The Madras High Court directed the Petitioner to deposit INR 10 Lakhs instead of 20% of Tax Demand.
Facts
The second respondent, Income Tax Officer passed an assessment order, under the provisions of Income Tax Act, 1961 whereby, a tax liability of Rs.1,48,54,156/- was determined for the assessment year 2018-19 under best judgment assessment on the ground that the petitioner has failed to file returns and apart from demand of tax liability, penalty proceedings were also initiated under Sections 270A, 271 AAC and 272 A(1) (d) of the Income Tax Act, 1961 and a total demand of Rs.2,44,47,282/- was determined against the petitioner.
Submissions
T.Ramesh, counsel appearing for the petitioner submitted that the petitioner is engaged in the business of manufacturing handloom sarees and the total turnover of the petitioner’s business itself is only Rupees One Crore and by virtue of the impugned order, the petitioner was directed to 20% of tax, which comes to Rs.47,89,456.
R.S.Balaji, Senior Standing Counsel, appearing for the respondents, submitted that since the petitioner failed to file returns, the second respondent passed the assessment order, dated 21.03.2023 and though the petitioner filed Appeal against the said order, since a sum of Rs.1,36,79,856/- is in cash rotation on the petitioner’s bank account, the Appellate Authority imposed the condition of pre depositing 20% of the tax and same is only reasonable and not onerous as contended by the petitioner.
Decision
The single judge bench of Justice Krishnan Ramasamy observed that the grievance of the petitioner is only with regard to conditional stay order passed by the Appellate Authority, whereby, the petitioner is directed to pre-deposit 20% of the demanded tax, which comes around Rs.47,89,456/- for entertaining the Appeal.
The court viewed that the order passed by the first respondent/Appellate Authority requiring the petitioner to pay 20% of the tax demand is on the higher side.
Therefore, the Court directed the petitioner to deposit Rs.10,00,000/- instead of 20% (which come around Rs.47,89,456/-) of the impugned demand ordered by the Appellate Authority within a period of eight weeks.
