PARADIGM CORPORATION PRIVATE LIMITED vs. PRINCIPAL CHIEF COMMISSIONER OF INCOME-TAX

PDF · subscribers
WP/23594/2025HC TelanganaHBHC01046499202511 August 2025Bench: APARESH KUMAR SINGH,G.M. MOHIUDDIN11 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the communication dated February 21, 2025, regarding whether the assessment was 'high pitched' was not unequivocal. The Court acknowledged that a 'high pitched assessment' typically involves income determined substantially higher than the returned income, such as double the returned income or more. In this case, the income was assessed at Rs. 62 crores against a NIL return, clearly indicating a high-pitched scrutiny assessment. The Court also observed that the PCIT's order permitting installment payments did not specifically deal with the plea of financial hardship. The petitioner was directed to approach the competent officer (Respondent No. 1) with a fresh application for stay of demand, along with supporting documents and case laws, within one week. Respondent No. 1 was directed to consider and decide the application in accordance with law within four weeks. The Court did not comment on the merits of the plea raised by the petitioner.

What were the facts?

The petitioner, Paradigitu Corporation Private Limited, is challenging orders passed by income tax authorities for Assessment Year 2022-23. The assessment, conducted under Section 143(3) read with Section 144B of the Income Tax Act, 1961, determined the total income at Rs. 62,57,82,042/-, leading to a demand of Rs. 60,48,85,080/-. The petitioner filed an appeal before the National Faceless Appeal Centre (NFAC) and a petition for stay of payment before the Principal Commissioner of Income Tax (PCIT). The PCIT, by order dated October 25, 2024, allowed payment in installments of Rs. 1 crore per month until appeal disposal, failing which the petitioner would be treated as an assessee in default. Subsequently, the petitioner sought a stay from the Principal Chief Commissioner of Income-Tax (PCCIT), which was rejected on June 6, 2025, citing the petitioner's failure to establish financial strength. A notice of demand under Section 156 was also issued on March 22, 2024.

What were the issues?

1. Whether the assessment conducted under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for AY 2022-23 was a 'high pitched scrutiny assessment' given the income determined was Rs. 62,57,82,042/- against a returned income of NIL. Assessee's Contention: The assessment was a high-pitched scrutiny assessment, as the income determined was substantially higher than the returned income, citing the Gujarat High Court judgment in *Harsh Dipak Shah v. Union of India*. The petitioner also argued that correspondence indicated ambiguity regarding whether it was a 'high pitched assessment'. Revenue's Contention: The petitioner failed to furnish supporting documents like cash flow, financial statements, and source of funds, which were the basis for the scrutiny assessment. Therefore, the impugned order does not require interference. 2. Whether the orders rejecting the stay of demand by the PCIT and PCCIT were arbitrary, illegal, and violative of principles of natural justice and statutory provisions. Assessee's Contention: The authorities failed to apply their mind to the grounds of financial hardship and the fact that the assessment might not be a high-pitched one. The PCIT's order allowing installments was rendered meaningless by the rejection of the stay by the PCCIT. Revenue's Contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 143,Section 144B,Section 156

AI-generated summary — verify with the full judgment below

[ 34881 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY,THE ELEVENTH DAY OF AUGUST TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE THE CHIEF JUSTICE APARESH KUMAR SINGH AND THE HONOURABLE SRI JUSTICE G.M. MOHIUDDIN WRIT PETITTON NO:23594 OF 2025 Between: AND 1 2 e PARADIGTU CORPORATION PRIVATE LlfVlTED, Shaikpet Hydrabad, Jubilee Hills S.O 500033 Telangana. ...PETITIONER PRINCIPAL CHIEF COIVIIUISSIONER OF tNCOfvlE-TAX, Andhra Pradesh And Telangana, lT Tower, lvlasab Tank, Hyderabad - 500004 PRINCIPAL COMMISSIONER OF INCOIVIE-TAX - IV, INCOME TAX TOWCT, Masab Tank, Hyderabad - 500004. NATIONAL FACELESS ASSESSIVENT CENTRE (NFAC), RCP bY ItS Principal Commissioner lncome Tax Department, Ministry of Finance, New Delhi - 110001. ...RESPONDENTS Petition under Article 226 ot the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ of certiorari or any other appropriate writ, order or direction calling for records and a) quashing the order bearing DIN No. ITBA/COtV/F/17t2025-2611076782752(1) dated 06.06.2025 passed by the Respondent No. '1 , as the same is arbitrary, illegal and violative of principles of natural justice, and consequently, set aside the same, b) quashing the order bearing DIN No. ITB A/COI\4/F11712024-2511069933944(1) daled 25.1O.2024 passed by the Respondent No. 2, as the same is arbitrary, illegal and violative of principles of natural justice, and consequently, set aside the same, c) grant stay of recovery pursuant to the notice of . demand bearing DIN No- |TBA/AST/S/15612023-2411063204328(1) dated 22.03.2024 issued under section 156 of the lncome Tax Act, 1961, by the Respondent No 3 for A.Y 2022-23,

