A two-judge bench of the Bombay High Court has held that the requirement of 20% pre deposit of tax pending appeal is not rigid one and cannot be implemented in all cases of outstanding dues.
The return filed by the assessee was selected for scrutiny by the Assessing Officer who later passed an order of assessment u/s 143(3) computing the assessee’s total income at Rs.299.92 Crores. This gave rise to a total demand of Rs.137,95,82,948 crores which included tax of Rs.103.72 crores and interest of Rs.34.23 crores.
The assessee challenged the order by filing an appeal and on the very same day, also filed an application before the AO requesting that till such appeal was disposed of, recovery of tax arising out of the order of assessment could be kept in abeyance.
The Assessing Officer permitted the same subject to a condition that the assessee should deposit 20% of the outstanding demand, to grant stay during the pendency of the appeal. The assessee thereupon approached Pr CIT and made the same request, but in vain.
Though complied with the requirement of depositing 20% tax, the petitioner contended before the High Court that the condition provided in the CBDT circulars would be wholly unjust.
Justice Sarang V Kotwal and Justice Akil Kureshi held that “since the Appeal of the Petitioner is pending before the Appellate Commissioner, we would be well advised not to consider the Petitioner’s argument on merit of disallowances threadbare.”
“Suffice to reiterate that the Petitioner has a prima facie case on such disputed issues. With this background, we may recall, that the Petitioner had already deposited advance tax of Rs.11 Crores and TDS of Rs.7,05,288/by the time of filing of the return. The Petitioner has deposited further sum of Rs.1 Crore with the tax department. Impugned order passed by the Commissioner does not take into account the sum of Rs.11,07,05,288/, perhaps due to oversight since it appears that the Petitioner may not have brought such facts to his notice. Be that as it may, whatsoever direction we may issue for depositing the tax pending appeal, this amount must be taken into consideration,” the bench said.
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