2019 (3) TMI 1467 - HC - Income Tax

Stay petition - recovery proceedings - AO directing the petitioner to deposit 20% of the tax demand, upon which the rest of the recovery would be stayed - HELD THAT - No recovery pending the appeal before the appellate Commissioner could be carried out. This Court in the case of UTI Mutual Fund Vs. ITO 2012 (3) TMI 333 - BOMBAY HIGH COURT had observed that, If the Assessing Officer has taken a view contrary to what has been held in the preceding previous years without there being a material change in facts or law, that is a relevant consideration in deciding the application for stay. In the present case, prima facie, the Revenue is unable to point out any material change in the facts or law on the basis of which the Assessing Officer has made the additions. Under the circumstances, while allowing the Revenue to file reply and adjourning this group of petitions to 22nd March, 2019, we prevent the respondents from carrying out recoveries arising out of the orders of assessment.

Summary

Issues:
1. Stay on tax demand pending appeal before Commissioner (Appeals)
2. Disallowances and additions made by Assessing Officer
3. Request for full waiver of recovery rejected by Principal Commissioner
4. Prima facie assessment orders based on same additions previously deleted by appellate Commissioner
5. Lack of material change in facts or law for additions made by Assessing Officer

Analysis:
1. The petitions involved a common background where the petitioner, a trust, aimed to acquire Non-Performing Assets (NPAs) from banks and recover dues from defaulters. The Assessing Officer passed an order of assessment for the assessment year 2016-17, resulting in a tax demand of ?6.69 crores. The petitioner filed an appeal before the Commissioner (Appeals) and requested the Assessing Officer to keep the tax demand in abeyance. However, the Assessing Officer directed the petitioner to deposit 20% of the tax demand, leading to the petitioner seeking a full waiver of recovery from the Principal Commissioner, which was rejected, prompting the filing of the petition.

2. The counsel for the petitioner highlighted that the additions made by the Assessing Officer in the assessment orders were similar to those made in the hands of other trusts created under ARCIL. The appellate Commissioner had previously allowed the appeal of another assessee, deleting all additions made by the Assessing Officer. The Commissioner, in the impugned order, observed that the appellate Commissioner's decision had not been accepted by the Revenue, and no appeal could be filed due to low tax effect in other cases.

3. The Court noted that the assessment orders in the present case were seemingly based on the same additions and disallowances that had been previously deleted by the appellate Commissioner, which currently held sway. Citing a previous case, the Court emphasized the relevance of considering whether there had been a material change in facts or law when deciding on a stay application. The Revenue failed to demonstrate any such material change in the present case, indicating that recoveries pending the appeal should not proceed.

4. Consequently, the Court allowed the Revenue to file a reply and adjourned the petitions to a later date. In the interim, the respondents were prohibited from carrying out recoveries stemming from the assessment orders, given the lack of apparent justification for the additions made by the Assessing Officer without any material change in facts or law.