TaxTMI 
TaxTMI 
2021 (4) TMI 609
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....Appeals), Madurai. Since recovery proceedings 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 vulne....
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....F.NO.1/6/69-ITCC], DATED 21-8-1969 1.One of the points that came up for 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 2....
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....ld normally be taken by Assessing Officer/TRO and his immediate superior. A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances; e.g., where the assessment order 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 ju....
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....the Assessing Officer will continue to review the situation to ensure that the conditions imposed are fulfilled by the assessee failing which the stay order would need to be withdrawn. ii. Where the assessee seeks stay of demand from the Tribunal, it should be strongly opposed. If the assessee presses his application, the CIT should direct 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 procedur....
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....ed before the assessing officer under Section 220(6) of the Act cannot be treated as a stay petition in the normal sense, as held by the Hon'ble Supreme Court in The Income Tax Officer, Cannanore vs. M.K. Mohammed Kunhi (AIR 1969 SC 430), the assessing officer while passing an order certainly exercises his power to stay the recovery of dues by not treating the assessee in default. 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 Corporati....
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....t relies upon financial difficulties, the authority concerned should briefly indicate whether the assessee is financially sound and viable to deposit the amount or the apprehension of the revenue of non recovery later. Thus warranting deposit. This of course, if the case is not otherwise sustainable on merits; (d) The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures 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 mus....
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....cipal Commissioner of Income Tax vs. LG Electronics India Pricate Limited). Based on the submission of the learned Additional Solicitor General, the Hon'ble Supreme Court clarified that in all cases arising under 220(6) of the Act, it will be open to the authorities on the facts of individual cases, to grant deposit orders of a lesser amount than 20% pending appeal. This was laid down by the Hon'ble Supreme Court since it was submitted that the administrative circular will not 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 th....
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....connected miscellaneous petitions are closed. ============= Document 1 F.No.404/72/93-ITCC Government of India Ministry of Finance Central Board of Direct Taxes (CBDT) Office Memorandum New Delhi, Dated: 29th February, 2016 Sub: Partial modification of Instruction No. 1914 dated 21.03.1996 to provide for guidelines for stay of demand at the first appeal stage. Instruction No. 1914 dated 21.03.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. 2. In part 'C' of the Instruction, it has been prescribed that a demand will be stayed only if there are valid reasons for doing so and that mere filing of an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. It has been further prescribed that while granting stay, the field officers may require the assessee to offer a suitable security (bank guarantee, etc.) and/ or require the assessee to pay a reasonable amount in lump sum or in instalments. 3. It has been reported that the field authorities often insist on payment of a very....
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....h disposed of by the Pr. CIT CIT within 2 weeks of the assessing officer m reference or the assessee filing such review, as the case may be. (E) In granting stay, the Assessing Officer may impose such conditions as he m He may, inter alia. (i) require an undertaking from the assessee that he will cooperate in the ea of appeal failing which the stay order will be cancelled; (ii) reserve the right to review the order passed after expiry of reasonable p months) or if the assessee has not cooperated in the early disposal of appeal, subsequent pronouncement by a higher appellate authority or court alters situations; S (iii) reserve the right to adjust refunds arising, if any, against the demand, to of the amount required for granting stay and subject to the provisions of sect These instructions guidelines may be immediately brought to the notice of working in your jurisdiction for proper compliance. सतà¥à¤¯à¤®à¥‡à¤µ जयते (A.K. Sinl Director (IT ncipal Chief Commissioners/ Principal Directors General of Income Tax/ Chief issioners/ Directors General of Income Tax. D: WEB COPY....