2020 (10) TMI 995 - HC - Income Tax

Stay petition - HELD THAT - Before the assessee had approached the Tribunal, the assessee had paid 25% of the disputed tax and as per the above orders, a further sum of ₹ 8,00,000/- had already been remitted. Therefore, we are of the considered view that the interest of the revenue is sufficiently safeguarded and nothing more is required to be done and the order of stay, which was initially granted on 11.06.2019 should continue till the appeal is heard and disposed of by the Tribunal. Writ petition is allowed and the impugned order is set aside and in the light of the reasons assigned above, there shall be an order of interim stay of the demand raised by the AO pursuant to the order of assessment dated 14.03.2016, till the appeal filed by the assessee before the Tribunal is heard and disposed of on merits and in accordance with law.

Issues:
1. Stay application rejection by the Tribunal.
2. Financial hardship demonstration by the assessee.
3. Compliance with the conditions imposed by the Court.
4. Safeguarding the interest of revenue.
5. Continuation of the stay order till the appeal is heard and disposed of by the Tribunal.

Issue 1: Stay application rejection by the Tribunal
The writ petition was filed by the assessee challenging the rejection of the Stay application by the Income Tax Appellate Tribunal. The Tribunal dismissed the stay petition citing the absence of a prima facie case in favor of the assessee and the lack of demonstrated financial hardship. The assessee had pointed out nine reasons for seeking a stay, emphasizing the potential favorable outcome of the appeal. Despite the assessee's arguments, the Tribunal did not provide substantial reasons for its decision, leading to the interim order passed by the High Court to stay further proceedings subject to certain conditions.

Issue 2: Financial hardship demonstration by the assessee
The assessee had already paid 25% of the disputed demand and argued that imposing further conditions would cause unbearable hardship. The Tribunal's dismissal of the stay petition without detailed reasoning prompted the High Court to intervene and impose a condition for the assessee to pay a specified sum within a set timeframe to continue the stay order. The compliance with this condition was confirmed before the High Court, leading to the decision that the interest of the revenue was adequately safeguarded, and the stay order should continue until the appeal is heard and disposed of by the Tribunal.

Issue 3: Compliance with the conditions imposed by the Court
The compliance with the condition imposed by the High Court was confirmed by the learned counsel for the petitioner/assessee during the proceedings. This compliance, which involved the payment of a specified sum, was a crucial factor in the High Court's decision to allow the writ petition, set aside the impugned order, and order an interim stay of the demand raised by the Assessing Officer until the appeal is heard and decided by the Tribunal.

Issue 4: Safeguarding the interest of revenue
The High Court considered the fact that the assessee had already paid a significant portion of the disputed tax, in addition to the amount specified in the Court's order. This led to the conclusion that the interest of the revenue was sufficiently safeguarded, and no further actions were deemed necessary. The decision to continue the stay order was based on the assessment that the revenue's interests were adequately protected through the payments made by the assessee.

Issue 5: Continuation of the stay order till the appeal is heard and disposed of by the Tribunal
In light of the compliance with the Court's conditions and the safeguarding of the revenue's interest, the High Court allowed the writ petition, set aside the impugned order, and ordered an interim stay of the demand raised by the Assessing Officer until the appeal filed by the assessee before the Tribunal is heard and disposed of on merits and in accordance with the law. The decision ensured the continuation of the stay order until the appeal process was completed, with no additional costs imposed.

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