2019 (12) TMI 1452 - AT - Income Tax

Stay petition - as submitted that around 20% of the demand raised is already paid to Revenue and prayers are made to stay outstanding demand of tax and interest - HELD THAT - As assessee placed before the Bench, the challans for payment of taxes to the tune of ₹ 9.26 crores post assessment framed by the AO , which challans are now placed in the stay petition file. The assessee has however not filed any financial statements / Balance sheet etc before the Bench to prove financial difficulties. The learned DR objected to grant of stay of outstanding demand of income-tax and interest thereon. After hearing both the parties and keeping in view entire factual matrix of the case and as per detailed discussions above, we are inclined to grant early hearing of the appeal which is now fixed for hearing before Regular Bench on 13th January 2020 and till then we direct Revenue not to take coercive action against the assessee for recovery of outstanding demand. Registry is directed to issue notice to both the parties fixing appeal .

Issues:
1. Stay of demand of disputed tax and interest amount.
2. Surrender of undeclared income and non-disclosure in return of income.
3. Allegations of infringement of Section 2(22)(e) of the Income-tax Act, 1961.
4. Treatment of long term capital gain as bogus/sham and exemption under Section 10(38).
5. Payment of outstanding demand and request for stay.

Stay of Demand:
The assessee filed a Stay Petition seeking a stay of demand of disputed tax and interest amount. The background of the case involved the assessee making a surrender of undeclared income during a search conducted by the Revenue. The assessee claimed that the surrender was made on behalf of a company and not in his individual capacity. The Revenue authorities rejected the contentions raised by the assessee and made additions to the tune of the surrendered income. The Tribunal granted early hearing of the appeal and directed the Revenue not to take coercive action until the appeal hearing in January 2020.

Surrender of Undeclared Income:
The assessee surrendered an amount as undeclared income during a search operation, but did not disclose it in the return of income filed later. The authorities observed discrepancies in the processing of gold and held that the assessee cannot retract from his initial statement. The assessee argued that the non-disclosure in the return can be considered a retraction, claiming the surrender was made on behalf of a company. The Tribunal did not comment on the merits of the issue but granted early hearing of the appeal.

Allegations of Infringement:
The Revenue made additions under Section 2(22)(e) alleging that money advanced to the assessee's concern originated from a company in which the assessee held equity. The Tribunal noted that the authorities below decided against the assessee, leading to additions in the hands of the assessee. The assessee claimed that the transactions were genuine and requested to argue the case at the earliest.

Treatment of Long Term Capital Gain:
The Revenue treated long term capital gain claimed as exempt under Section 10(38) as bogus/sham and brought it to tax. The authorities held after detailed investigation that the claim was not genuine. The assessee argued that the gain was legitimate and raised concerns about the adherence to principles of natural justice. The Tribunal granted early hearing of the appeal without commenting on the merits.

Payment of Outstanding Demand:
The assessee had paid a portion of the outstanding demand and requested a stay on the remaining amount. The Tribunal noted the payment made and directed the Revenue not to take coercive action until the appeal hearing. The assessee did not provide financial statements to prove financial difficulties, and the Tribunal disposed of the Stay Petition accordingly.

This detailed analysis covers the issues of stay of demand, surrender of undeclared income, allegations of infringement, treatment of long term capital gain, and payment of outstanding demand as addressed in the judgment delivered by the Appellate Tribunal ITAT Chennai.

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