2019 (3) TMI 392 - AT - Income Tax

Stay of demand - recovery proceedings - HELD THAT - We find that the assessee has an arguable case and as seen from the submissions of the DR itself, the assessee does not have funds to meet the outstanding demand of tax. However, we deem it fit and proper to grant stay of the recovery of the outstanding demand of tax for all the A.Ys under consideration subject to the condition that the assessee pays ₹ 3.00 crores on or before 15.03.2019. The assessee shall submit the copy of the challan and also file the paper books within time so that the matter can be heard on 27.03.2019 which is the date fixed for hearing. The stay shall be in force for a period of 180 days or till the disposal of the appeal, whichever is earlier.

Summary

Issues:
Stay of recovery of outstanding demand of tax for A.Ys 2007-08 to 2011-12.

Analysis:
The stay applications were filed by the assessee seeking relief from the recovery of the outstanding demand of tax for the assessment years 2007-08 to 2011-12, totaling &8377; 27,77,94,727. The demand primarily arose due to the disallowance of the claim of deduction under section 80IA of the Income Tax Act and certain expenditure. The counsel for the assessee argued that the assessee had only partially succeeded before the CIT (A) and was facing severe cash crunch as all bank accounts had been attached by the Department, rendering the assessee unable to continue business operations. Consequently, the counsel requested a stay on the recovery of the outstanding tax demand and the lifting of the bank account attachments.

The Departmental Representative opposed the grant of stay, highlighting that the assessee had not paid the outstanding tax demand even after the CIT (A) appeal decision. During survey proceedings, the Managing Director of the assessee company provided two post-dated cheques of &8377; 1.00 crore each, which were not honored despite ample time. Additionally, the Department had issued notices to corporate debtors of the assessee for attaching receivables, but the notices were returned due to unavailability of addresses. The Departmental Representative argued against granting the stay.

After considering the arguments and evidence presented, the Tribunal observed that the assessee had an arguable case and lacked the funds to meet the outstanding tax demand. Consequently, the Tribunal decided to grant a stay on the recovery of the outstanding tax demand for the relevant assessment years, subject to the condition that the assessee pays &8377; 3.00 crores by a specified date. The assessee was directed to provide proof of payment and submit necessary documents within the given timeline for the hearing scheduled later. The stay was granted for 180 days or until the appeal's disposal, whichever came first. Ultimately, the Tribunal allowed the stay applications of the assessee, providing relief in the matter.

In conclusion, the Tribunal granted the stay of recovery of the outstanding tax demand for the specified assessment years, considering the financial constraints faced by the assessee and the arguable nature of the case. The decision aimed to balance the interests of both parties while ensuring compliance with the necessary conditions for the stay to remain in effect until the appeal's resolution.