Court grants stay of demand for Co-operative Society, sets aside 15% disputed tax order. Favorable order, Assessing Officer's power considered.

The court allowed the writ petition filed by a Primary Agricultural Co-operative Credit Society Ltd., setting aside an order requiring payment of 15% of disputed tax for stay of collection. The court considered the petitioner's earlier favorable order, discretionary power of the Assessing Officer, and principles for granting interim orders. Finding that all parameters for granting a stay were met, the court granted a stay of demand for assessment years 2008-09, 2010-11, 2013-14 until the appeals are heard and disposed of. No costs were awarded, and the connected Miscellaneous Petition was closed.

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Issues involved:
Challenge to order imposing condition for payment of disputed tax as a condition for stay of collection, authority's power to direct payment, relevance of earlier favorable order, interpretation of circular on grant of stay, principles for granting interim order.

Analysis:
The petitioner, a Primary Agricultural Co-operative Credit Society Ltd., challenged an order by the first respondent imposing a condition to pay 15% of disputed tax for stay of collection for assessment years 2008-09, 2010-11, 2013-14. The court noted that the petitioner, being a Co-operative Society, cannot be bound by a concession made by an authorized representative during a personal hearing. The court decided to examine if the authority could direct such payment as a condition for stay.

In a previous assessment year 2009-10, the Assessing Officer ruled against the petitioner regarding the definition of Agricultural Credit Society under Section 80P(4) of the Income Tax Act. However, the Commissioner of Income Tax (Appeals) later accepted the petitioner's case, allowing the appeal and granting them the benefit under the Act. The court highlighted the relevance of this earlier favorable order in determining the current stay application.

The court referred to Circulars and instructions regarding the grant of stay and noted a modification in the instructions in 2016, giving discretionary power to the Assessing Officer. It emphasized that this discretionary power should be exercised judiciously and for valid reasons. The court discussed the cardinal principles for granting an interim order, including establishing a prima facie case, balance of convenience, and irreparable hardship.

Considering the petitioner's success in the earlier appeal, the court found that all three parameters for granting a stay were fulfilled in the petitioner's favor. Consequently, the court allowed the writ petition, set aside the impugned order, and granted a stay of demand for the assessment years 2008-09, 2010-11, 2013-14 until the appeals filed by the petitioner are heard and disposed of by the second respondent. No costs were awarded, and the connected Miscellaneous Petition was closed.

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