2019 (4) TMI 1483 - HC - Income Tax

Stay of demand - pre-deposit of 20% of the disputed tax before he can be provided with an interim protection - institution is registered under section 12AA - HELD THAT - In so far as the issue of pre-deposit is concerned, the guidelines issued by the Department from time to time do prescribe an amount of about 20% or so for obtaining an order of stay on recovery process but which limit can be reduced at the discretion of the Assessing Authority. In so far as the present case is concerned, no such discretion has been exercised and by the order impugned the petitioner has been directed to deposit of 20% of the disputed amount, for availing the interim protection. It is not in dispute that while initially a sum of ₹ 5,00,000/- was deposited by the petitioner towards the disputed tax amount but during the pendency of the matter another sum of ₹ 15,00,000/- has been deposited. Thus when this matter came up for consideration on 26.03.2019, a sum of ₹ 20,00,000/- had already been deposited by the petitioner. Allowing the petitioner to move ahead, it is informed by Mr. Rastogi and not contested by Ms. Archana Sinha, learned counsel representing the Department that a further sum of ₹ 20,00,000/- has been deposited by the petitioner-University . There is admittedly a discretion vested in the statutory authority to go below the limit of 20% so fixed in the advisories issued, that the institution is registered under section 12AA of the Act , we are satisfied by the conduct of the petitioner to grant interim protection until the disposal of the appeal bearing note of the deposit of about ₹ 40,00,000/- by the petitioner towards the disputed amount.

Issues:
1. Pre-deposit requirement for invoking appellate jurisdiction under the Income Tax Act, 1961.
2. Discretion of the Appellate Authority in directing deposits for interim protection.
3. Exemption benefits for educational institutions under sections 11 and 12 of the Act.
4. Guidelines for obtaining stay on recovery process and the discretion of the Assessing Authority.
5. Amount deposited by the petitioner towards the disputed tax.
6. Granting interim protection until the appeal is disposed of by the Commissioner of Income Tax (Appeals).

Analysis:
1. The petitioner challenged an order requiring a pre-deposit of 20% of the disputed tax amount for interim protection. The court noted that the Income Tax Act does not mandate pre-deposits for invoking appellate jurisdiction, leaving it to the discretion of the Appellate Authority. The petitioner, an educational institution, claimed exemption benefits under sections 11 and 12 of the Act.

2. The court acknowledged the guidelines allowing for a 20% deposit to obtain a stay on recovery, subject to the Assessing Authority's discretion. In this case, the petitioner had already deposited a total of ?40,00,000 towards the disputed amount, exceeding the required 20%. The court considered the petitioner's conduct, the institution's registration under section 12AA of the Act, and granted interim protection until the appeal's disposal.

3. Emphasizing cooperation for an expeditious appeal disposal, the court directed the Commissioner of Income Tax (Appeals) to decide on the matter within 8 weeks. It prohibited coercive measures for recovering the balance amount until the appeal's resolution, highlighting the importance of cooperation between the parties for a swift resolution.

4. The judgment highlighted the discretionary nature of pre-deposits for interim protection, balancing the interests of the petitioner and the Department. By considering the petitioner's substantial deposits and registration under section 12AA, the court ensured fairness in granting interim relief while awaiting the appeal's final decision.

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