Sri Bhaskar Reddy Vemireddy V. Income Tax Department

WP/23438/2021

AI Insights

The case involves a writ petition filed under Article 226 of the Constitution of India, challenging an order by the Income Tax Department directing the petitioner to pay 20% of a disputed tax demand pending the appeal's disposal. The petitioner, engaged in the palm oil business, contested an assessment order that added significant unexplained cash credits to his income for the assessment year 2017-18. The petitioner argued that the 20% demand was arbitrary and not in line with recent Supreme Court rulings, which allowed for discretion in determining the stay amount. The respondents defended the order as reasonable. The court, referencing the Supreme Court's decision, reduced the required payment to 10%.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 795530 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 26-08-2022
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax and others v. LG Electronics India Private Limited
• Laws Referred To: Article 226 of the Constitution of India, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M KIRANMAYEE
• Assessee Lawyers: SHAIK BASHA
• Keywords: Assessment Order; Demonetization; Disputed Demand; Scrutiny; Stay of recovery; Unexplained cash credits; Writ of Mandamus
• Section: 143(3); 143(2); 139(1); 68

Judgement Text

"THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HONOURABLE SRI JUSTICE A.V.RAVINDRA BABU WRIT PETITION No.23438 of 2021 ORDER:- (Per Hon’ble Sri Justice C.Praveen Kumar) Heard Sri Shaik Jeelani Basha, learned counsel, representing Sri Bhaskar Reddy Vemireddy, learned counsel for the petitioner and Ms. M. Kiranmayee, learned Standing Counsel for Income Tax appearing for the respondents, and with their consent, this writ petition is disposed of at the stage of admission. 2. The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:- “…… to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the order of the 2nd respondent, dated 28.07.2021, in directing the petitioner to pay 20% of the disputed demand, pending disposal of the petitioner’s appeal before the 1st Appellate Authority, for the Assessment year 2017-18 as arbitrary, mechanical, illegal, bad in law, bereft of any reasons, violative of principles of natural justice, consequently set aside the same and grant stay of any recovery, pending disposal of the petitioner’s appeal before the 1st Appellate Authority, in the interest of justice…” 2 3. The facts in issue are that the petitioner, who is carrying on business in Palm Oil and who is on the rolls of the 1st respondent, filed his returns for the assessment year 2017-18 through e-filing, disclosing a total income of Rs.14,58,870/-. The petitioner’s case was selected for scrutiny under Section 143(2) of the Income Tax Act, for verification of cash deposits during demonetization period and accordingly, an assessment order dated 25.12.2019 came to be passed under Section 143(3) of the Income Tax Act making addition of Rs.2,23,50,000/- as unexplained cash credits under Section 68 of the Act. 4. The 1st respondent, who was entrusted with the assessment, while rejecting the books of accounts, estimated the profit at 1% on the turnover declared by the petitioner and determined the net profit as Rs.22,96,439/-. The 1st respondent also made an addition of Rs.2,91,607/- towards profit on sale of vehicle, Rs.6,35,299/- being the commission received and a sum of Rs.1,189/- towards interest. It is said that the petitioner has offered Rs.14,45,573/- in the return of income filed under Section 139(1) of the Income Tax Act. By an order dated 25.12.2019, the 1st respondent passed assessment order, which was challenged in the appeal before the 4th respondent. Pending appeal, an application for stay was made before the assessing 3 officer, who, vide his order dated, 28.07.2021, directed the petitioner to pay 20% of the demanded amount immediately, failing which, steps will be initiated as per provisions of Income Tax Act. Challenging the said order dated 28.07.2021, the present Writ Petition came to be filed. 5. Sri Shaik Jeelani Basha, learned counsel, representing Sri Bhaskar Reddy Vemireddy, learned counsel for the petitioner would contend that in view of the recent Supreme Court Judgment in Principal Commissioner of Income Tax and others v. LG Electronics India Private Limited1, fixing of 20% of the demand amount for grant of stay is incorrect. He further submits that in view of the Judgment, discretion is given to authorities in fixing the percentage of amount to be paid and as such, pleads that even less than 20% can be directed to be paid for grant of stay. 6. To this, Ms. M. Kiranmayee, learned standing counsel for Income Tax appearing for the respondents, would contend that the order under challenge warrants no interference, as reasonable amount has been fixed for granting stay for recovery of the balance amount. 7. Taking into consideration the Judgment of the Hon’ble Supreme Court referred to above, having regard to the facts in 1 [2018] 12 ITR-OL 334 (SC) 4 issue and in view of the statement made by the learned standing counsel, we deem it appropriate to direct the petitioner to pay 10% of the outstanding amount, out of the total liability, instead of 20% as directed by the assessing authority, within a period of five (5) weeks from today, in default, the stay stands vacated automatically. 8. With the above direction, this Writ Petition is disposed of. There shall be no order as to costs. Miscellaneous petitions pending, if any, in this Writ Petition shall stand closed. _______________________________ JUSTICE C.PRAVEEN KUMAR ________________________________ JUSTICE A.V.RAVINDRA BABU Date : 26.8.2022 MP 5 107 THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HONOURABLE SRI JUSTICE A.V.RAVINDRA BABU WRIT PETITION No.23438 of 2021 Date : 26.8.2022 MP "