Court reduces petitioner's payment to 15% for stay pending appeal; timely compliance crucial

The court modified the impugned order, directing the petitioner to pay 15% of the demand within four weeks for obtaining a stay of the assessment order pending appeal, instead of the originally demanded 20%. Failure to comply within the stipulated time would automatically vacate the stay. The court emphasized the importance of the assessing officer exercising discretion judiciously and considering individual case circumstances.

---

---

Issues Involved:
1. Legality of the impugned order demanding 20% of the assessed tax before granting a stay.
2. Application of Section 220(6) of the Income Tax Act, 1961.
3. Consideration of grounds raised by the petitioner for stay without pre-deposit.
4. Discretionary power of the assessing officer in granting stay.
5. Reference to judicial precedents and departmental instructions.

Issue-wise Detailed Analysis:

1. Legality of the Impugned Order:
The petitioner challenged the impugned order dated 20.12.2021, which mandated the payment of 20% of the demand as a condition for stay during the pendency of the appeal. The petitioner argued that this condition was "illegal, arbitrary, against the principles of natural justice and devoid of merits."

2. Application of Section 220(6) of the Income Tax Act, 1961:
The petitioner invoked Section 220(6) of the Act, which allows the assessing officer to treat the assessee as not being in default pending appeal, subject to conditions. The petitioner contended that the assessing officer should have considered the grounds raised in the stay application and granted a stay without the pre-condition of paying 20% of the demand.

3. Consideration of Grounds Raised by the Petitioner:
The petitioner argued that the assessing officer did not properly consider the grounds raised in the application for stay. The petitioner cited judicial precedents, including the cases of "Queen Agencies" and "Mrs. Kannammal," to support the argument that the assessing officer should have exercised discretion more judiciously and considered a lesser amount than 20%.

4. Discretionary Power of the Assessing Officer:
The respondent's counsel argued that the assessing officer's discretion under Section 220(6) is guided by departmental instructions, which currently require a minimum payment of 20% of the demand. The court noted that the discretion must be exercised based on the circumstances of each case and is not bound by a hard and fast rule.

5. Reference to Judicial Precedents and Departmental Instructions:
The court referred to the Supreme Court judgment in "Principal Commissioner of Income Tax -Vs- LG Electronics India Private Limited," which clarified that the assessing officer could grant a stay with a lesser deposit than 20%. The court also considered departmental Instruction No.1914, which initially required a 50% deposit but was later reduced to 20%.

Judgment:
The court concluded that the assessing officer should have considered a lesser percentage than 20% given the circumstances and the quantum of demand (Rs. 12,86,72,780/-). Instead of remanding the matter for reconsideration, the court modified the impugned order, directing the petitioner to pay 15% of the demand within four weeks. On compliance, the stay of the assessment order would be granted until the disposal of the appeal. If the payment was not made within the stipulated time, the stay would be automatically vacated.

Conclusion:
The writ petition was disposed of with the modification that the petitioner/assessee shall pay 15% of the demand to obtain a stay of the assessment order pending the appeal. The court emphasized the need for the assessing officer to exercise discretion judiciously and consider the specific circumstances of each case.

---