Interim Stay on Penalty Recovery Pending Appeal: Income Tax Act Sections 271D & 271E

The Court granted an interim stay on penalty recovery pending the disposal of Appeals against penalty orders under Sections 271D and 271E of the Income Tax Act for the assessment year 2015-2016. The Appellate Authority was directed to review and decide on the Appeals within three months from the judgment date, maintaining the stay on penalty recovery until the Authority's decision is communicated to the petitioner. The petitioner was instructed to provide a copy of the Writ Petition and the judgment to the Appellate Authority for further action.

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Issues:
Challenge against orders passed in stay applications along with Appeals against penalty orders under Section 271D and 271E of the Income Tax Act during the assessment year 2015-2016.

Analysis:
The petitioner, a primary agricultural credit society, faced penalties for contravening Section 269SS and 269T of the Income Tax Act by accepting cash deposits exceeding Rs. 20,000. The penalties imposed amounted to Rs. 48,79,81,702 under Section 271D and Rs. 44,38,36,515 under Section 271E. The petitioner sought a stay on penalty recovery pending the disposal of Appeals against the penalty orders. The Appellate Authority directed the petitioner to pay Rs. 2.5 crores in each Appeal as a condition for granting stay on the remaining penalty amounts, which the petitioner contested due to its weak financial position.

Upon admission of the Writ Petition, the Court granted an interim stay on further proceedings related to the penalty orders. The Court acknowledged the Appellate Authority's discretion in requiring the petitioner to pay only Rs. 2.5 crores in each Appeal out of the total penalties imposed. However, considering the petitioner's financial state and the prolonged duration since filing the Appeals, the Court directed the Appellate Authority to decide on the Appeals within three months from the judgment date. The stay on penalty recovery was to continue until the Appellate Authority's decision is communicated to the petitioner.

In conclusion, the Writ Petition was disposed with instructions for the Appellate Authority to review and decide on the Appeals within three months, maintaining the stay on penalty recovery until the Authority's decision is communicated to the petitioner. The petitioner was directed to provide a copy of the Writ Petition and the judgment to the Appellate Authority for necessary action.

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