10% of Demand Already Paid By Assessee, Madras High Court Allows Cooperative Bank's Writ Appeal By Waiving 10% Pre-Deposit

The Madras High Court has waived the condition of payment of a 10% pre-deposit as the 10% demand was already paid by the assessee.

The bench of Justice R. Mahadevan and Justice Mohammed Shaffiq have observed that the single judge, while taking note of the financial hardship expressed by the assessee, modified CIT (TDS)'s order and permitted the assessee to deposit the amount in three instalments. The aggrieved assessee filed writ appeals, whereby the Division Bench waived the payment of the balance 10% of the pre-deposit and directed the disposal of the appeals on merits within eight weeks after hearing the assessee.

The appellant filed statutory appeals before the Commissioner of Income Tax (TDS) against the orders of assessment passed by the Income Tax Officer (TDS Ward). While filing the appeals, the appellant could not remit the 20% of the amount towards the pre-deposit along with the appeals due to the extreme financial hardship confronted by them, and hence, they prayed for the respondent to adjudicate the appeals without the pre-deposit.

Notwithstanding the plea of the appellant, the second respondent passed the orders permitting the appellant to deposit 20% of the amount in two equal instalments, out of which the first installment shall be remitted before December 31, 2022, and the second installment on or before March 15, 2023.

Aggrieved by the orders, the appellant has filed the Writ Petitions before the Writ Court.

When the writ petitions were taken up for hearing, the learned judge concluded that the appellate authority has already given relief by directing the appellant to remit 20% of the amount towards the pre-deposit in two equal instalments, while at the same time, the plea of waiver made by the appellant cannot be considered. However, taking note of the financial hardship expressed by the appellant, the judge permitted the appellant to deposit the amount in three instalments. Aggrieved by the order of the judge, the appellant has come up with the writ appeals.

The appellant contended that the appellant bank is reeling under extreme financial doldrums, and that was the reason they approached the respondent with applications seeking waiver and also filed the writ petitions before the judge for the same reason. The Assessing Officer passed the orders of assessment mainly on the ground that the appellant did not upload Form Nos. 15G and 15H along with the returns. The customers of the appellant bank are agriculturists, and they are exempt from payment of income tax under Section 80P(2) of the Income Tax Act. While so, the assessment orders themselves are not legally sustainable, and therefore the appellant sought a waiver of the pre-deposit of 20% of the amount. If the appeals are entertained on merit, the appellant has every chance to convince the appellate authority about the legal flaw committed by the Assessing Officer and succeed in the appeals. Therefore, the appellant sought a direction from the appellate authority to entertain the appeals without a pre-deposit.

The department contended that remitting 20% of the amount arrived at by the Assessing Officer is a condition precedent for entertaining the statutory appeals. In fact, taking note of the financial difficulties portrayed by the appellant, the Appellate Authority permitted the appellant to remit the amount in two instalments, which was further modified by the learned judge to be paid in three instalments. Therefore, the appellant cannot seek a waiver of the pre-deposit, and they are liable to remit 20% of the amount for entertaining their appeals. If any further indulgence is shown, it would prejudice the respondents in as much as the orders of assessment have been passed by following the due process of law.

The court modified the orders passed by the judge in the writ petitions and directed the second respondent/appellate authority to entertain the appeals filed by the appellant without insisting on the balance of 10% of the amount towards pre-deposit.

Counsel For Petitioner: T.Ramesh

Counsel For Respondent: B.Ramaswamy

Case Title: The Salem Urban Co-operative Bank limited Versus The Income Tax Officer (TDS Ward)

Citation: 2024 LiveLaw (Mad) 122

Case No.: Writ Appeal Nos. 666 and 669 of 2024 and CMP Nos. 4615 and 4618 of 2024

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