2017 (3) TMI 1259 - HC - Income Tax

Court stays demand of Rs. 29.13 crores pending appeal decision for assessment year 2014-15. Emphasizes adherence to Income Tax Act.

The Court ruled in favor of the petitioner, staying the demand of Rs. 29.13 crores until the CIT (A) decides on the appeal for the assessment year ... Stay of demand - directing the petitioner to deposit/pay 15% of the disputed demand so as to stay the demand till final disposal of its appeal before CIT (A)- Held that:- Having accepted 15% of deposit in respect of a stay under Section 220(6) of the Act for an earlier appeal cannot estop the petitioner from contending that they should be granted an unconditional stay. This is more particularly so as the issue now seems to be covered by the order of the Appellate Authority for the earlier assessment year in its favour. In the above view the issue arising in the appeal for the assessment year 2014-15 which is pending before the CIT (A) stands concluded as of now in favour of the petitioner – assessee by the order of the Appellate Authorities for earlier assessment year. It would therefore be appropriate in these facts to pass the following order : (i) The demand of ₹ 29.13 crores be stayed till such time as CIT (A) decides the petitioner's appeal for the assessment year 2014-15 and the communication of same to the petitioner; (ii) Petition disposed of in above terms. Issues:Challenge to order under Section 220(6) of the Income Tax Act, 1961 for deposit of 15% of disputed demand for stay of demand till appeal disposal.Analysis:Issue 1: Breach of settled law and CBDT guidelinesThe petitioner challenged the order directing deposit of 15% of disputed demand under Section 220(6) of the Act. The petitioner argued that the demand was in favor of the assessee by orders of the Appellate Authorities for earlier assessment years. The petitioner contended that the order was contrary to settled law and CBDT Instruction No.1914, which allows stay if the dispute is in favor of the assessee. The impugned order did not provide any justification for demanding 15% of the disputed demand.Issue 2: Compliance with judicial guidelinesThe Court referred to various cases, including KEC vs. B.R. Balakrishnan, to outline the factors to consider while deciding stay applications under Section 220(6) of the Act. The guidelines emphasized that if the assessed income far exceeds the returned income, or the issue is concluded by a higher forum, stay should be granted. Lack of financial hardship should not be the sole ground for deposit/payment of demands if the applicant has a strong case. The authority should balance the interests of the revenue and the assessee while deciding on stay applications.Issue 3: Conclusion in favor of the petitionerThe Court found that the issue for the assessment year 2014-15 was concluded in favor of the petitioner by orders of the Appellate Authorities for earlier assessment years. Therefore, the Court ordered the demand of Rs. 29.13 crores to be stayed until the CIT (A) decides the petitioner's appeal for the assessment year 2014-15. The petitioner's case was covered by the guidelines outlined in the previous cases, and the Court held that the petitioner should be granted an unconditional stay based on the favorable orders from the Appellate Authorities.In conclusion, the Court disposed of the petition by staying the demand till the CIT (A) decides on the appeal for the assessment year 2014-15, with no order as to costs. The judgment highlighted the importance of following established legal principles and guidelines while deciding on stay applications under the Income Tax Act, ensuring a fair balance between the interests of the revenue and the assessee.