Mandatory compliance with section 13A conditions governs stay of recovery; belated returns do not satisfy the due-date requirement.

Stay of recovery in tax matters is discretionary and depends on a strong prima facie case with supporting equities, not routine hardship alone. On the exemption question, the third proviso to section 13A was read as requiring the return to be furnished by the due date under section 139(1); a return filed later under section 139(4) was treated as insufficient to satisfy that condition. The cash-receipts issue was also decided strictly, with donations received in cash above the prescribed limit treated as falling within the restrictive proviso. The note emphasises that the conditions for exemption under section 13A are mandatory and that recovery will not ordinarily be stayed absent merit and equity.

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Issues: (i) Whether the assessee made out a strong prima facie case for stay of recovery by contending that the return filed under section 139(4) satisfied the third proviso to section 13A and that cash receipts were not hit by clause (d) of the first proviso to section 13A; (ii) whether the recovery notice under section 226(3) warranted interference on the ground of hardship or lack of bona fides.

Issue (i): Whether the assessee made out a strong prima facie case for stay of recovery by contending that the return filed under section 139(4) satisfied the third proviso to section 13A and that cash receipts were not hit by clause (d) of the first proviso to section 13A.

Analysis: The stay jurisdiction was held to be discretionary and exercisable only where a strong prima facie case and supporting equities are shown. On the merits, the third proviso to section 13A was construed as requiring furnishing of the return on or before the due date under section 139(1), and not within the extended time under section 139(4). The return filed after the due date therefore did not satisfy the statutory condition. On the cash receipts issue, the sums were treated as donations received in cash above the prescribed limit, and the distinction sought between donations and voluntary contributions was not accepted for defeating clause (d) of the first proviso to section 13A. The conditions in section 13A were held to be mandatory and strictly enforceable.

Conclusion: The assessee did not establish a strong prima facie case on merits, and the statutory exemption was prima facie unavailable.

Issue (ii): Whether the recovery notice under section 226(3) warranted interference on the ground of hardship or lack of bona fides.

Analysis: The power to grant stay was recognised as incidental to appellate jurisdiction, but not as a matter of routine. The chronology of the proceedings did not show undue haste or mala fides on the part of the Revenue. The assessee had earlier been offered conditional protection, had not pursued available remedies promptly, and had also not demonstrated sufficient urgency in the pending appeal. The balance of convenience and public revenue considerations did not justify suspension of recovery.

Conclusion: No interference with the recovery notice was warranted on the grounds urged.

Final Conclusion: The application for stay failed on both merit and equity, and the recovery process was allowed to continue pending the appeal.

Ratio Decidendi: For exemption under section 13A, compliance with the prescribed conditions is mandatory, and a return filed after the due date under section 139(1) does not satisfy the third proviso merely because section 139(4) permits belated filing.

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