2014 (3) TMI 1227 - AT - Income Tax

Seeking stay of collection of outstanding demand payable by the assessee for the assessment year 2006-07 - main plea of the assessee appears that the assessing officer was not right in assessing the sale value as a slump sale. Alternatively it is contended that the assessing officer should have allowed deduction of the value of Net worth for the purpose of computing the Capital gain - HELD THAT - Though the assessee pleads about the financial difficulties, yet no document was filed before us to substantiate the said claim. Hence, under these circumstances, the Tribunal is of the considered view that the balance of convenience is in favour of granting partial stay to the assessee. During the course of hearing, the ld A.R agreed to pay a further sum of Rs.2.50 lakhs and pleaded for the stay of balance amount. D.R submitted that the assessee may be directed to pay a sum of Rs.15.00 lakhs. Having regard to the rival submissions, we direct the assessee to pay a sum of Rs. 10 lakhs (Ten lakhs) in two equal installments. The first installment should be paid on or before 31-03-2014 and the second installment shall be paid on or before 15-04-2014. Subject to the payment of the above instalments by the dates mentioned above, we direct the revenue not to recover the balance amount of tax till the date of disposal of the appeal or for a period of six months from the date of this order, whichever period expires earlier. Stay Petition filed by the assessee is allowed.

Summary

Issues:
Stay of outstanding demand for assessment year 2006-07 based on the assessee's claim of erroneous assessment and financial difficulties.

Analysis:
The assessee filed a Stay Petition seeking to stay the collection of an outstanding demand of Rs.43,75,982 for the assessment year 2006-07. The counsel argued that the assessing officer erroneously treated the sale of assets as a slump sale, assessed the entire amount as income without allowing deduction of net worth, and considered capital receipts as income. The counsel contended that if deductions were allowed, the tax demand would significantly reduce. The assessee, facing financial constraints, had already paid a substantial amount towards the demand.

The Departmental Representative opposed the plea, citing a reasoned order by the CIT(A) and lack of evidence supporting the assessee's financial difficulties. The DR argued that since the assessee had closed its business and sold assets, the plea lacked merit. The Tribunal heard both sides and noted the assessee's primary contention regarding the incorrect assessment of the sale value as a slump sale, the denial of net worth deduction, and the assessment of goodwill value. The assessee claimed a potential relief of Rs.25 lakhs if the net worth deduction was allowed, reducing interest charges significantly.

The Tribunal acknowledged the prima facie merit in the assessee's contentions but emphasized the need for a thorough examination during the appeal hearing. Despite the plea of financial difficulties, the lack of documentary evidence weakened the claim. Consequently, the Tribunal granted a partial stay to the assessee, directing payment of Rs.10 lakhs in two installments. The first installment was due by 31-03-2014, and the second by 15-04-2014. The revenue was instructed not to recover the balance amount until the appeal disposal or six months from the order date, whichever was earlier. The Stay Petition was allowed, and the decision was pronounced on 07-03-2014.