2018 (7) TMI 1411 - HC - Income Tax

Granting stay pending appeals - payment of 15% of the disputed tax demand pending appeals to enjoy stay of further recoveries - Held that - Some of the additions made by the Assessing Officer would be arguable. At the same time, several of the oppositions of the assessee to such additions also, going by the material that the AO has taken into consideration, cannot be discarded out of hand. Considering all we reduce the requirement of depositing the disputed tax dues to enable the assessee to enjoy stay pending appeals before the Commissioner to 7.5%. This would however be on a further condition that he shall offer immovable security for the remaining 7.5% to the satisfaction of the assessing authority. The order passed by the Principal Commissioner stands modified accordingly. Both these conditions shall be satisfied latest by 30.04.2018. The petitioner shall file an affidavit before the registry whether he would abide by these conditions and undertake to fulfill them within the time permitted. Such affidavit shall be filed latest by 16.03.2018. It is clarified that either if the petitioner does not file any such affidavit, or in such affidavit declares that he does not wish to be bound by such conditions or having in such affidavit agreed to fulfill the conditions, fails to do so by 30.04.2018, the relief granted under this order would stand automatically withdrawn and the impugned order of the Principal Commissioner would revive.

Summary

Issues:
Challenge to orders demanding payment of 15% of disputed tax for stay of recoveries pending appeals; Discretionary powers of Assessing Officer and Principal Commissioner in granting stay; Interpretation of CBDT circulars on stay of demand pending appeal.

Analysis:
1. The petitioner challenged separate orders by the Assessing Officer and the Principal Commissioner demanding 15% of disputed tax for stay of recoveries pending appeals. The petitioner, an individual, faced substantial tax demands for three assessment years totaling ?30 crores. The Assessing Officer required a 15% deposit for stay, which the Principal Commissioner upheld. The petitioner argued that the demands were exaggerated, and the condition was harsh and unreasonable, emphasizing the discretionary powers of the authorities in granting stays.

2. The respondent contended that the authorities had properly exercised their discretion, citing the petitioner's involvement in large cash transactions related to land deals. The issue of granting stay pending appeals is governed by CBDT circulars, particularly one requiring a 15% deposit unless exceptional circumstances warrant a different amount, which can be decided by the administrative Pr. CIT/CIT.

3. The High Court reviewed the circulars and found that the Principal Commissioner had not fully understood the discretion allowed by the CBDT guidelines. Considering the high tax demand and the pending appeals, the Court reduced the deposit requirement to 7.5% with a condition of offering immovable security for the remaining amount. The petitioner was given a deadline to comply, failing which the relief would be withdrawn.

4. The Court exercised caution not to influence the appellate authority's decision but indicated that some additions by the Assessing Officer were arguable, suggesting a balanced approach in reducing the deposit percentage. The modified order provided clarity on the conditions and timelines for compliance, ensuring the petitioner's accountability.

5. Ultimately, the petition was disposed of with the modified conditions, emphasizing the importance of complying with the Court's directives to maintain the granted relief. The judgment highlighted the need for a balanced approach in applying the CBDT circulars and considering the specific circumstances of each case in granting stays pending appeals.