2024 (2) TMI 846 - HC - Income Tax

HC upholds 20% pre-deposit requirement for tax appeals, rejects hardship waiver without financial evidence

M/s Shyam Oil Extractions Pvt. Ltd. Versus Principal Commissioner, Income - Tax, Bhopal, Chief Commissioner Of Income Tax Central Raipur, Assistant Commissioner Of Income-Tax Central Circle-Bilaspur

M/s Shyam Oil Extractions Pvt. Ltd. Versus Principal Commissioner, Income - Tax, Bhopal, Chief Commissioner Of Income Tax Central Raipur, Assistant ... Issues Involved:1. Waiver of pre-deposit of 20% of assessed tax liability.2. Legality of high-pitched assessment.3. Adequacy of installment facilities granted by revenue authorities.Summary:Issue 1: Waiver of pre-deposit of 20% of assessed tax liabilityThe petitioner challenged the order of the Assistant Commissioner of Income Tax (ACIT) rejecting the waiver of pre-deposit of 20% of the assessed tax liability under Section 220(6) of the Income Tax Act. The petitioner argued that the assessment was high-pitched, making it financially impossible to pay even 20% of the total tax demand, which amounted to Rs. 2,76,88,710/-, 10.27 times the returned income.Issue 2: Legality of high-pitched assessmentThe petitioner contended that the assessment was excessively high, as the tax demand of Rs. 13,84,43,552/- was 51 times higher than the original tax deposited. The petitioner cited various judgments and circulars, including CBDT Circular No. 96 and the circular dated 23.04.2022, which provide guidelines for dealing with high-pitched assessments. The petitioner argued that the revenue authorities did not consider these circulars, which are binding on them.Issue 3: Adequacy of installment facilities granted by revenue authoritiesThe ACIT granted installment facilities to the petitioner, requiring a monthly payment of Rs. 30,73,524/-. The Principal Commissioner of Income Tax (PCIT) later reduced this amount to Rs. 13,85,000/- per month for 20 months. The petitioner argued that these orders were arbitrary and did not consider the financial difficulties faced by the company. The revenue authorities, however, maintained that the assessment was based on substantial evidence, including a survey under Section 133(A) and transactions with related parties.Judgment:The court held that the revenue authorities had exercised their discretionary powers judiciously by granting installment facilities. The court noted that the petitioner had not provided sufficient evidence of genuine financial hardship to justify a waiver of the 20% pre-deposit requirement. The court also observed that the petitioner had not sought relief from the appellate authority, which has the power to grant such waivers.The court found no arbitrariness or illegality in the orders of the ACIT and PCIT, and dismissed the petition. The court emphasized that public interest and the need for liquid cash for governmental functions outweigh the petitioner's request for interim relief.Conclusion:The petition was dismissed, and the court upheld the installment facilities granted by the revenue authorities, finding no merit in the petitioner's claims of high-pitched assessment and financial hardship. The court reiterated the importance of following statutory procedures and the discretionary powers of revenue authorities in tax matters.