Sushen Mohan Gupta Vs PCIT (Delhi High Court)
In the case of Sushen Mohan Gupta Vs Principal Commissioner of Income Tax (PCIT), the Delhi High Court dealt with the issue of the imposition of a substantial pre-deposit requirement for the stay of tax demands during the pendency of appeals. The case arose after the petitioner, Sushen Mohan Gupta, was subjected to a search and seizure operation by the Income Tax Department, leading to significant tax assessments for the assessment years (AYs) 2010-11 to 2020-21. The petitioner challenged the assessment orders and sought a stay on the tax demands, but his applications were initially denied due to the non-payment of 20% of the outstanding demand, as per the Central Board of Direct Taxes (CBDT) guidelines.
The Delhi High Court observed that the authorities, including the Principal Commissioner and the Assessing Officer (AO), failed to assess the merits of the case and the undue hardship that the petitioner might face due to the substantial demand. The court noted that the authorities merely followed the CBDT’s Office Memorandums (OMs) without considering the specific facts and circumstances of the case, leading to an unjust requirement for a 40% pre-deposit of the outstanding demand.
The petitioner argued that the assessment was arbitrary and unsustainable, referencing the Supreme Court’s judgment in Principal Commissioner of Income Tax v. Abhisar Buildwell Private Limited, which addressed similar issues. The petitioner also offered alternative means to secure the demand, such as pledging properties, but these were rejected by the authorities.
