RADHAKRISHNAN NAIR MADHAVAN NAIR vs. PRINCIPAL COMMISSIONER OF INCOME TAX

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.

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.

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. T.R.RAVI JUDGE mpm

WP(C) NO. 6385 OF 2023 6