2019 (4) TMI 1440 - HC - Income Tax

Stay petition - unconditional stay of entire demand - HELD THAT - Undisputed position that the ground on which the Assessing Officer has made additions in the order of assessment giving rise to the tax demand, is already decided in favour of some other Assessee by the Appellate Commissioner in other proceedings. Even though this Assessee in such Appellate proceedings is not the Petitioner, nevertheless, if the facts and law are identical, there is no reason why the present Petitioners also should not get the benefit of such Appellate order passed by the Commissioner in case of another Assessee. It is entirely open for the Department to carry the challenge against the order of Appellate Commissioner before the Tribunal. However, till such order is reversed by the Tribunal, the effect of such order would continue to apply. In view of the Appellate order, which is in force presently, the Department cannot take a stand that such order has no binding effect or that said order should be ignored for the purpose of deciding the condition of deposit of tax pending Appeal. ORDER (i) There shall be unconditional stay against the recovery of tax pending Appeals. (ii) If the order of the Commissioner (Appeals) in case of Scheme A1 of ARCIL CPS 002 XI Trust is reversed by the Tribunal, it would be open for the Principal Commissioner of Income Tax to impose a suitable condition for the Assessee to deposit tax pending Appeals, which order shall be passed after giving a reasonable opportunity of hearing to the Petitioner. (iii) The Petitioners shall not contribute to any delay in disposal of the Appeals. If in the opinion of the Department, the Petitioners are responsible for delay in disposal of the Appeals, it would be open for the Department to apply for recalling this order.

Summary

Issues:
Challenge to tax recovery order pending appeal before Appellate Commissioner.

Analysis:
The Petitioners challenged an order by the Income Tax Officer directing them to deposit 20% of the tax demand pending their appeal before the Appellate Commissioner. They argued that the additions made by the Assessing Officer were reversed in a similar case by the Appellate Commissioner, and they should benefit from the same decision. The Petitioners sought a complete stay on tax recovery based on the CBDT circular allowing relaxation in depositing tax when the Appellate Authority has ruled in favor of the Assessee on a similar issue.

The Court outlined the factual background, stating that the Assessing Officer had made disallowances and additions resulting in a tax demand, which the Petitioners contested through an appeal. The Assessing Officer ordered the Petitioners to deposit 20% of the tax demand, which was challenged by the Petitioners. The Commissioner rejected the request for full waiver of recovery, leading to the filing of the petition. The Court noted that similar additions made in other cases were deleted by the Appellate Commissioner, indicating a prima facie case for no recovery pending the appeal.

The Revenue opposed the Petitions, arguing that the orders were in line with CBDT's circular, and the Petitioners failed to justify interference. However, the Court observed that the issue on which the additions were made had been decided in favor of another Assessee by the Appellate Commissioner in a different case. The Court held that if the facts and law were identical, the Petitioners should benefit from the Appellate order, even if they were not the Assessee in that case.

The Principal Commissioner acknowledged that the issue was covered by the Appellate order but mentioned that the Department had challenged it before the Tribunal. The Court clarified that until the Tribunal reversed the order, it would continue to apply. Consequently, the Court directed an unconditional stay against tax recovery pending appeals and allowed the Principal Commissioner to impose conditions if the Tribunal reversed the Appellate order. The Petitioners were instructed not to delay the appeal process, with the provision for the Department to seek a recall of the order if the Petitioners caused delays.