Baregundi Jagadhisha Yediyala Vs ITO (Karnataka High Court)
In the case of Baregundi Jagadhisha Yediyala vs. Income Tax Officer (Karnataka High Court), the petitioner challenged the Principal Commissioner of Income Tax (PCIT)’s order rejecting a stay petition. The PCIT had ordered the petitioner to pay 20% of the tax demand while the appeal was pending before the Commissioner of Income Tax (Appeals). The petitioner argued that the PCIT had failed to properly consider whether the demand was “unreasonably high pitched” or if the petitioner faced “genuine hardship,” as required by applicable circulars and previous court decisions, including the case of Flipkart India Private Limited v. Assistant Commissioner of Income Tax (2017).
The Karnataka High Court observed that the PCIT had not adequately addressed the issue of the unreasonably high demand or genuine hardship. While the PCIT noted that the petitioner did not face financial difficulties in paying the demand, this alone did not constitute a proper evaluation of hardship. Additionally, the High Court found that the PCIT had not considered whether the demand was unreasonably high in the context of the petitioner’s circumstances. As a result, the Court quashed the order and remanded the case back to the PCIT for reconsideration, directing that all relevant circulars and the Flipkart India ruling be applied. The petitioner was also allowed to submit additional documents to support their claim. Furthermore, the Court lifted the order of attachment on the petitioner’s assets, as it had not led to the appropriation of funds towards the demand.
