Stay of demand cannot require deposit where disputed additions are already covered in the assessee's favour by earlier decisions.

A deposit condition imposed while considering stay of demand under the Income-tax Act was not sustainable where the disputed additions were already covered in the assessee's favour by earlier tribunal decisions. CBDT Instruction No. 1914 recognises complete stay where the disputed demand concerns issues already decided in favour of the assessee by an appellate authority or court, and recovery in such circumstances was treated as unwarranted. The deposit condition was set aside and the Tribunal was directed to hear the matter expeditiously.

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Issues: Whether the condition directing deposit of Rs. 5 crores while dealing with stay of demand under section 254 of the Income-tax Act, 1961 was sustainable where the disputed additions were already covered in favour of the assessee by earlier tribunal decisions.

Analysis: The demand arose from additions which were stated to be covered in the assessee's favour in earlier years. CBDT Instruction No. 1914 dated 02.02.1993 recognises complete stay where the disputed demand relates to issues already decided in assessee's favour by an appellate authority or court. Recovery in respect of issues already decided in favour of the assessee was treated as unwarranted.

Conclusion: The deposit condition was set aside and the matter was directed to be heard expeditiously by the Tribunal.

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