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HC stays I-T demand on Azim Premji Trustee Co

The Karnataka High Court has ordered a stay on an additional tax demand of Rs 5,258.14 crore raised by the income tax department on Azim Premji Trustee Company Pvt Ltd under section 143(1) of the Income Tax Act, 1961.

Justice SR Krishna Kumar clamped a stay on the tax demand through an interim order on December 16, till the next date of hearing on a petition from the assessee, and posted the case for January 19 for further hearing.

The judge, however, allowed the tax authorities to seek modification or vacation of the interim order.

The I-T department had sought an additional tax of Rs 5,258.14 crore for the assessment year 2021-22 by way of an intimation. The assessee sought quashing of the intimation and a restraint from adjustment of pending refunds against the impugned demand as well as a stay on the impugned demand.

The Azim Premji Trustee Company had paid Rs 282.48 crore towards taxes. The company is a sole trustee of Azim Premji Trust, a private discretionary trust.

An email seeking a comment from Azim Premji Foundation did not elicit a response till press time. Business data aggregation website Zauba Corp lists the foundation’s email as the contact address.

The assessee had filed “nil” return under the head ‘profits & gains of business or profession’, and mentioned Rs 660.29 crore under the head ‘income from other sources’. However, according to the petitioner, the I-T department’s Centralized Processing Centre raised the income under the two heads to Rs 10,409.56 crore with its own set of additions.

The petitioner contested the tax demand, arguing that it was unsustainable, ex-facie impermissible in law, unconstitutional and arbitrary, being violative of Articles 14, 19, 21 and 265 of the Constitution.

The assessee submitted to the court that such huge tax demand was unsustainable and impermissible in law since the intimation violated the principle of natural justice as no show-cause notice was issued in terms of the first proviso to section 143(1). That would have enabled it to furnish its reply as per the second proviso under the section, it argued.

The alternative appellate remedy was not helpful as the assessee would be required to pay 20% of the demand to seek a stay on recovery, said Amit Maheshwari, managing partner, Ashok Maheshwary & Associates, a chartered accountancy firm, quoting the assessee’s petition. STL News

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