Interim stay of tax demand granted pending reference application, with recovery restrained and adjournment safeguards imposed.

ITAT Delhi granted interim stay of the outstanding tax demand pending disposal of the reference application, finding the case suitable for protection on the facts presented. The Tribunal considered that the demand arose from rectification of assessment, that the assessee had already pursued further statutory remedies, and that recovery had caused financial hardship, including bank account attachment. It also took note of the company's consideration before BIFR. The stay was made conditional on the assessee not seeking adjournments that would delay the hearing of the reference application.

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Issues: Whether stay of the outstanding tax demand should be granted pending disposal of the reference application, and whether recovery steps could be restrained in the circumstances.

Analysis: The Tribunal noted that the demand arose from rectification of the assessment and that the assessee had already pursued further statutory remedies. It also considered the assessee's financial hardship, attachment of the bank account, and the fact that the company was under consideration before the Board for Industrial and Financial Reconstruction. On these facts, and in light of the materials placed before it, the Tribunal found the case fit for interim protection, subject to a safeguard against delay by the assessee in the hearing of the reference application.

Conclusion: Stay of the outstanding demand was granted in favour of the assessee until disposal of the reference application, subject to the condition regarding adjournments.

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