on 29.02.2016, which generally mandates a 15% deposit of the disputed demand for granting a stay. However, the circular allows for adjustments based on the specifics of each case. The court noted that the authorities had discretion to modify the percentage, either increasing or decreasing it, based on the case's merits.

3. Financial Incapacity of the Petitioner:
The petitioner claimed financial difficulty in paying 20% of the demand, which amounted to Rs. 34,65,832. The court examined the petitioner's financial records and found no substantial evidence to support the claim of financial incapacity. The court emphasized that the petitioner failed to provide adequate proof of financial distress either before the tax authorities or the court.

4. High-Pitched Assessment:
The petitioner contended that the assessment was high-pitched and that insisting on a 20% deposit was unjust. The court acknowledged that the total tax demand was significantly high, and the issues were at the first appeal stage. The court referred to a similar case decided by the Bombay High Court, which emphasized that the right to appeal should not be rendered illusory due to stringent pre-deposit requirements. Consequently, the court decided to reduce the deposit requirement to 10% of the disputed tax dues, with the condition that the petitioner offers immovable security for the remaining amount.

5. Discretionary Powers of Tax Authorities:
The court analyzed the discretionary powers vested in the tax authorities by the CBDT circulars. It noted that while the authorities are generally required to follow the 15% deposit guideline, they have the discretion to adjust this percentage based on the case's specifics. The court found that the authorities had exercised their discretion appropriately in this case, but it modified the order to reduce the deposit requirement to balance the interests of the petitioner and the revenue.

Conclusion:
The court reduced the requirement for the petitioner to deposit 20% of the demand to 10%, subject to the petitioner providing immovable security for the remaining amount. The petitioner was directed to comply with these conditions by 31st July 2019, failing which the relief granted would be automatically withdrawn. The petition was disposed of accordingly.

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