2019 (5) TMI 1658 - AT - Income Tax

Stay of demand - treating the sale consideration received on the sale of shares as unexplained credit based on the report of Directorate of Investigation Income Tax Department Kolkata on denying exemption u/s.10(38) - HELD THAT - The petitioner could not make out any case for undue financial hardship in paying the outstanding demand and further we do not find any prima facie case on the merits of the addition in favour of the assessee and therefore it is not a fit case for grant of absolute stay. The interest of the justice would be met if the petitioner is ordered to pay monthly installment of 10, 00, 000/- for each month and we order accordingly. The first installment should be paid on or before 31.05.2019 and the subsequent installment should be paid by 30th of each calendar month. The stay petition shall stand vacated in case the assessee seeks any adjournment from hearing of appeal without any just and reasonable cause. The appeal is posted for hearing on 28.08.2019.

Summary

Issues:
Stay of demand for Assessment Year 2012-13 based on unexplained credit from sale of shares treated as income escaping assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961.

Analysis:

1. Issue of Undue Financial Hardship:
The assessee filed a stay petition seeking relief from the demand of &8377; 37,40,152/- for the Assessment Year 2012-13. The contention was that the demand arose from the assessment order treating the sale consideration of shares as unexplained credit, denying exemption under section 10(38) of the Act. The assessee argued against the reopening of assessment, claiming no reason to believe that income had escaped assessment. The Tribunal noted that the petitioner failed to establish any case for undue financial hardship in paying the outstanding demand.

2. Prima Facie Case on Merits:
The Tribunal considered the merits of the addition in favor of the assessee. It was observed that there was no prima facie case supporting the assessee's position. The Tribunal found that the assessee did not have a strong case in its favor concerning the addition made by the assessing officer. Consequently, the Tribunal concluded that it was not a fit case for the grant of an absolute stay.

3. Decision on Stay Petition:
After hearing both parties, the Tribunal decided to partially allow the stay petition. While rejecting the request for absolute stay, the Tribunal ordered the petitioner to pay a monthly installment of &8377; 10,00,000/- for each month. The first installment was to be paid by a specified date, with subsequent installments due by the end of each calendar month. The Tribunal also warned that seeking adjournment from the appeal hearing without a justifiable cause would result in the vacation of the stay. The appeal was scheduled for a hearing on a specific date.

4. Final Verdict:
The Tribunal pronounced the order on the stay petition, partly allowing it on the specified terms. The decision aimed to balance the interests of both parties while ensuring compliance with the payment schedule set by the Tribunal. The order was issued on the 17th day of May, 2019, in Chennai.

This detailed analysis of the judgment provides a comprehensive overview of the issues addressed, the arguments presented by both sides, and the Tribunal's decision on the stay petition concerning the demand for the Assessment Year 2012-13.