Court dismisses Writ Petition challenging tax demand, orders deposit, emphasizes compliance

The court disposed of the Writ Petition challenging the respondent's order demanding 20% of the disputed amount for considering the application under Section 220(6) of the Income Tax Act. The court directed the respondent to expedite the appeal process and ordered the petitioner to deposit 10% of the outstanding demand within four weeks. The court emphasized the importance of fair treatment and compliance with legal provisions, ultimately closing the case without awarding costs.

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Issues:
1. Disposal of Writ Petition challenging impugned order by the respondent.
2. Application filed under Section 220(6) of the Income Tax Act.
3. Authority of Assessing Officer to demand 20% of disputed amount.
4. Violation of principles of natural justice in the proceedings.
5. Compliance with CBDT instructions and legal provisions.
6. Payment of outstanding demand and interest by the petitioner.
7. Direction to respondent for expeditious disposal of appeal and deposit of 10% of outstanding demand by petitioner.

Analysis:

1. The Writ Petition challenges the impugned order passed by the respondent, which demanded payment of 20% of the disputed amount as a condition precedent for considering the application under Section 220(6) of the Income Tax Act. The petitioner, a dealer in petroleum products, argued that the order was contrary to law and requested the court to quash the order and direct the respondent to consider the application under Section 220(6) with a fair hearing.

2. The petitioner filed an application under Section 220(6) of the Act seeking a stay of the disputed demand during the pendency of the appeal before the Commissioner of Income Tax (Appeals). The respondent's order demanded 20% of the outstanding amount, leading to the filing of the Writ Petition. The court directed the respondent to dispose of the appeal expeditiously and ordered the petitioner to deposit 10% of the outstanding demand within four weeks.

3. The Assessing Officer's authority to demand 20% of the disputed amount was questioned by the petitioner, arguing that it was contrary to law and the officer had no right to impose such a condition. The respondent justified the demand based on a Central Board of Direct Taxes Office Memorandum, which required payment of 20% of the disputed demand when the assessee is in appeal before the CIT (A).

4. The petitioner alleged a violation of principles of natural justice, stating that they were deprived of a personal hearing, and the respondent's actions were arbitrary and discriminatory. The court noted the importance of fair and reasonable treatment in such proceedings and directed the respondent to consider the petitioner's application under Section 220(6) with an opportunity for a hearing.

5. Compliance with CBDT instructions and legal provisions was a key point of contention. The petitioner argued that the respondent did not follow the CBDT instruction No.95 dated 21.08.1969, which should have guided the exercise of discretion in the case. The petitioner relied on legal precedents to support their argument for fair treatment and proper consideration of their application.

6. Regarding the payment of outstanding demand and interest, the court referred to Section 220(2) of the Income Tax Act, which mandates the payment of simple interest if the specified amount is not paid within the stipulated period. The court directed the petitioner to deposit 10% of the outstanding demand within a specified timeframe.

7. In conclusion, the Writ Petition was disposed of with the direction for the respondent to expedite the appeal process and for the petitioner to deposit 10% of the outstanding demand. No costs were awarded, and connected Miscellaneous Petitions were closed as a result of the judgment.

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