pending disposal of the appeal filed by the petitioner before the National F'aceless Appeal centre, as the said notice of demand dated 22.o3.2024 is arbitrary, illegar and violative of principles of natural justice and statutory provisions lA NO: 1 OF 202s Petition under section 151 cpc praying that in the circumstances s;tated in the affidavit filed in support of the petition, the High court may be pleersed suspend the operation and effect rTBA/COM/F/1 7 I 2O25-26t 1 07 67 827 52(1 ) Respondent No. '1 lA NO: 2 OF 2025 of the order bearing DIN dated 06.06.2025 passed by to No. the Petition under Se:ction i 51 cpc praying that in the circumstances stat3d in the affidavit filed in support of the petition, the High court may be pleased to suspend the operatiorr and effect of the order bearing DIN No. ITBA/COM/F/1 7 I 2024 -zsl 1 069933944( j ) dated 25. j 0 2024 passed by rhe Respondent No. 2 lA NO: 3 OF 2025 Petition under rlection 15i cpc praying that in the circumstances sl.ated in the affidavit filed in support of the petition, the High court may be pleased to stay all further proceedingrs, including but not rimited to recovery, pursuant to the notice of demand br:aring DIN No. lrBA/AST/s/1561 2o23-24t1o632ot3zB(1) dated 22.03.2024 iss.red by the Respondent No. 3 to the petitioner for A.\'2022- Counsel for the Petitioner: SRt. VIKRAM POOSERLA SENTOR COUNSEL FOR Ms. K. MAANASA Counsel for the Resp,rndents: SRI K. SUDHAKAR REDDY (Sr SC FOR TNCOME TAX) The Court made the following: ORDER

IIeard tr1r. \'ikram l)ooserla, lcarned Scnior (lounsel Incomc l'ax l)cpzrrtmcnt appcaring for the appearing lcrr i\ls- I(. \lenasa, learncd counsel lor the peridoner and Mr. l(.Suc{haker Reddv, learned Senior Standing Counsei for THE HON'BLE THI] EEII]EJT]STICE SRI APARESH KUMAR S AND THtr H SRI U CE M.MOH DIN \Yri Petiti o 235 25 Ordcr respondents / rc\:cn ue- 11.04.2024. Pctitioner- conductcd undcr SectLon 113(3) rcad with Section 144R of the lncome Tar 1961 (ftrr shot't 'thc 1961 Act') assessing the total incomc of thc pcrittoncr as 11s.62,57 ,82,042/ -. By otdcr da,rc<l 22.03.2021, dcmancl oi Rs.60,48,85,080/- was raised. 2. lror the asscssmcnt vcrer 2022-2023, the Petrtloncr comp2rn\i filccl its r-('tllro 1s r\-[].. Facclcss asscssment wits it Facelcss r\ppcal (-cntrc, l)clhi, \ct, 'fhe pctitioncr c()n1[)e1rv has hled an appcal before the National on company has elso tilctl :r pctition for sta1, of pavmcnt of demand u11 disposat of [hc eppcal bclirr:c respondent No.2- Principal

-=r 2 (lommissrorret oI Incomc 'Iax I\/ (icrr shorr .pCI.t.), on 13.06.2021. 'fhe PCI'[', bv ordcr darccl 25.1()202.+, pcrmrr.cd pavmcrit of thc rmpugncd demancl throuqh insrrhncrrts ,,F lls.-i crores per'r)onrh star[ing from Nor-crrbcr, ]()2-1. rill disposal of thc Frr-st appcal, othcnvise the pctrrioncr- c()1rp:urv s.oukl be rreated as a1 asscssee in cicfault. pctirirtncr approachcd the Principal (lhreI Commissioner of I.c().tc [,.1r, -\.tll-rra pradcsh end Tclanqana (lor short .pCCIl',), or,r 0.1.11.2(t2-+, sccl<ins srry oF clcmancl .or the samc asscsstncnl vcar. l\. rhc lnpucnccl <rrder datcd 06.06.2025, such a pra\:e r \\.as rc l.rrsccl as tlrc pctltioncr .ornpan), has larlcd to esreltlish irs ilnancral stnngcltc\,. Petitioner, bcrng aggner.cd thercbt,, has appro:rchcd rhis Court. 3. Pctitioncr is also seeking sta\. of rcc()\rcl.of thc cicrnand tlrrough order. clared 22.03.2021, passccl undcr Sccuon 1-5(r of the .\ct o[ 1961 :y rcspondenr No.3, as rhe rppcal is strll penciinq bc[orc the Nadonal f acclcss _,\ppcel (_cnrcr. [. L,car:ncd counscl lrrr the petJlr( )11(.r jtter ,tiia strbmittcd dtat rhc applicatiorr lor stay of dcn-rencl carcsor:icalli ma(lc out 2 c11s ( )

