2021 (2) TMI 1066 - AT - Income Tax

Stay petition - applicant seeks a stay on collection/recovery of the outstanding amount of tax and interest etc, in respect of tax withholding demands under section 201 r.w.s. 194C - HELD THAT - As assessee has admittedly paid more than 20% of the original demands raised on the assessee, and, therefore, it is not even necessary to deal with implications of first proviso to Section 254(2A). DR has filed a written wherein it is stated that at the time of filing of stay of demand petition by the assessee, demand/ sum payable denotes total demand (including interest) as reduced by the amount already paid by the assessee before filing of the stay petitions , but then this plea is only to be noted and rejected. On the fact of it, beyond any dispute or controversy, he reference to the said requirements of pre-payment of at least 20% of the amount of tax, interest, fees or any other sum payable under the provisions of this Act apparently refers to the statutory liability and not the outstanding amount. By no stretch of logic, therefore, these requirements of first proviso to Section 254 (2A) come into play in the present case. We need not, therefore, deal with that aspect of the matter at this stage. Stay petition is allowed in the terms indicated above.

Summary

Issues:
Stay application for outstanding tax and interest amount under section 201 r.w.s. 194C of the Income Tax Act, 1961 for the assessment year 2018-19.

Analysis:
The appellant, a company providing marketing and support services to a technology company, Uber BV, was seeking a stay on the collection/recovery of outstanding tax and interest amounting to ?77,84,56,072 for tax withholding demands under section 201 r.w.s. 194C. The Assessing Officer found discrepancies in tax withholding obligations, leading to a demand of ?102,01,00,959 under section 201(1) and ?11,83,55,112 as interest. Despite partial payment of ?36,00,00,000, the appellant appealed to CIT(A) unsuccessfully and further to the ITAT. The ITAT, after considering the facts and legal position, granted a stay on the outstanding demands until the disposal of the appeal or 180 days from the order date, subject to the condition of the appellant's cooperation and no unnecessary adjournments. The ITAT also directed an out-of-turn hearing for the appeal on 27th January 2021. Noting the appellant's payment exceeding 20% of the demands, the ITAT rejected the Departmental Representative's argument regarding pre-payment requirements under Section 254(2A), clarifying that it does not apply to the outstanding amount in this case.

This judgment highlights the importance of complying with tax withholding obligations under the Income Tax Act, as failure to do so can lead to significant demands and interest liabilities. The ITAT's decision to grant a stay on the outstanding amount reflects a balanced approach, considering the appellant's arguable case in appeal and the need for cooperation in the appeal process. The clarification on pre-payment requirements under Section 254(2A) provides insight into the statutory liability aspects and their application in specific cases, ensuring a fair and just interpretation of the law.