Madras High Court Waives 10% Pre-Deposit in Cooperative Bank's Writ Appeal Following Assessee's Payment of 10% of Demand

Madras High Court Waives 10% Pre-Deposit in Cooperative Bank's Writ Appeal Following Assessee's Payment of 10% of Demand

The Madras High Court has waived the requirement for a 10% pre-deposit since the assessee had already paid the 10% demand.

The Madras High Court bench, comprising Justices R. Mahadevan and Mohammed Shaffiq, has waived the requirement for a 10% pre-deposit, noting that the assessee had already paid the 10% demand. The single judge had previously acknowledged the financial difficulties faced by the assessee and modified the order of the CIT (TDS), allowing the payment to be made in three installments. Subsequently, the aggrieved assessee filed writ appeals, and the Division Bench waived the payment of the remaining 10% of the pre-deposit. The bench directed the appeals to be disposed of on their merits within eight weeks after hearing the assessee.

The appellant has filed statutory appeals with the Commissioner of Income Tax (TDS) challenging the assessment orders issued by the Income Tax Officer (TDS Ward). During the appeal filing process, the appellant faced extreme financial hardship, preventing them from remitting the required 20% pre-deposit alongside the appeals. Consequently, they requested that the respondent consider adjudicating the appeals without requiring a pre-deposit.

Despite the appellant's request, the second respondent issued orders allowing the appellant to make a 20% deposit in two equal instalments. The first installment was required to be paid before December 31, 2022, and the second installment by March 15, 2023.

Aggrieved by the orders, the appellant filed the writ petitions before the writ court.

During the hearing of the writ petitions, the judge noted that the appellate authority had already granted relief by directing the appellant to pay 20% of the amount as a pre-deposit in two equal instalments. Therefore, the plea for waiver made by the appellant could not be entertained. However, acknowledging the financial hardship faced by the appellant, the Judge allowed the appellant to deposit the amount in three instalments. Dissatisfied with the order of the judge, the appellant has now filed the present writ appeal.

The appellant reiterated that their bank is currently facing severe financial difficulties, which prompted them to approach the second respondent with applications seeking a waiver. They also filed writ petitions before the learned judge for the same reason. According to the appellant's counsel, the Assessing Officer based the assessment orders primarily on the grounds that the appellant did not submit Form Nos. 15G and 15H along with the returns. Additionally, it was stated that the customers of the appellant bank are agriculturists exempted from paying income tax under Section 80P(2) of the Income Tax Act.

Therefore, the assessment orders themselves are legally unsustainable, and the appellant sought a waiver of the 20% pre-deposit amount. The appellant further argued that if the appeals are heard on merit, he stands a strong chance of convincing the appellate authority regarding the legal flaws committed by the Assessing Officer, leading to success in the appeals. Hence, the learned counsel prayed for a directive to the appellate authority to entertain the appeals without requiring a pre-deposit.

The respondents' department vehemently opposed the relief sought in the writ appeals, arguing that remitting 20% of the amount determined by the Assessing Officer is a prerequisite for entertaining the statutory appeals. They pointed out that, despite the financial difficulties portrayed by the appellant, the Appellate Authority already permitted the appellant to remit the amount in two instalments, a decision further modified by the learned judge to be paid in three instalments.

Therefore, the department contended that the appellant cannot seek a waiver of the pre-deposit, emphasizing their obligation to remit 20% of the amount to proceed with their appeals. Granting any further indulgence, according to the department, would prejudice them, as the orders of assessment were issued following due legal process. Consequently, the respondents prayed for the dismissal of the appeals.

The court revised the orders issued by the judge in the writ petitions, instructing the second respondent/appellate authority to accept the appeals filed by the appellant without requiring the remaining 10% pre-deposit.

Additionally, the second respondent was directed to evaluate the appeals based on their merits and in compliance with the law, ensuring a fair opportunity for the appellant.