Legal Case Summary

Case Details
Case ID 2671ba34-1ca2-409d-88b8-3d9a4c301962
Body View case body.
Case Number WP(C) No. 5665 OF 2008 AND CM No. 10823 OF 2008
Decision Date Aug 07, 2008
Hearing Date
Decision The Delhi High Court held that the demand notice issued by the Deputy Commissioner of Income Tax should be kept in abeyance until the jurisdictional Commissioner decides the pending stay application. The court observed that the assessed income was approximately 74 times the returned income, which fell within the definition of 'unreasonably high pitched' as per the CBDT Instruction No. 1914 of 1993. The court emphasized that the petitioner could continue day-to-day business operations but could not withdraw any funds for purposes other than statutory liabilities from the bank account affected by the recovery notice.
Summary In the case of Soul v. Deputy Commissioner of Income Tax, the Delhi High Court addressed the issue of a demand notice issued under section 226(3) of the Income-tax Act, 1961. The petitioner, Soul, contested the notice on the grounds that the assessed income was excessively high compared to the returned income. The court deliberated on the implications of Instruction No. 1914, which superseded previous guidelines regarding tax recovery, and noted that the circumstances warranted a stay of the recovery action. The decision clarified that while the petitioner could operate its business, restrictions on fund withdrawal were necessary until a resolution was reached regarding the appeal against the assessment order. This case highlights the judicial approach to tax recovery procedures and the standards for determining excessive assessments, serving as a significant reference for similar future cases.
Court Delhi High Court
Entities Involved Not available
Judges Badar Durrez Ahmed, Rajiv Shakdher
Lawyers Kannan Kapur, R.D. Jolly
Petitioners Soul
Respondents Deputy Commissioner of Income Tax
Citations 2010 SLD 1756, (2010) 323 ITR 305, (2008) 173 TAXMAN 468
Other Citations Valvoline Cummins Ltd. v. Dy. CIT [2008] 171 Taxman 241
Laws Involved Income-tax Act, 1961
Sections 226, 222