Tribunal Grants Stay on Rs. 7.19 Cr Tax Demand, Citing Assessee's Financial Hardship

The Tribunal granted a stay on the recovery of an outstanding demand of Rs. 7,19,43,460 resulting from an assessment made by the Assessing Officer under the Income Tax Act for the assessment year 2009-10. The stay was allowed due to the financial difficulties faced by the assessee, a sick company referred to the BIFR, and the strong prima facie case presented by the counsel challenging the additions made by the AO. The Revenue was directed not to take coercive measures for recovery until the appeal was disposed of or six months from the order date, whichever was earlier.

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Issues:
Stay on recovery of outstanding demand arising from assessment made by the Assessing Officer u/s 143(3) r.w.s. 144C(1) of the Income Tax Act, 1961 for assessment year 2009-10.

Analysis:
The assessee sought a stay on the recovery of an outstanding demand of Rs. 7,19,43,460 resulting from an assessment by the Assessing Officer. The total demand included various additions made by the AO, such as transfer pricing adjustment, disallowance of legal and professional fees, and addition on account of unverified sundry creditors under section 68 of the Act. The assessee had already deposited Rs. 2,50,00,000, leaving a balance outstanding of Rs. 4,69,43,460. The counsel argued that the additions were unjustified, emphasizing that the provisions created for specific expenses liabilities did not fall under section 68. The counsel cited relevant judgments to support the argument, contending that even if section 68 applied, the set-off of business loss carried forward should have been allowed. The counsel also challenged other additions made, asserting a strong prima facie case for success in the Tribunal.

The counsel highlighted the financial difficulties faced by the assessee, being a sick company referred to the BIFR. The assessed income significantly differed from the income returned, with the assessment showing a positive figure due to additions made under section 68, while the business loss carried forward was not allowed to be set-off. Considering these circumstances, the Tribunal found merit in the assessee's case and granted a stay on the outstanding demand of Rs. 7,19,43,460. The Revenue was directed not to take coercive measures for recovery until the appeal was disposed of or six months from the order date, whichever was earlier. The appeal of the assessee was scheduled for an out-of-turn hearing on 10th November, 2014, before the regular Bench. The Stay Application was disposed of accordingly on 10th July, 2014.

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