2019 (4) TMI 1377 - AT - Income Tax

Stay on the recovery of the outstanding demand - additions made on account of unexplained cash credit u/s 68 and interest on such unexplained cash credit - HELD THAT - We are inclined to grant a stay of outstanding demand subject to the deposit of ₹ 20,00,000/- towards the outstanding demand as discussed above in two installments. The first installment of ₹ 10 Lacs shall be deposited on or before 28th February 2019 and the remaining installment of ₹ 10,00,000/- will be deposited on or before 15th March 2019. It is also important to note that after making the aforesaid payment of ₹ 20 lacs the total payment of the outstanding demand shall constitute 52.06% of the total demand including interest. Accordingly, we direct that the said outstanding demand be kept in abeyance till the disposal of the appeal by the Tribunal or for six months whichever is earlier. We also direct the registry to fix the appeal of the assessee for hearing out of turn on 12th April 2019, which is a date agreed by the ld Representative of both the sides as convenient to them. The assessee shall not seek any adjournment of the case on the date of hearing and if it does so, the bench hearing the appeal of the assessee will be at liberty to revoke this order granting the stay of recovery of the outstanding demand.

Summary

Issues involved:
Stay on recovery of outstanding demand amounting to ?55,38,956 under section 143(3) of the Income Tax Act, 1961 - Unexplained cash credit u/s 68 of the Act - Granting a stay subject to deposit of ?20,00,000 towards the outstanding demand - Keeping outstanding demand in abeyance till disposal of appeal by the Tribunal or for six months - Fixing the appeal for an expedited hearing - Consequences of seeking adjournment during the appeal hearing.

Analysis:

The assessee, a partnership firm engaged in property development and civil contracting, sought a stay on the recovery of an outstanding demand of ?55,38,956 resulting from an assessment under section 143(3) of the Income Tax Act. The additions made by the Assessing Officer (AO) were related to unexplained cash credit under section 68 of the Act amounting to ?1,79,29,883 and interest on such credit totaling ?3,01,277. The AO and the Commissioner of Income Tax (Appeals) confirmed these additions despite the submission of supporting documents by the assessee during the proceedings.

During the hearing, the assessee's representative presented various pieces of evidence, including PAN copies, account confirmations, bank statements, and income tax returns, to substantiate the cash credits. Additionally, the representative highlighted the significant decline in the assessee's business and provided balance sheets, profit & loss accounts, and bank statements to support the claim of financial hardship. The assessee's lack of liquid funds further emphasized the potential genuine hardship if coercive actions were taken for recovery.

After considering the arguments from both sides, the Tribunal decided to grant a stay on the outstanding demand subject to the deposit of ?20,00,000 in two installments. The first installment of ?10,00,000 was to be deposited by 28th February 2019, with the remaining amount due by 15th March 2019. This payment would constitute 52.06% of the total demand, including interest. The Tribunal ordered that the outstanding demand be kept in abeyance until the appeal's disposal or for six months, whichever is earlier, and scheduled an expedited hearing for 12th April 2019.

Furthermore, the Tribunal warned that the assessee should not seek adjournment during the appeal hearing. Any adjournment request would empower the bench to revoke the stay order on the recovery of the outstanding demand. Ultimately, the Tribunal allowed the Stay Petition filed by the assessee, providing detailed instructions and timelines for compliance.

This comprehensive analysis outlines the key issues addressed in the judgment, including the grounds for seeking a stay, the basis of additions made by the tax authorities, the evidence presented by the assessee, the financial situation of the assessee, the conditions imposed for granting the stay, and the procedural directives for the appeal hearing.