3 weeks ago
Calcutta High Court bins conditional order in tax dispute
A company in India received a large tax bill from the government.
The company said a loan it received was real money, not hidden income.
A tax appeal officer dismissed the company's case without listening to its side.
A higher tax tribunal agreed this was unfair and gave the company another chance.
But the tribunal said the company first had to pay one lakh rupees as a cost.
The company did not have the money, so the big tax addition was automatically confirmed.
The company asked the Calcutta High Court for help.
The court said making justice depend on paying money is wrong.
The court lowered the payment to 25,000 rupees and cancelled the automatic confirmation.
Now the tax officer must hear the company's case again and explain the decision in writing.
The Calcutta High Court set aside a conditional Income Tax Appellate Tribunal order that would have automatically confirmed a Rs 1.23 crore tax addition against Ajitnath Suppliers Private Limited.
The high court said procedural law must remain a 'handmaid to justice rather than its mistress' and that costs cannot determine the survival of an appeal.
The ITAT had found the company was denied a proper hearing, but made a fresh hearing conditional on payment of Rs 1 lakh in costs.
The court reduced the cost to Rs 25,000, cancelled the automatic confirmation clause, and restored the case to the CIT(A) for a fresh decision on merits.
No coercive recovery of the Rs 1.81 crore tax demand can be made until the CIT(A) passes a reasoned, speaking order within 12 weeks.
- Who
- Calcutta High Court Justices Rajarshi Bharadwaj and Uday Kumar ruled on an appeal by Ajitnath Suppliers Private Limited against the Principal Commissioner of Income Tax-1, Kolkata.
- What
- The court struck down a conditional ITAT order and restored the Rs 1.23 crore tax dispute for a fresh hearing before the CIT(A).
- Where
- Calcutta High Court, Kolkata, India.
- When
- The hearing took place on August 7, 2025; the disputed ITAT order was passed on June 23, 2025.
- Why
- Because the tribunal made a fair hearing contingent on a Rs 1 lakh payment, which the court found subverted access to justice and violated natural justice.
Key facts
- Court
- Calcutta High Court
- Bench
- Justices Rajarshi Bharadwaj and Uday Kumar
- Appellant
- Ajitnath Suppliers Private Limited
- Disputed Addition
- Rs 1.23 crore unsecured loan added under Section 68 of the Income Tax Act
- Total Tax Demand
- Rs 1.81 crore
- Assessment Year
- 2018-19
- ITAT Order
- June 23, 2025 - conditional relief tied to Rs 1 lakh cost payment
- Revised Condition
- Rs 25,000 to Legal Aid Services within four weeks; reasoned CIT(A) order within 12 weeks
Quotes
Justices Rajarshi Bharadwaj and Uday Kumar
Supreme Court judges of the Calcutta High Court hearing the appeal
“"When that remedial restoration is shackled by an arbitrary monetary pre‑condition, coupled with a penal guillotine of ‘automatic confirmation’ upon default, the judicial process is subverted into an instrument of oppression."”
indianexpress.com
Sources
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