TaxTMI 
TaxTMI 
2021 (4) TMI 609
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....gs were initiated, the petitioner submitted an application before the first respondent under Section 220(6) of the Income Tax Act, 1961 so that the petitioner may not be treated as an assessee in default till the disposal of the appeal filed by the appellate authority. The first respondent directed the petitioner to pay 20% of the demand immediately for stay and informed the petitioner that in the event of non-compliance, necessary follow up action will be taken. Questioning the communication dated 06.02.2020, this writ petition came to be filed. 2.The learned counsel for the petitioner reiterated all the contentions set out in the affidavit filed in support of the writ petition. Her foremost contention is that the first respondent had erred in not taking into account the Office Memorandum bearing F.No.1/6/69/-ITCC, dated 21.08.1969. Relying on the decision of the Madras High Court reported in [2019] 413 ITR 390(Mad) (Kannammal vs. Income Tax Officer, Ward 1(1), Tirupur), she contended that the parameters laid down for consideration of a stay application have also been totally ignored. She also contended that the impugned order is vulnerable in view of its non-speaking nature. 3.....
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....consideration in the 8th Meeting of the Informal Consultative Committee was that income-tax assessments were often arbitrarily pitched at higher figures and that the collection of disputed demand as a result thereof was also not stayed in spite of the specific provision in the matter in s. 220(6) of the IT Act, 1961. 2. The then Deputy Prime Minister had observed as under: "......... Where the income determined on assessment was substantially higher than the returned income, say twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeal provided there were no lapses on the part of the assessees." 3.The Board desire that the above observations may be brought to the notice of all the Income-tax Officers working under you and the powers of stay of recovery in such cases up to the stage of first appeal may be exercised by the Inspecting Assistant Commissioner/Commissioner of Income-tax." There was a modification of the same vide Instruction No. 1914 dated 02.12.1993. It reads as follows : "SECTION 220 OF THE INCOME TAX ACT, 1961 - COLLECTION AND RECOVERY OF TAX WHEN TAX PAYABLE AND WHEN ASSESSEE DEEMED IN DE....
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....er appears to be unreasonably high-pitched or where genuine hardship is likely to be caused to the assessee. The higher authorities should discourage the assessee from filing review petitions before them as a matter of routine or in a frivolous manner to gain time for withholding payment of taxes. C.GUIDELINES FOR STAYING DEMAND: i.A demand will be stayed only if there are valid reasons for doing so. Mere filing an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. A few illustrative situations where stay could be granted are: (a)If the demand in dispute relates to issues that have been decided in assessee's favour by an appellate authority or court earlier ; or (b)if the demand in dispute has arisen because the Assessing Officer had adopted an interpretation of law in respect of which there exist conflicting decisions of one or more High Courts (not of the High Court under whose jurisdiction the Assessing Officer is working); (c)if the High Court having jurisdiction has adopted a contrary interpretation but the Department has not accepted that judgment. It is clarified that in these situations also, stay may be grant....
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....t the departmental representative to request that the appeal be posted within a month so that Tribunal's order on the appeal can be known within two months. iii. Appeal effects will have to be given within 2 weeks from the receipt of the appellate order. Similarly, rectification application should be decided within 2 weeks of the receipt thereof, instances where there is undue delay in giving effect to appellate orders, or in deciding rectification applications, should be dealt with very strictly by the CCITs/CITs. 3. The Board desires that appropriate action is taken in the matter of recovery in accordance with the above procedure. The Assessing Officer or the TRO, as the case may be, and his immediate superior officer shall be held responsible for ensuring compliance with these instructions. 4.This procedure would apply mutatis mutandis to demands created under other direct taxes enactments also." The said instructions were however modified by Office Memorandum (F.No.404/72/93-ITCC), dated 29.02.2016 & 31.07.2017. They read as under : 6.The learned counsel for the petitioner took me through the decisions of the Delhi High Court reported in [2008] 307 ITR 103 (Delhi) (....
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....efault. That is why, in Kannammal's case, the learned Judge (Dr.Justice Anita Sumanth) held as follows : "7.The parameters to be taken into account in considering the grant of stay of disputed demand are well settled-the existence of a prima facie case, financial stringency and the balance of convenience. 'Financial stringency' would include within its ambit the question of 'irreparable injury' and 'undue hardship' as well. It is only upon an application of the three factors as aforesaid that the assessing officer can exercise discretion for the grant or rejection, wholly or in part, of a request for stay of disputed demand." 9.I may also add that the Division Bench of the Bombay High Court in the decision reported in 2019 SCC OnLine Bom 8430(General Insurance Corporation of India vs. Assistant Commissioner of Income Tax Circle 3(1)(2) and Others) has also laid down the principles which the assessing officer must bear in mind while exercising his jurisdiction under Section 220(6) of the Act. Paragraph No.10 of the said order reads as follows : "10.Before dealing with the rival submissions it would be useful to set out the parameters to be borne in m....
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.... may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order (e) In exercising the powers of stay, the Authority should always bear in mind that as a quasi judicial authority it is vested with the public duty of protecting the interest of the Revenue while at the same time balancing the need to mitigate hardship to the assessee. Though the assessing officer has made an assessment, he must objectively decide the application for stay considering that an appeal lies against his order; the application for stay must be considered from all its facets and the order should be passed, balancing the interest of the assessee with the protection of the Revenue. The above guidelines are only illustrative and the authority concerned would have to have exercise his discretion in matters of stay on the facts of the case before him. Keeping in view of the above broad parameters we shall now examine whether the authorities have properly exercised their jurisdiction." 10.As r....
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....ot operate as a fetter on the Commissioner since he is a quasi-judicial authority. Since the Assessing Officer is exercising quasi-judicial power by virtue of Section 220(6) of the Act, the implication of the clarification of the legal position by the Hon'ble Supreme Court is that the assessing officer can grant deposit orders of a lesser amount than 20% pending appeal without making reference to the administrative Pr.CIT/CIT. Reference of course has to be made if he is of the view that deposit order of a higher amount than 20% pending appeal is warranted. 13.The order impugned in this writ petition is liable to be set aside as it is absolutely non-speaking. It is true that as pointed out by the learned standing counsel, the stay petition filed by the petitioner is equally bald and bereft of details. But as observed in Kannammal's case, the assessing officer ought to be pro-active. The statutory provision will come into play only if an appeal has been filed before the appellate authority. The case of the assessee would definitely be projected in the appeal memorandum. Therefore, in the light of the stand taken in the appeal memorandum, the Assessing Officer can pass order ....