2024 (2) TMI 549 - HC - Income Tax

Stay of demand - order directed the petitioner to pay 20% of the disputed demand entirely on the basis of the CBDT Instruction No.1914 dated 31.07.2017 (Instruction No.1914) - petitioner submitted that the appellate authority is required to take into consideration the principles relating to consideration of a stay application and cannot impose conditions merely by referring to Instruction No.1914 - HELD THAT - Instruction 1914 sets out guidelines to be taken into account while deciding stay applications. As is evident on examining such guidelines, the discretion of the appellate authority remains and it is not mandated that in all cases 20% of the disputed tax demand should be pre-deposited. This aspect was noticed by this Court in the Order in Kannammal 2019 (3) TMI 1 - MADRAS HIGH COURT wherein, the appellate authority was directed to take into account the classical principles relating to the consideration of stay petitions. We find that the appellate authority has not recorded any reasons for the conclusion that the assessee should pay 20% of the disputed tax demand. Therefore, the order impugned herein calls for interference. Hence, the impugned order is quashed and the matter is remitted to the appellate authority for re-consideration of the stay application after providing a reasonable opportunity to the petitioner. While re-considering such stay application, the appellate authority shall take into account the existence of a prima facie case, the financial condition of the assessee and the balance of convenience and thereafter dispose of the stay application within a maximum period of two months from the date of receipt of a copy of this order.

Summary

Issues involved:
The petitioner challenges an order of the appellate authority in a stay petition related to the assessment order for the assessment year 2018-19, based on CBDT Instruction No.1914. The main contention is the directive to pay 20% of the disputed demand without proper reasoning.

Summary:

Issue 1: Consideration of Stay Application
The petitioner argued that the appellate authority should consider principles beyond Instruction No.1914, citing a previous court order in a similar case. The authority should not impose conditions solely based on the instruction.

Issue 2: Applicability of Instruction 1914
The respondents contended that the appellate authority is bound by Instruction 1914, which provides guidelines for stay applications. However, it was highlighted that the authority still retains discretion in deciding the percentage of disputed tax demand to be pre-deposited.

Judgment:
The High Court found that the appellate authority failed to provide reasons for requiring the petitioner to pay 20% of the disputed tax demand. Consequently, the impugned order was quashed, and the matter was remitted to the authority for re-consideration of the stay application. The court directed the authority to consider factors such as the prima facie case, financial condition of the assessee, and balance of convenience. The authority was instructed to dispose of the stay application within two months from the date of the court's order. The case was disposed of with no costs, and related motions were closed.