1992 (11) TMI 132 - AT - Income Tax

Tribunal Grants Stay on Tax Demand Pending Appeal: Key Considerations & Expedited Hearing Process

SMT. MADHU JAIN. Versus INCOME TAX OFFICER.

The Tribunal granted an interim stay on the demanded tax and interest amount of Rs. 13,76,343 pending appeal related to land acquisition compensation. The ... - Issues: Application for stay of demand of tax and interest amounting to Rs. 13,76,343 on the grounds of pending appeal related to land acquisition compensation.Analysis:The assessee, an individual, sought a stay of demand of Rs. 13,76,343 representing tax and interest, based on the acquisition of certain rights in a land acquisition case dating back to 1971. The land was acquired by the U.P. State Govt., and the assessee, along with another individual, purchased the rights of claim, leading to an enhancement in compensation awarded by the Tribunal. The assessee argued that the amount received was not taxable income for the year due to the pending appeal filed by the State of U.P. against the Tribunal's decision. The assessee relied on various legal precedents to support the claim that the right to receive enhanced compensation must accrue to the assessee before becoming liable to tax, irrespective of accounting methods. The assessee presented a trial balance to demonstrate the financial position, indicating that the received amounts were deposited and not in liquid cash, seeking an interim stay and expedited appeal hearing based on the legal principles established in prior judgments.The Department, represented by Smt. Surbhi Sinha, opposed the application for stay, arguing that the Supreme Court decision cited by the assessee was distinguishable based on the facts of the case. The Department contended that the financial position of the assessee, with amounts deposited with various persons, was irrelevant concerning the payment of due taxes. The Department insisted that a prima facie case had not been established by the assessee and requested either denial of stay or imposition of adequate security if granted.Upon considering the submissions from both parties, the Tribunal acknowledged the requirement for a prima facie case, assessment of the appellant's financial position, and the balance of convenience in deciding on the stay application. While refraining from expressing any view on the merits of the issue, the Tribunal noted that most of the received amounts were held in deposits with different firms. Consequently, the Tribunal ordered an expedited appeal hearing on a specified date, granted interim stay on the demanded amount of Rs. 13,76,343 until the appeal's resolution, and specified that failure to appear on the scheduled date would automatically vacate the stay and revert the appeal to its normal course for hearing. The order was directed to be served by Dasti for compliance.