2010 (11) TMI 974 - AT - Income Tax

Stay of realization of the total outstanding demand with interest - Jurisdiction of Tribunal to grant stay on realization of demand - assessment order has been framed which is in conformity with the directions of the Dispute Resolution Panel u/s 144C - HELD THAT - As the assessment order has been framed which is in conformity with the directions of the Dispute Resolution Panel u/s 144C of the I T Act and therefore, the assessee has filed appeal before the Tribunal directly. The assessee in the instant case has also not moved any application before the Revenue authorities seeking stay of realization of the outstanding demand and has directly approached the Tribunal for stay of realization of the demand. From the various decisions filed, it is found that different views are available regarding the approach before the Tribunal directly for stay of realization of demand. In view of the decision of the Allahabad Bench of the Tribunal in the case of BROSWEL PHARMACEUTICAL INC. VERSUS INCOME TAX OFFICER. 2004 (1) TMI 295 - ITAT ALLAHABAD it is not mandatory on the part of the assessee to move application before the Revenue Authorities for granting of stay of outstanding demand. There are no merit in the arguments advanced by the ld DR that the stay application should be rejected outright since the assessee has not moved any petition before the Revenue Authorities seeking stay of the demand. Thus, seeking stay before the lower authorities is directory and not mandatory. Thus, the assessee has a prima facie case. However, the assessee, in the instant case could not satisfactorily explain its financial hardship and the balance of convenience. The assessee is directed to deposit an amount of ₹ 1.50 crores before 31.12.2010 and the balance demand is stayed till the disposal of the appeal or for a period of six months from the date of this order whichever is earlier. Further, the request for early hearing is also granted subject to payment of the amount of 1.50 crores and the appeal is fixed for hearing on 13.1.2011. No fresh notice is required to be issued as the order itself is deemed to be service of notice of hearing to both sides. The Stay Application is partly allowed.

Summary

Issues involved:
1. Stay of realization of outstanding demand of Rs. 7,05,61,534/- including interest of Rs. 1,91,02,311/-
2. Whether the assessee is required to move application before the Revenue Authorities for stay of realization of demand before approaching the Tribunal directly.

Detailed Analysis:
Issue 1: The assessee sought a stay of the outstanding demand of Rs. 7,05,61,534/-, which included interest of Rs. 1,91,02,311/-. The assessee, a subsidiary of a global logistics provider, contested the assessment made by the Assessing Officer, claiming that the additions made were not sustainable based on various favorable decisions. The assessee directly filed an appeal before the ITAT, bypassing the Revenue Authorities. The Tribunal noted that the assessment order was in line with the directions of the Dispute Resolution Panel, and after considering arguments from both sides, directed the assessee to deposit Rs. 1.50 crores by a specified date and stayed the balance demand until the appeal's disposal or for six months, whichever is earlier.

Issue 2: The main contention revolved around whether the assessee was obligated to seek stay from the Revenue Authorities before approaching the Tribunal directly. The ld DR argued that the Tribunal usually insists on approaching the Commissioner for stay to allow the department to evaluate the situation and protect revenue interests. However, the Tribunal, referring to a decision by the Allahabad Bench, concluded that it was not mandatory for the assessee to seek stay from the Revenue Authorities first. The Tribunal found no merit in rejecting the stay application outright due to the absence of a petition before the Revenue Authorities. It held that seeking stay before lower authorities is directory, not mandatory, and allowed the stay application partially, directing the assessee to deposit a specified amount and granting an early hearing subject to the payment.

In conclusion, the ITAT Mumbai, comprising N. V. Vasudevan and R. K. Panda, partially allowed the Stay Application, directing the assessee to deposit a specific amount and granting an early hearing for the appeal. The judgment highlighted the discretion of the assessee in directly approaching the Tribunal for stay of realization of demand without prior application to the Revenue Authorities, emphasizing the prima facie case presented by the assessee while considering financial hardship and balance of convenience.