2016 (3) TMI 1412 - AT - Income Tax

Stay of the recovery of the impugned balance/tax amount and interest - As stated that the impugned demand has been made by the AO taking into consideration the expected profits from his business of distributorship of Sony Channels estimated for seven years whereas the assessee has actually acquired the ownership rights of the channels after 4 years - as stated that if the demand raised by the AO on estimation basis for 7 years is considered for 4 years as the assessee has obtained the ownership rights of the channels after 4 years, in that event, the resultant figure will result into refund due to the assessee - HELD THAT - We find that there is a prima-facie case in favour of the assessee. We therefore stay the recovery of the balance taxes including interest etc. relevant to the assessment year under consideration for a period of six months or till the disposal of the appeal of the assessee on merits, whichever is earlier. The appeal is fixed for an early hearing on 14.06.16 - assessee will not contribute in delaying the hearing of the appeal and will not take any unnecessary adjournments in default, the stay will be deemed to be vacated. Our above observations will not have any bearing on merits of the case at the time of its final disposal.

Summary

Issues: Stay of recovery of balance tax amount and interest based on adjustment of refund and likelihood of success in appeal.

The judgment by the Appellate Tribunal ITAT MUMBAI involved an application by the assessee seeking a stay on the recovery of the impugned balance tax amount and interest. The Tribunal had earlier directed the Assessing Officer (AO) to adjust the refund due to the assessee in relation to earlier assessment years. The assessee's representative highlighted that the net amount already paid by the assessee towards the taxes due constituted 56% of the principal tax amount and 36% of the total demand including interest. The representative argued that the impugned demand was based on an estimation of profits from the business of distributorship of Sony Channels for seven years, whereas the assessee had acquired ownership rights of the channels after four years. It was contended that if the demand raised by the AO for seven years was adjusted to four years, it would result in a refund due to the assessee.

Upon considering the submissions of the assessee's representative, the Tribunal found a prima facie case in favor of the assessee. Consequently, the Tribunal stayed the recovery of the balance taxes, including interest, relevant to the assessment year under consideration for a period of six months or until the disposal of the appeal on merits, whichever was earlier. The Tribunal also scheduled an early hearing for the appeal and emphasized that any delays caused by the assessee would result in the vacation of the stay. It was clarified that these observations would not impact the merits of the case during its final disposal.

In conclusion, the Tribunal granted a stay on the recovery of the balance tax amount and interest based on the adjustment of the refund and the likelihood of success in the appeal. The decision aimed to provide temporary relief to the assessee pending the final disposal of the appeal on its merits, ensuring a fair opportunity for the assessee to present their case without undue financial burden.