9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 669 - HC - Income TaxStay of demand - payment of 20% of the outstanding demand - ITAT rejecting its application for stay on the recovery of demand during the pendency of appeal - HELD THAT - The tone and tenor of submissions clearly appear to have been concentrated upon the merits of the assessment order. Although the issue of payment of 20% of the outstanding demand appears to have been raised, the same came to be summarily rejected by the ITAT in cryptic terms. Notwithstanding the above, it becomes pertinent to observe that the 20% deposit which is spoken of in the OM dated 31 July 2017 is not liable to be viewed as a condition etched in stone or one which is inviolable. The OM merely seeks to provide guidance to the authorities to bear in mind certain aspects while considering applications for stay of demand pending an appeals remedy being pursued. The OM is not liable to be read as conferring an indefeasible right upon the assessee to claim a stay of a tax liability by merely offering or consenting to deposit 20% of the outstanding liability. Ultimately, it is for the authorities to examine and consider what amount would be sufficient to securitise the interest of the Revenue and thus a just balance being struck. The quantum of the deposit that would be required to be made would ultimately depend upon the facts and circumstances of each case. The position which thus emerges is that while 20% is not liable to be viewed as an entrenched or inflexible rule, there could be circumstances where the respondents may be justified in seeking a deposit in excess of the above dependent upon the facts and circumstances that may obtain. This would have to necessarily be left to the sound exercise of discretion by the respondents based upon a consideration of issues such as prima facie, financial hardship and the likelihood of success. This observation we render being conscious of the indisputable position that the OM applies only upto the stage of the appeal pending before the CIT(A) and being of little significance when it comes to the ITAT. All that we additionally deem appropriate to observe is that merely because the AO had disposed of the stay application on 28 October 2021 or the fact that the petitioner failed to comply with the conditions so imposed, would not detract from the right of the ITAT to independently consider whether appropriate interim measures were liable to be framed for the purposes of protecting the interest of the assessee and at the same time securitizing the outstanding demand. In the end, we take note of an amount of Rs. 65.94 crores having been recovered by the respondents in the interregnum and that amount translating to roughly 48% of the outstanding demand. This changed circumstance is an aspect which, in our considered opinion, would merit consideration by the ITAT in case the petitioner chooses to move a fresh application for stay. Notwithstanding the refrain of the ITAT and which had also taken note of the continued adjournments which were sought by the writ petitioner as well as it having turned down its offer for the appeal itself being put down for final hearing, we deem it appropriate to accord liberty to the writ petitioner to move a fresh application for stay before the ITAT bearing in mind the developments which have occurred in the meanwhile including that of an amount of Rs. 65.94 crores having been recovered by the respondents pursuant to encashment of the bank drafts. Whether the aforesaid circumstance would merit protective measures being granted in respect of the balance outstanding demand, and if so to what extent, is an issue which must necessarily be considered by the ITAT in the first instance it being the tribunal which is in seisin of the principal appeal. We thus refrain from rendering any conclusive opinion in this respect and leave this aspect open for the consideration of the ITAT. No ground to interfere with the order impugned, we dispose of the writ petition according liberty to the petitioner to approach the ITAT by way of a fresh stay application bringing to its attention the change in circumstances noticed above.
Issues Involved:
1. Entitlement to a stay of the resultant tax demand upon deposit of 20% of the outstanding amount. 2. Compliance with the conditions imposed by Section 13A of the Income Tax Act. 3. Distinction between voluntary contributions and donations. 4. Computation of total income without considering the expenditure incurred. 5. Allegation of mala fides in the recovery proceedings initiated by the respondents. 6. Financial hardship and securitization of the outstanding demand. Summary: 1. Entitlement to Stay on Deposit of 20%: The petitioner challenged the ITAT's rejection of its application for stay on the recovery of demand during the pendency of appeal. The ITAT had cursorily rejected the petitioner's submission that it was entitled to a stay upon deposit of 20% of the outstanding amount, emphasizing that each application for stay must be decided on its own facts and circumstances. 2. Compliance with Section 13A: The petitioner, a recognized National Political Party, filed its Return of Income for AY 2018-2019 claiming exemption under Section 13A. The AO rejected this exemption due to non-compliance with the Second Proviso to Section 13A, as the return was not filed within the time prescribed under Section 139(4B). Additionally, the AO found a violation of clause (d) of the First Proviso to Section 13A, as the petitioner received donations in cash exceeding INR 2000. 3. Distinction Between Voluntary Contributions and Donations: The ITAT found no merit in the petitioner's argument that there was a distinction between voluntary contributions and donations. The AO's findings, supported by the petitioner's books of account and reports to the Election Commission, indicated that all contributions were recorded as donations, violating clause (d) of the First Proviso to Section 13A. 4. Computation of Total Income: The ITAT rejected the petitioner's argument that the total income was computed without considering the expenditure incurred. The ITAT referred to a prior judgment by the Delhi High Court, which held that no deduction for expenditure incurred by a political party is allowed if the conditions of Section 13A are not met. 5. Allegation of Mala Fides: The ITAT found no evidence to support the petitioner's claim that the recovery proceedings were actuated by mala fides. The chronology of events did not indicate undue haste by the respondents, and the petitioner had not demonstrated keenness to settle the issue expeditiously. 6. Financial Hardship and Securitization: The ITAT noted that the petitioner had not taken concrete steps to securitize the outstanding demand or seek interim protection. The petitioner's failure to comply with the AO's condition to deposit 20% of the demand further weakened its case. The ITAT also observed that the petitioner had substantial financial resources, as evidenced by its latest IT Return. Conclusion: The High Court upheld the ITAT's order, finding no fundamental infirmity in the prima facie conclusions rendered by the ITAT. The Court granted liberty to the petitioner to move a fresh application for stay before the ITAT, considering the changed circumstances, including the recovery of INR 65.94 crores by the respondents. The ITAT was directed to consider the fresh application with due expedition, keeping all rights and contentions open for consideration.
|
