2018 (9) TMI 541 - HC - Income Tax

Conditional stay of recovery - condition imposed to pay 20% of the disputed demand - entitled for exemption under Section 10(21) - Held that - Order passed by the first respondent directing the petitioner to pay 20% disputed demand, as a condition to grant the stay, cannot be sustained, in view of the fact that on the very same issue namely, entitlement of the petitioner for exemption under Section 10(21), already a decision of the Income Tax Appellate Tribunal had come in favour of the petitioner on 26.05.2006 in respect of assessment year 1997-1998 etc. It is seen that the Tribunal has found that the petitioner is entitled for exemption under Section 10(21). Even though, the learned counsel for the respondents contended that the said order of the Tribunal is sought to be challenged by way of appeal before this Court, the fact remains that till this date, the said order is in force and has not been stayed so far. 100% stay granted, pending disposal of the appeal filed by the petitioner before the Commissioner of Income Tax (Appeals).

Summary

Issues:
Challenging the conditional stay of recovery granted by the Assessing Officer till the disposal of the First Appeal before the Appellate Authority.

Analysis:
1. The petitioner filed three writ petitions challenging the order of the Assessing Officer granting conditional stay of recovery until the disposal of the First Appeal before the Appellate Authority. The petitioner's grievance was regarding the condition imposed to pay 20% of the disputed demand while granting the stay, arguing that unconditional stay should have been granted considering the favorable appeal decisions in previous years.

2. The Assessing Officer passed orders of assessment for the years 2010-2011, 2011-2012, and 2015-2016, rejecting the exemption claimed by the assessee under Section 10(21) of the Income Tax Act. The petitioner sought stay of recovery pending appeal, citing successful appeals in previous years on the same issue. The first respondent imposed the condition to pay 20% of the disputed demand for granting the stay, leading to the filing of writ petitions challenging this condition.

3. The court considered previous judgments where similar orders were challenged and stayed pending appeal. The petitioner argued for similar relief for the subject assessment years based on the favorable decision of the Income Tax Appellate Tribunal regarding exemption under Section 10(21) for the petitioner. The court noted that the Tribunal's decision in favor of the petitioner remained unchallenged and in force, justifying the petitioner's request for stay of recovery without the condition of paying 20% of the disputed demand.

4. The court found merit in the petitioner's argument and allowed the writ petition in part. The impugned orders of the Assessing Officer were modified to provide an order of stay of recovery proceedings pending the disposal of the appeal before the Commissioner of Income Tax (Appeals) for the assessment years 2010-2011, 2011-2012, and 2015-2016. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.