Observing absence of financial difficulties not consideration of genuine hardship – HC

Merely observing absence of financial difficulties does not amount to consideration of genuine hardship – High Court

In a recent judgment, Hon’ble High Court of Karnataka has held that mere absence of financial difficulties as observed by the Commissioner of Income Tax by itself does not amount to consideration of the ground of genuine hardship of the assessee.

ABCAUS Case Law Citation:
4191 (2024) (08) abcaus.in HC

In the instant case, the assessee had challenged the order of the Principal Commissioner of Income Tax whereby he had disposed off the stay petition directing the assessee to pay 20% of the demand raised where appeal was pending before the Commissioner of Income Tax (appeals).

Before the Hon’ble High Court, the Petitioner contended that when the stay application was put up before the Principal Commissioner of Income Tax, he was required to dispose off the same insofar as the condition of deposit is concerned by taking note of the Circular dated 29.2.2016 and circulars No. 1914 and also the law laid down by the High Court in the case of Flipkart India Private Limited where the Hon’ble High Court had held that Instruction No. 2-B(iii) contained in Circular No.1914 continues to exist independently of and in spite of the Circular dated 29.2.2016.

It was submitted that in terms of the applicable circulars regarding condition of deposit, the Principal Commissioner of Income Tax was to examine as to whether the assessment is ‘unreasonably high pitched’ or where ‘genuine hardship is likely to be caused to the assessee’.

It was submitted that in terms of the order while Principal Commissioner of Income Tax had clearly stated that there were no financial difficulties in payment of tax, the question of unreasonably high pitched demand was not considered. It was submitted that the order was a non speaking order.

On the other hand the Revenue submitted that the petitioner was required to furnish necessary documents to demonstrate the case of ‘unreasonable high pitched demand’ or ‘genuine hardship’ and in the absence of relevant documents placed before the Principal Commissioner of Income Tax, petitioner cannot assail such order.

The Hon’ble High Court observed that the impugned order indicated that the finding as regards requirements of unreasonably high pitched demand and genuine hardship of the assessee had not been considered in proper prospective. Mere absence of financial difficulties as observed by the Principal Commissioner of Income Tax by itself does not amount to consideration of the ground of genuine hardship of the assessee, even otherwise there was no finding recorded as regards unreasonably high pitched demand.

Accordingly, the matter was remanded to PCIT for fresh consideration taking note of the applicable circulars including the direction of the Court. During such consideration, petitioner was given liberty to produce such other documents to make out his case.

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