RADHAKRISHNAN NAIR MADHAVAN NAIR V. PRINCIPAL COMMISSIONER OF INCOME TAX

WP(C)/6385/2023

AI Insights

The case involves Radhakrishnan Nair Madhavan Nair, the petitioner, who contested an income tax assessment that significantly increased his declared income from Rs.6,93,940 to Rs.4,94,18,803, categorizing it as a 'high pitched' assessment. The petitioner sought relief from the High Court of Kerala to direct the Appellate Authority to consider his appeal without the precondition of paying 20% of the assessed demand, as required by the Assessment Officer. The court acknowledged the assessment as 'high pitched' based on precedents and directed procedural relief without the payment condition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 749468 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-03-2023
• Assessment Year: misc
• Other Referred Cases: State of Kerala V. C.Velukutty, Taneja Developers & Infrastructure Ltd., V. Assistant Commissioner of Income Tax & Ors.
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: PREETHA NAIR
• Keywords: Best Judgment Assessment; Income tax appeal; Stay Application; High pitched income assessment
• Section: 143(3)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 1ST DAY OF MARCH 2023 / 10TH PHALGUNA, 1944 WP(C) NO. 6385 OF 2023 PETITIONER: RADHAKRISHNAN NAIR MADHAVAN NAIR AGED 63 YEARS FLAT NO.1A2, FOUR SQUARE MANOR HOLY FAITH BUILDING, OPP. ENGINEERING COLLEGE THRIKKAKKARA, ERNAKULAM, PIN - 682021 BY ADV PREETHA S.NAIR RESPONDENTS: 1 PRINCIPAL COMMISSIONER OF INCOME TAX REVENUE BUILDING, I.S.PRESS ROAD, KOCHI ., PIN - 682018 2 THE INCOME TAX OFFICER NATIONAL FACELESS ASSESSMENT CENTRE, DELHI,, PIN - 110002 3 THE INCOME TAX OFFICER NON-CORPORATE WARD -1(1),KOCHI,, PIN - 682018 4 THE COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE, (NFAC), DELHI, PIN – 110002. SRI. CHRISTOPHER ABRAHAM, SC. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.03.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 6385 OF 2023 2 T.R. RAVI, J. -------------------------------------------- W.P.(C) No.6385 of 2023 -------------------------------------------- Dated this the 01st day of March, 2023 JUDGMENT Against Ext.P1 assessment order, the petitioner has preferred an appeal as Ext.P2. The petitioner has also preferred a stay application before the Assessment Officer on which the petitioner has been directed to pay 20% of the demand. The petitioner has approached this Court seeking direction to the Appellate Authority to consider and pass orders on the appeal without insisting on the payment as directed by the Assessment Officer. The petitioner is yet to file an application for stay before the Appellate Authority. The contention of the petitioner is that against a returned income of Rs.6,93,940/-, the 2nd respondent has completed the assessment proceedings by fixing the total income at Rs.4,94,18,803/-. The counsel for the petitioner submits that a high pitched income fixed in an assessment on best judgment which necessarily involves a certain amount of guess work. The petitioner has relied on the decision of the Hon’ble Supreme Court in State of Kerala V. C.Velukutty WP(C) NO. 6385 OF 2023 3 reported in 1966 (60) ITR 239 (SC)] to submit that the power to conduct a best judgment assessment does not mean that a capricious assessment can be done and guidelines have also been put in place regarding the manner in which a best of judgment assessment should be made. Reliance is also placed on the decision of the Division Bench of the Delhi High Court in Taneja Developers & Infrastructure Ltd., V. Assistant Commissioner of Income Tax & Ors. reported in [2009 (222) CTR 521 (Delhi)], to submit that an assessment at twice the amount of the returned income would amount to being substantially higher or high pitched. The court in that case was considering a case where an assessment was made at 350 times the returned income. After referring to several other cases, the Court noticed that even a figure of 8 times and 74 times have been classified as unreasonably high pitched and therefore the case before the court which has 350 times also falls under the same nomenclature. 2. In the case on hand, the returned income was only Rs.6,93,940/- and the amount which has been arrived at is Rs.4,94,18,803/-. It is almost 71 times and going by the yardstick followed by the Division Bench of the Delhi High Court, it definitely WP(C) NO. 6385 OF 2023 4 comes under the nomenclature of high pitched. It is in the above circumstances the learned counsel for the petitioner submits that it is a case where the Appellate Authority should be directed to hear the appeal and dispose it of without insisting on payment. The counsel for the Department submitted that the appeal can be directed to be disposed of but however, it may be on the basis of a condition on payment of a portion of the tax. 3. I have considered the contentions on either side. It is seen that the appeal had been preferred in April, 2022. It will be onerous to burden the petitioner with a condition of paying a portion of a tax in a case which necessarily has to be categorised under the high pitched category going by the decisions referred to above, particularly since the appeal has been pending for almost nine months. 4. In the result, the writ petition is disposed of directing the petitioner to approach the concerned Assessing Authority for opening the portal for preferring a stay application and a stay application shall be preferred within two weeks from today. The Appellate Authority shall take up the stay application along with the appeal and consider the appeal itself and pass orders unless the Appellate WP(C) NO. 6385 OF 2023 5 Authority is of the opinion that the workload will not permit such a course of action. In such a situation, the Appellate Authority shall consider the stay application with particular reference to the decisions referred above and pass appropriate orders. All coercive steps shall be kept in abeyance till a decision as directed above is taken by the Appellate Authority. The writ petition is disposed of as above. Sd/- T.R.RAVI JUDGE mpm WP(C) NO. 6385 OF 2023 6 APPENDIX OF WP(C) 6385/2023 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE ASSESSMENT ORDER ALONG WITH DEMAND NOTICE DATED 30-03-2022 Exhibit P2 :A TRUE COPY OF THE FORM NO.35 DATED 30-04-2022 Exhibit P3 A TRUE COPY OF THE STAY APPLICATION DATED 05-05- 2022 Exhibit P4 A TRUE COPY OF THE ORDER OF THE 3RD RESPONDENT DATED 19-12-2022 "