Petitioner instructed to deposit 50% disputed tax, provide security, and stay recovery pending appeal.

The court directed the petitioner to deposit 50% of the disputed tax with the Department by a specified date and provide security for the remaining 50%. An undertaking confirming compliance was required, and a stay against recovery was granted until the appeal's disposal.

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Issues:
Challenge to order refusing stay against tax recovery pending appeal.

Analysis:
The petitioner challenged an order refusing stay against tax recovery pending appeal. The petitioner, an individual, filed a return of income for the Assessment Year 2016-2017, declaring total income and claiming a set-off of loss recoverable from a share-broker. The Assessing Officer rejected the set-off claim, resulting in a tax demand. The petitioner appealed the assessment order and sought a stay on tax recovery, which was initially refused. The High Court directed the Principal Commissioner to decide on the stay application. The Principal Commissioner, in the impugned order, directed the petitioner to deposit the entire tax amount pending appeal, leading to the current petition.

The court analyzed the petitioner's transactions, noting that they were under SEBI proceedings with a prima facie opinion of contrived loss. The SEBI highlighted specific instances of fund movements and observed deliberate losses/profits through reversal trades, indicating non-genuine activities. The court found that the petitioner's offer to pay 20% of the disputed tax was insufficient due to the serious nature of the SEBI findings. However, requiring the full tax amount pending appeal was deemed harsh. The court referred to a CBDT circular providing discretion to authorities in such cases, emphasizing the need for just exercise of discretion.

Considering the circumstances, the court directed the petitioner to deposit 50% of the disputed tax with the Department, including amounts already paid, by a specified date. For the remaining 50%, the petitioner was to provide security to the Assessing Officer's satisfaction. Additionally, the petitioner had to file an undertaking confirming compliance with these conditions. Upon filing the undertaking, a stay against recovery was granted until the appeal's disposal. The petition was disposed of based on these directions.

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