Court upholds tax recovery rules, rejects challenge on legality and payment requirements

The court dismissed the petition challenging the constitutionality of certain instructions and orders related to tax recovery. The court found that the department had acted reasonably in requiring payment before considering a stay on tax recovery. The petitioner's arguments regarding the legality of committee minutes and entitlement to stay without payment were also rejected. The court ordered the petitioner to pay costs to the Department within four weeks.

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Issues Involved:
1. Constitutionality of Instruction F. No. 225/101/2021-ITA-II dated 23.4.2022.
2. Legality of the order dated 19.10.2022 rejecting the stay of tax recovery.
3. Validity of the minutes of the meeting dated 11.11.2022 by the Local High Pitch Committee.
4. Entitlement to stay on recovery of taxes without payment of any tax as per Instruction No. 1914 of 2016.

Detailed Analysis:

1. Constitutionality of Instruction F. No. 225/101/2021-ITA-II dated 23.4.2022:
The petitioner challenged the constitution of the Local High Pitch Committee by the Central Board of Direct Taxes (CBDT) as unconstitutional and ultra vires to the Income Tax Act, 1961. The court did not delve deeply into this broader question, focusing instead on the specific grievances and procedural aspects.

2. Legality of the order dated 19.10.2022 rejecting the stay of tax recovery:
The petitioner sought to quash the order by the Principal Commissioner of Income Tax rejecting the application for stay of recovery of tax. The court noted that the Deputy Commissioner of Income Tax had informed the petitioner that the request for stay could only be considered after payment of at least 20% of the gross demand, which the petitioner did not comply with. The petitioner's appeal under Part A of Chapter XX of the Income Tax Act, 1961, is pending with the National Faceless Appeal Centre.

3. Validity of the minutes of the meeting dated 11.11.2022 by the Local High Pitch Committee:
The petitioner contended that the minutes of the meeting by the Local High Pitch Committee, which rejected his grievance application, were illegal, invalid, and violative of Articles 14 and 19 of the Constitution of India. The court referred to the CBDT Circular dated 29-12-2021 and the revised instructions dated 23-4-2022, which outline the procedures for handling high-pitched scrutiny assessments. The court noted that the High-Pitched Committee considered the material on record from a prima facie perspective and concluded that the assessment was not high-pitched. The court found no irrationality in the reasons recorded by the High-Pitched Committee.

4. Entitlement to stay on recovery of taxes without payment of any tax as per Instruction No. 1914 of 2016:
The petitioner sought a stay on recovery of taxes without payment of any tax in light of Instruction No. 1914 of 2016. The court observed that the department had already shown indulgence by granting a stay for the assessment year 2018-19 on the condition of payment of Rs. 4,00,000/- per month. The court considered this arrangement reasonable and considerate.

Conclusion:
The court dismissed the petition as meritless, emphasizing that the department had been reasonable in allowing the petitioner to pay the demand in monthly installments. The petition was dismissed with costs of Rs. 10,000/- to be paid to the Department within four weeks from the date the order is uploaded on the High Court Website.

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