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Issues: Whether the High Court should interfere with the Tribunal's refusal to grant stay of recovery of tax demand and whether the petitioner was entitled to seek fresh stay relief in view of subsequent recovery of a substantial part of the demand.
Analysis: The Tribunal had examined the stay application on a prima facie basis and had addressed the principal objections relating to exemption under section 13A, the effect of delayed return filing, alleged cash donations, and the claim that expenditure should be allowed against income assessed as income from other sources. In stay proceedings, the Tribunal was required only to form a tentative view on the merits, hardship, and the likelihood of success, and the High Court found no manifest illegality or perversity in that prima facie assessment. The Court also held that the CBDT instruction contemplating a 20% deposit is only a guiding measure and does not create an inflexible entitlement or rule. At the same time, the Court noted that a substantial amount had since been recovered and that this change in circumstances could bear upon any further request for protection against recovery.
Conclusion: The High Court declined to interfere with the impugned order, while leaving the petitioner at liberty to move a fresh stay application before the Tribunal on the basis of subsequent developments.
Ratio Decidendi: In stay matters, the Tribunal's prima facie assessment will not be interfered with absent manifest illegality or perversity, and the 20% deposit guideline is not an inflexible condition, especially where later developments justify reconsideration of stay protection.
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