2017 (1) TMI 1596 - HC - Income Tax

Stay of demand - pre-deposit requirement - payment of 15% of the disputed demand - Held that - The decision of the Allahabad High Court in Jagran Prakashan ltd. v. Deputy Commissioner of Income Tax (TDS) 2012 (5) TMI 488 - ALLAHABAD HIGH COURT is relied on by the petitioners. The Appellate Authority has noticed the said judgment in its order. However more pertinent would be the words employed in the Circular which refers to a decision of the Hon ble Supreme Court or the jurisdictional High Court. In such circumstance based on the Allahabad High Court judgment no stay can be demanded as a matter of right by the assessee. Assessee in default - Tax Deduction at Source (TDS) having not been made for payment of interest in the deposits accepted by the petitioners nor Form Nos.15G/15H having been produced - Held that - assessee did not produce the documents before the Assessing Officer who has to verify it. As of now the assessee is in default and the orders cannot be interfered with. In such circumstance the assessee would be required to make payment of atleast 15% of the disputed demand within a period of three months from the date of receipt of a certified copy of this judgment failing which the recovery proceedings shall continue.

Summary

Issues:
1. Allegations of Tax Deduction at Source (TDS) non-compliance for multiple assessment years.
2. Interpretation of Office Memorandum regarding stay of demand in income tax cases.
3. Applicability of a decision of the Allahabad High Court on granting stay of demand.
4. Assessment of tax deductible and production of Form Nos.15G/15H.

Analysis:
1. The petitioners challenged interlocutory orders regarding TDS non-compliance for the assessment years 2013-14 to 2016-17. Allegations included failure to make TDS for interest payments and not producing Form Nos.15G/15H. The Assessing Officer demanded tax under Sections 201(1) and 201(1)(a) of the Income Tax Act, 1961. Petitioners later produced the required forms for all years.

2. The revenue relied on an Office Memorandum allowing stay of demand on payment of 15% of disputed amount until the first appeal's disposal. However, a blanket stay of demand is mandated under certain circumstances, such as a favorable decision from the Supreme Court or jurisdictional High Court. This raised a question of interpretation regarding the applicability of the memorandum.

3. The petitioners cited a decision of the Allahabad High Court in a similar case, arguing for a stay of demand based on that judgment. The Appellate Authority acknowledged the judgment but emphasized the requirement in the Circular for a decision from the Supreme Court or jurisdictional High Court. Consequently, the stay could not be demanded as a matter of right solely based on the Allahabad High Court decision.

4. In a specific case where a substantial amount was assessed as tax deductible, the petitioner claimed to have submitted Form Nos.15G/15H amounting to the total demand. However, the documents were not produced before the Assessing Officer for verification, resulting in default. The court directed the petitioner to pay at least 15% of the disputed demand within three months, failing which recovery proceedings would continue. Similar orders were issued for all related writ petitions with comparable facts and figures.

The judgment disposed of the writ petitions with directions for payment and highlighted the importance of complying with TDS requirements and producing necessary forms for verification to avoid default and recovery proceedings.