2017 (3) TMI 735 - HC - Income Tax

Stay of demand - AO has not given due consideration to the top line credit adjustment - Held that - The impugned order dated 22.02.2017, undoubtedly, has given effect to the OM, relied upon by the petitioner in the sense that the demand has been stayed subject to substantial relief of 85%. However, the circular as noticed earlier and highlighted by the petitioner also carved out an expenditure in regard to certain covered matters or in regard to other contentious issues, the condition of 15% pre-deposit can be relaxed. The petitioner contentions in this regard are three fold. The impugned order does not disclose whether the AO had an occasion to consider or examine these issues. In these circumstances, the Court is of the opinion that the AO should consider and make an order under Section 220(6) of the Act specifically dealing with the three arguments urged by the petitioner and reflected in this order. The AO shall pass appropriate orders in this regard, after giving such necessary opportunity to the petitioner as he deems expedient in the circumstances, with the approval of the competent officer i.e. the concerned Principal CIT/Commissioner of Income Tax (Appeals), within two weeks from today.

Summary

Issues:
1. Stay of recovery of demands for Assessment Year 2014-15.
2. Interpretation of Central Board of Direct Taxes Office Memorandum.
3. Consideration of various adjustments and refunds by Assessing Officer.
4. Exercise of discretion by Assessing Officer under Section 220(6) of the Income Tax Act, 1961.

Stay of Recovery of Demands for Assessment Year 2014-15:
The petitioner sought relief from the order of the Assessing Officer (AO) dated 22.02.2017, which granted a stay of recovery of demands for Assessment Year 2014-15 subject to a specific deposit. The petitioner argued that it was entitled to a higher relief based on the Central Board of Direct Taxes Office Memorandum dated 29.02.2016, which allowed for a stay of demand exceeding 15% under certain exceptions. The court noted that the AO did not consider crucial aspects such as top line credit adjustment, license fee adjustment, and pending refunds. It directed the AO to reevaluate the matter and make a decision within two weeks, with the approval of the competent officer.

Interpretation of Central Board of Direct Taxes Office Memorandum:
The court analyzed the contentions raised by the petitioner regarding the interpretation of the Central Board of Direct Taxes Office Memorandum. It emphasized that the AO should have considered the exceptions provided in the memorandum, especially in cases where the demand exceeds 15%. The court directed the AO to specifically address the arguments presented by the petitioner and make a decision in accordance with the provisions of the memorandum.

Consideration of Various Adjustments and Refunds by Assessing Officer:
The petitioner highlighted various adjustments, including top line credit adjustment, license fee adjustment, and pending refunds, which were not adequately considered by the Assessing Officer. The court acknowledged these contentions and instructed the AO to review these aspects while making a decision under Section 220(6) of the Income Tax Act, 1961. It emphasized the importance of a comprehensive assessment taking into account all relevant financial details.

Exercise of Discretion by Assessing Officer under Section 220(6) of the Income Tax Act, 1961:
The court deliberated on the exercise of discretion by the Assessing Officer under Section 220(6) of the Income Tax Act, 1961. It noted that the AO should have given due consideration to the arguments raised by the petitioner and the provisions of the Central Board of Direct Taxes Office Memorandum. The court directed the AO to pass appropriate orders within two weeks, ensuring a fair assessment of the petitioner's claims and financial circumstances. Additionally, it ordered that no coercive measures be taken by the revenue until a new decision is made by the AO.