2019 (10) TMI 465 - AT - Income Tax

Stay of demand - early hearing seeked - HELD THAT - Keeping in view the entire facts and circumstances of this Stay Petition, we are inclined to reject Stay Petition filed by the assessee. However, we are granting early hearing of the appeal for ay 2014-15 which will be listed for hearing before the Division Bench of the tribunal on 09.10.2019. We clarify that we have not commented on the merits of the issue in this appeal filed by the assessee . We would also like to place a condition for grant of early hearing of the appeal that the assessee will not seek adjournment when the appeal will be listed before the regular Bench for hearing of the appeal unless there are genuine and bona-fide reasons for seeking adjournments.

Summary

Issues:
Stay of demand of disputed tax amount for Assessment Year 2014-15.

Analysis:
The assessee filed a Stay Petition seeking a stay of the demand of disputed tax amount of ?13,93,880 arising from the assessment for the year 2014-15. The assessment was framed by the Assessing Officer (AO) under section 143(3) of the Income-tax Act, 1961, making two additions to the returned income. The first addition was disallowing an exemption claimed by the assessee under section 10(38) of the Act, and the second addition was on account of cash deposits made by the assessee in its bank account. The total income assessed by the AO was ?51,05,496, resulting in an income tax payable of ?18,95,280. The assessee challenged this assessment by filing an appeal before the CIT(A), who deleted the addition related to cash deposits but confirmed the addition on account of disallowance of exemption under section 10(38). Dissatisfied with the CIT(A)'s order, the assessee filed an appeal before the tribunal, which was pending for disposal. The assessee then filed the Stay Petition seeking a stay of the outstanding demand of tax and interest amounting to ?13,93,880.

The primary issue in contention was regarding the genuineness of long-term capital gains claimed by the assessee on the sale of shares. The AO alleged manipulation and rigging in penny stocks through stock exchanges, leading to the disallowance of the exemption claimed under section 10(38) of the Act. The counsel for the assessee denied any manipulation and rigging, stating that the gains were legitimate and the shares were purchased with cash payments, later dematerialized after a period. The AO and the CIT(A) supported the disallowance based on detailed investigations and contentions of organized manipulation and rigging of stocks. The counsel for the assessee argued for the genuineness of the gains and requested a stay of the outstanding demand.

After considering the arguments from both sides, the tribunal rejected the Stay Petition filed by the assessee. However, the tribunal granted an early hearing of the appeal before the Division Bench on a specified date. It was clarified that the grant of early hearing did not imply any judgment on the merits of the case. The tribunal also imposed a condition that the assessee should not seek adjournment during the hearing unless for genuine reasons. The decision was announced in open court, and the Stay Petition was dismissed, with the appeal scheduled for early hearing before the Division Bench.

In conclusion, the tribunal dismissed the Stay Petition while granting an early hearing of the appeal, emphasizing the importance of presenting the case before the Division Bench without seeking adjournments unless for valid reasons.