PCIT Order requiring Assessee to pay 20% of the tax demand during an ongoing appeal quashed by Karnataka High Court
The Karnataka High Court recently made a significant ruling in the case of Baregundi Jagadhisha Yediyala vs ITO. The court quashed an order by the Principal Commissioner of Income Tax (PCIT) that required the petitioner to pay 20% of the tax demand during an ongoing appeal.
The petitioner argued that the PCIT failed to consider whether the tax demand was unreasonably high or caused genuine hardship, as required by CBDT Circulars. The Court agreed, stating that the PCIT’s order lacked a thorough examination of the petitioner’s claim.
Key Points of the Ruling:
– Unreasonable Demand: The court emphasized that tax authorities must assess whether the demand is unreasonably high before mandating deposits.
– Genuine Hardship: The mere absence of financial difficulties does not equate to addressing hardship claims.
– Thorough Examination: A detailed examination of the petitioner’s claim is necessary to determine whether the demand is unreasonably high.
The court set aside the PCIT’s order and directed the department not to take further coercive measures until the stay application is reconsidered. This ruling is a significant win for taxpayers, emphasizing the importance of considering hardship and unreasonable demands in tax cases.
The copy of the order is as under:
