Prima facie case and CBDT stay guidelines justified deferment of disputed demand pending appeal.

A stay of demand arising from a prima facie adjustment under section 143(1)(a) was granted where the assessee showed a strong prima facie case, including a revised return under section 139(5) and a similar issue decided in its favour in the preceding year. The Tribunal also relied on CBDT instructions governing recovery of disputed demand, noting that the assessee should not be treated as a defaulter when the addition is under challenge. The stay was made subject to an undertaking not to alienate assets, and the appeal was listed out of turn.

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Issues: Whether stay of the demand arising from the intimation under section 143(1)(a) should be granted pending disposal of the appeal, having regard to the assessee's prima facie case, the filing of a revised return, and the CBDT circulars governing stay of disputed demand.

Analysis: The demand arose from a prima facie adjustment made in the intimation issued under section 143(1)(a). The assessee had filed a revised return under section 139(5), and the record showed that in the immediately preceding assessment year a similar issue had been decided in the assessee's favour. The Tribunal also noted that the demand in dispute was substantially higher than the returned income and that the CBDT instructions supported stay where disputed additions were under challenge and the assessee was not to be treated as a defaulter in such circumstances. On the facts, a prima facie case in favour of the assessee was made out.

Conclusion: Stay of the impugned demand was granted in favour of the assessee, subject to the filing of an undertaking regarding non-alienation of assets, and the appeal was directed to be posted out of turn.

Ratio Decidendi: Where an assessee demonstrates a prima facie case against a disputed demand raised through a prima facie adjustment and the governing CBDT instructions support deferment of recovery, stay of demand may be granted pending appeal.

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