M/S.POPULAR TRADERS, vs. THE ASSISTANT COMMISSIONER OF INCOME TAX,

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WP(C)/7546/2019HC KeralaKLHC01019255201915 March 2019Author: HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE3 pages
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What did the High Court hold?

The High Court of Kerala, considering the facts and circumstances of the case, modified the conditional order of stay passed by the Commissioner of Income Tax (Appeals). Instead of the original direction to pay 20% of the demand, the Court ordered the petitioner to pay 50% of the amount previously directed (i.e., 50% of 20% of the total demand) in two installments. The first installment was to be paid by March 31, 2019, and the balance 50% within a further period of one month. The Court directed that the appeal be disposed of expeditiously. The principle established is that the appellate authority's discretion in imposing conditions for stay must be exercised reasonably, considering the assessee's financial capacity, and that the High Court can modify such conditions in writ proceedings when they appear unfeasible.

What were the facts?

The petitioner, M/s. Popular Traders, approached the High Court of Kerala challenging a conditional order of stay passed by the Commissioner of Income Tax (Appeals). The total demand against the petitioner was Rs. 44,82,72,598/-. The Commissioner of Income Tax (Appeals) directed the petitioner to remit 20% of this demand, amounting to over Rs. 9 Crore, by March 15, 2019, as a condition for granting the stay. The petitioner contended that they were unable to pay such a substantial amount.

What were the issues?

1. Whether the condition imposed by the Commissioner of Income Tax (Appeals) for granting a stay, requiring the petitioner to remit 20% of the total demand (over Rs. 9 Crore), is excessive and unfeasible for the petitioner? (Mixed question of law and fact, concerning the exercise of discretion under relevant provisions of the Income Tax Act, 1961, related to stay of demand). Assessee's Contention: The petitioner argued that they cannot afford to pay the stipulated 20% of the demand, which amounts to more than Rs. 9 Crore, due to its magnitude. Revenue's Contention: The judgment does not record any specific contentions made by the revenue in response to the petitioner's plea regarding the conditional stay.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE FRIDAY ,THE 15TH DAY OF MARCH 2019 / 24TH PHALGUNA, 1940 WP(C).No. 7546 of 2019 PETITIONER: M/S.POPULAR TRADERS, POPULAR TOWERS, VAKAYAR P.O., KONNI, PATHANAMTHITTA, REPRESENTED BY ITS MANAGING PARTNER, THOMAS DANIEL, AGED 63 YEARS BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I, THIRUVALLA - 689 101. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), DEPARTMENT OF INCOME TAX, KOTTAYAM - 686 001. 3 THE TAX RECOVERY OFFICER, DEPARTMENT OF INCOME TAX, THIRUVALLA - 689 101. SMT THUSHARA JAMES-GOVT.PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 7546 of 2019 -2-

JUDGMENT The petitioner, impugning a conditional order of stay passed by the Commissioner of Income Tax, (Appeals), has approached this Court. The total demand is Rs. 44,82,72,598/-. Ext. P4 is the order. Petitioner was directed to remit 20% of the demand on or before 15.03.2019 as a condition for stay.

2.

The learned counsel for the petitioner would submit that petitioner cannot pay such a huge amount. The amount would come to more than Rs. 9 Crore.

3.

Considering the facts and circumstances of the case, I am of the view that the petitioner shall pay 50% of the amount directed in the conditional order in two instalments. First of such intalment shall be paid on or before 31.03.2019 and balance 50% within a further period of one month. Impugned order accordingly modified as above. The appeal shall be disposed of as expeditiously as possible. The writ petition is disposed of accordingly. A.MUHAMED MUSTAQUE JUDGE JS

WP(C).No. 7546 of 2019 -3-

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2016-17. EXHIBIT P2 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT 2016-17. EXHIBIT P3 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT 2016-17. EXHIBIT P4 COPY OF ORDER ISSUED BY THE 2ND RESPONDENT. EXHIBIT P5 COPY OF OFFICE MEMORANDUM ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES.

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