2024 (6) TMI 825 - HC - Income Tax

Stay of demand - Petitioner challenging demand notice u/s 143(2) subsequent actions - petitioner is calling upon the respondents not to take further steps on the basis of the demand notice - HELD THAT - In this case it may be noticed that an order u/s 143 (3) read with Section 143 (3A) and 143 (3B) of the said Act has been passed on 7th April, 2021. It is also an admitted position that the petitioner had filed an appeal under Section 246 of the said Act. Admittedly, the said appeal is pending consideration. As taken note of the guidelines issued by the Central Board of Direct Taxes dated 29th February, 2016 including Instruction No. 1914 dated 2nd February, 1993 as well as Office Memorandum dated 31st July, 2017. Although ordinarily where an assessee files an appeal disputing the demand, stay may be granted upon payment of 20% of the disputed demand, however, exceptional circumstances have also been noted in the Memorandum dated 29th February, 2016 Thus taking note of the case made out by the petitioner, the petitioner is directed to make payment of a sum of Rs. 40 lakhs with the assessing officer. If such payment is made within a period of eight weeks from date, the demand dated 7th April, 2021 issued under Section 156 of the said Act shall remain stayed till the disposal of the appeal, to the extent challenged in the appeal by treating the petitioner as not being in default in respect of the amount in dispute in the appeal. The payment made by the petitioner with the authorities shall abide by the result of the appeal.

Summary

Issues involved:
Petitioner challenging demand notice u/s 143(2) & subsequent actions. Appeal filed, seeking stay of demand.

Summary:
1. The petitioner, an educational research organization, challenged a demand notice u/s 143(2) of the Income Tax Act, 1961, and subsequent actions based on financial constraints due to various reasons including a nation-wide lockdown and CAA protests.

2. The petitioner filed an appeal against the order u/s 143(3) & subsequent demand notice u/s 156. Despite seeking a stay on the demand till appeal disposal, the petitioner was directed to pay 20% of the outstanding demand as per CBDT Instruction No. 1914, leading to financial burden/stress.

3. The petitioner argued that the assessing officer's decision to demand 20% of the disputed tax was not mandatory in all cases and requested the court to consider the financial stress faced by the petitioner. The respondents cited guidelines under Section 220(6) of the Act to justify the demand.

4. The court noted that the appeal was pending consideration and considered the guidelines issued by the Central Board of Direct Taxes. While acknowledging the usual requirement of 20% payment for stay of demand, the court highlighted exceptional circumstances mentioned in the guidelines.

5. In light of the circumstances and the petitioner's plea, the court directed the petitioner to make a payment of Rs. 40 lakhs within eight weeks to stay the demand till appeal disposal, treating the petitioner as not in default regarding the disputed amount. The payment outcome would align with the appeal result.

6. The writ petition was disposed of with the mentioned directions, and no costs were awarded. Parties were to receive a certified copy of the order promptly upon compliance.