3 also hLcd as annexure-3, s hich shorved only balance oI Rs.71,17,436/- as on 0r.11.:()2+. l-earned counsei further of hnancial hardship. 'I he banli st^tement o[ thc Pe trtroner wxs submits that thc corrcspondencc bv thc Additronal/Joint Commissioner o[ Income 'fax, r\dmrmstration, Hyderabad, dated 21 .02.2025, rvould shos' that the dccisit.rn of rhc Local t'ligh Pitchcd Scrutinr' ,'\sscssments Committee is not unequivocal as tt> u,hcthcr thc clemar-rd raised upon thc pctitroncr, on the basis of thc rt zrssessmcnt, is 'Not IJigh Pitche d Asse ssment'. He, hou evcr, sr-rbmits that rhc communicatron indicates that it is not a 'Not [{igh Pitched Assessment'' Ilven otherw.rse, as per thc judg'meut rcndered by Gujarat l-Iigh Court Harsh Dipak Shah v. Union of Indial, 1fl parucular, paragraph 32, thc 'high pirchcd asscssuent' means r'vhere thc income determined:tnd itsscssttrcnt w2rs substaflually higher than thc returned incomc. lior erample, nvicc thc rcturncd income or 111 morc. I 2022 SCC ouline Guiarat 1679 I

-! 1() l( rl+ I.r'clc'r sit 4 5. In the instant casc, the incomc \\-i1s ,rss,-,sscLl as tls.(r(l crorcs eeainsa the return of NIL incomc. I)cfinirclr,, i[ u..:rs a crsc ol high pitched scrutrny asscsstncnt. Fll.en tl-rc blnk srrrtcrre nt of the petrtion,:r substantiatcd the grounds of financ:ial stflnscncy 'l'he rcvenur: authoritics har.e [ai]ed to aPph, thcir rnirrci to the grouncls takr:n and rcjectcd thc pravcr [or stal e\-cn er thc lcr el oi -[ h,: direcrion ol the PCI'l' datcd 2-i of instalrr-rents @ Rs.-r crore s per monrh :.mrnrlr tii,Ll Novcmbcr, .2024, tlll disposal of thc first appcal h:rs fl() mcrnlng far es the prayer lor stav of the impugnecl clcmrncl cJuring pcndcnct'of thc appeal is concerncd. 1'hcrch.,rc, thc pctirioncr. 6. I-carrrr cl counscl f<rr thc rcvcnLlc strbnriis th:Lt tlrc pcutioncr has lailed to furnish othcr slrpporting ckrcumcnrs sur;l-r as cash flr,,rv, fin2rraiul statcment and also thc sourcc oi inhrsion <>f lunds t() r.1c pctitioner-companv, u,hich has bcc.: thc besis for scrudnv asscssment of such naturc. 'l'hcre Frrre. rl-rc impugr.rird r'.,rcler docs n()t rcquirc ant, intcrFctencc P(_(_I1', s() has appro:rcheci this Court J

- ,/ l 1 Fiowevcr, on being spccifLcallr, askcd as to the umeline l,earnecl counscl for thc pcritioncr submits that in view oI rvrthin rvhich the appeal prclerrcd bv thc peuuoner is Likely to bc clisposcd o[, Iearned counsel lor thc rcvenuc rcplicd that he has no instructions regardiflg an1, particular tirnclinc 8 the stand tahen b1' thc revenuc, Pclilioncr is rcadv to lurnish othcr supporting documcnts to makc r.,ut the casc of financial hardship such as the cash florv, ltntnctal statcmcnts anci such other documcnts. 9. In the wake of such submission, learnccl cottnscl lor thc rc\renuc submits that in casc tltis Court ts inclincd ro rcmand the matter, the competent officer $'ould. uPon nccessarv clocuments being submrtted, reconsider thc application r.r f the pctitioner for stay of thc demand in accordancc with la*' 10. \Xl e have considcrcd thc submissiclns of lcarncd counsel for thc parties. { --I

