1996 (3) TMI 561 - AT - Income Tax

Summary

Issues:
1. Stay application for outstanding tax demand of Rs. 5,48,726.
2. Validity of order under section 154 for rectification of assessment.
3. Financial hardship faced by the assessee.
4. Jurisdiction of the Tribunal to grant stay.
5. Interpretation of provisions of Sick Industrial Companies (Special Provisions) Act, 1985.
6. Conditions for granting stay.

Analysis:

Issue 1: Stay Application
The assessee filed a stay application for the outstanding tax demand of Rs. 5,48,726 out of a total demand of Rs. 6,48,725. The application was made in light of the rectification order under section 154 and financial difficulties faced by the assessee.

Issue 2: Validity of Order under Section 154
The learned counsel argued that the order under section 154, which rectified the assessment, was improper as it was made after the regular assessment. The counsel contended that the rectification was not valid as it pertained to an adjustment made under section 143(1)(a) before the regular assessment.

Issue 3: Financial Hardship
The assessee highlighted financial hardship, with their bank account being attached. The counsel referred to the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies Act, emphasizing the need for permission before any recovery action. The counsel also cited relevant case law to support the plea for stay due to financial constraints.

Issue 4: Jurisdiction of the Tribunal
The Departmental Representative opposed the stay application, arguing that since the order under section 154 was confirmed, no stay could be granted. The representative referred to conditions that need to be satisfied for granting a stay and emphasized that no appeal was pending before the Tribunal.

Issue 5: Interpretation of Sick Industrial Companies Act
The Tribunal considered the provisions of the Sick Industrial Companies Act, 1985, and relevant case law cited by both parties. The Tribunal also reviewed the order of the Delhi High Court related to a writ petition filed by the assessee.

Issue 6: Conditions for Granting Stay
After evaluating all arguments and relevant provisions, the Tribunal granted the stay of the outstanding demand of Rs. 5,48,726 subject to the condition that the assessee would not seek adjournment of the reference application. The stay was contingent on the disposal of the reference application filed by the assessee.

In conclusion, the Tribunal allowed the stay application, considering the financial hardship faced by the assessee and the pending reference application. The decision was made in light of the provisions of the Sick Industrial Companies Act and relevant legal principles governing the grant of stay in tax matters.