2019 (6) TMI 480 - HC - Income Tax

Stay petition - directing the petitioner to pay 20% of the outstanding demand - HELD THAT - It is necessary to direct the respondent No.3 to consider the stay application filed by the petitioner on 15/16.5.2018 and take a decision in the matter considering the genuine hardship that would be caused to the petitioner in case the petitioner is directed to pay 20% of the disputed demand placing reliance on Instruction No.4(B)(b) of the Circular dated 29.2.2016. Assessment order being unreasonably high-pitched and the matter is heard by the appellate authority, the assessee is required to be protected from coercive action, if any, to be initiated by the Department until a decision is taken by the appellate authority. Under these circumstances the respondent No.3 is directed to consider the stay application filed by the petitioner on 15/16.5.2018 and take a decision in the matter in an expedite manner keeping in mind the observations made hereinabove.

Summary

Issues:
1. Stay application for demand collection under Section 143(3) of the Income-Tax Act, 1961.
2. Dismissal of stay application by respondent No.1 and subsequent unsuccessful attempts for absolute stay.
3. Alleged contrary demand of 20% of outstanding demand by authorities.
4. Obligation of respondent No.3 to consider stay application and pass appropriate orders.

Analysis:

The petitioner, a partnership firm, had assessments concluded for the assessment year 2015-16 under Section 143(3) of the Income-Tax Act, 1961. An appeal was filed before respondent No.4, who reserved orders after hearing the petitioner on 13.3.2019. The petitioner sought a stay of collection of demand of ?6,54,00,840 until the appeal's disposal, but respondent No.1 demanded 20% of the outstanding demand, dismissing the stay application on 3.4.2018. Subsequent attempts for absolute stay were unsuccessful, leading to this writ petition.

The petitioner contended that respondent No.3 must decide on the stay application, emphasizing that the 20% demand was contrary to a previous court judgment. The Revenue's counsel agreed that respondent No.3 should consider the stay application and pass appropriate orders. The court directed respondent No.3 to consider the stay application, taking into account the high-pitched assessment, and the potential hardship to the petitioner if coercive action is taken by the Department. The petitioner was instructed to appear before respondent No.3 on a specified date without notice, and no coercive recovery action was to be initiated until respondent No.3's decision.

In conclusion, the court disposed of the writ petition, directing respondent No.3 to expedite the decision on the stay application, considering the circumstances and observations mentioned in the judgment to protect the petitioner from coercive actions during the appeal process.