--i 6 11. taken into n()tc, as bornc out lrom thc pleadir-rgs on Frtrr thc c()nspcctus of lacts and the rclc:vant clocunrcrrts rcc( )f(., tI apPcars rhrt thc communicairon datcd 21 .02.2t.t25 on rhc tisuc u,hethcr the scrutiny assessmcnt undcrtakcrl againsr thc pctluon(ir high pitchcd was a s hcrc asscssec l-ras prcsented thc asscssment or not ls 11a)t cal, t]tr. :r;scrsirtt , ,ftlr t r' unecluivocuLl in its language as also quotcd hereinubor.c. In a :lsc apP trlr.\' ur Lrrs cliscrctior-r and subject to such condirions. ls lrc n,t\' thinl< fit. trcat the asscssee as not bcing in clc fur,rh in rcsfccr of thc arlorrr-rr in dispute oF the appcal and subjcct hln ftr pai'rrrc,nt of the clcrr and in instalments within a rimc prescribcd. I rr rlic prcscnt caie, thc petitioncr has approached rhc P(.1'l rntl subscqucrntll', thc PCCIT for stay o[ thc irnpuoncd dcrund I hc orcicr rlatcd 25.10.2024 passcd bv the P(.I'f, rhr-rs, pcrrnirrccl pa\.'nrcnt o1-thc irnpugned dcmancl rhrough irrs[rLlrncrrr: er thc leanrcd P(ll'f or the lcarnecl ITCCIT havc rrot sl.rcci:icrlh ) cr()fcs pcr rnoflth staftlng from thc month of Novcmbcr, 2(.11, onwards tll disposal of thc first appcal. Howo.er, it rppcars that dcalt *'ith thc issuc as rcgards ti-rc plea of Frnar-rcral lrarcrship n-r:rtlc

7 out by thc pcriuone r. It appe ars that thc Pctrtioner is recluited tcr submit lurther documents in thc naturc o[ cash florv and financiai statcments etc., for the competent officcr to takc dccision thcreupon. 12. At this stage, therc[ore, wthout commcnung uPon thc mcrits of the plca raised by the petitioncr, wc 1r ro inclincd trr direct the pctitioner to approach thc cornpr:tcnt officcr respondent No.1 with a fresh applicauon t()gcthcr rvith supporting documents and case laws lor taking a clccision on thc qucstion of stay of payment of the demancl raisccl upon hin-r for the assessment year 2022-2023 ln terms of Scction t43 r/it' Sectton 144B of the 1961 Act. a 13. Ncedless to say, if such application is r.nadc b.v thc petiuoner within a period o[ onc rveek, rcsponclcnt No.1 rvrlulcl consider thc same and take a decision thercon in accordance u,rth larv within a period of four u'ecks rhcre itotr-t \ \

8 14. At:c<. rclingll., the insranr Writ petition is disposcd ot. N() cos ts \ s a scrlr.rel, rniscellancous petitrons, pcnding if anr., stancl cIoscd //TRUE COPY// SD/.P. PONNA KITISHNA ASSISTANT REGISTRAR 6 SECTION OFFICER To, 1. The PRINCIPAL CHIEF COMMISSIONER OF INCOIME-TAX, Andhra Pradesh And Telangana, lT Tower, Masab Tank, Hyderabad - 500004 2. The PRINCIPi\L COMMISSIONER OF INCOIVIE-TAX - lV, lncorne Tax Tower, l\,4asab Tank, Hyderabad - 500004. 3. The Priniciparl Commissioner,NATIONAL FACELESS ASSESSTMENT CENTRE (NFpC), lncome Tax Department, Ministry of Finance, Nera,Delhi - 1 '10001. 4. One CC to Ms K. IVAANASA , Advocate IOPUCI 5. One CC to SRI K. SUDHAKAR REDDY, (Sr SC FOR INCOIVE TAX) IOPUC] 6. Two CD Copie:; BM a

HIGH COUR DATED:1110812025 'Ir'.1 I'I ir -'r*.. ,, .\ .,r. *, '( ,-.. \ .i rJi zBorTztfi ORDER WP.No.23594 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS \ ..-.. rl I I i I ri I I l +

More judgments on Section 144B

All 10,521 judgments and leading authorities on Section 144B →

Recent GST High Court judgments

Search GST case law →