Interim tax appeal relief granted where substantial demand was paid and balance secured by guarantee.

Where an assessee had already discharged a substantial part of the tax demand and offered security for the balance, the Madras High Court found no basis to refuse interim relief. It set aside the Tribunal's earlier order and directed that the appeal be heard on merits, subject to the assessee depositing the reduced amount within four weeks and furnishing a bank guarantee for the remaining tax. Recovery of penalty was stayed until the appeal was finally disposed of, giving partial relief while preserving the revenue's security.

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Issues: Whether the assessee was entitled to relief against the Tribunal's order by permitting the appeal to be heard on merits on compliance with a reduced tax deposit and security for the balance, and by suspending recovery of penalty till disposal of the appeal.

Analysis: The assessee had already paid more than half of the tax demand. The Court held that where substantial tax had been paid and security was offered for the remaining balance, there was no reason to deny the requested relief. The earlier orders were therefore set aside, and the Tribunal was directed to hear and decide the appeal on merits if the assessee deposited Rs. 7 lakhs within four weeks and furnished bank guarantee for the balance tax amount.

Conclusion: Relief was granted in part in favour of the assessee. The Tribunal's order was quashed, the appeal was directed to be heard on merits subject to compliance, and recovery of penalty was suspended until disposal of the appeal.

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