2025 (2) TMI 923 - HC - Income Tax

Stay of demand - deposit of 20% of the outstanding amount was made - HELD THAT - In the matter of M/s. Aarti 2018 (4) TMI 1284 - CHHATTISGARH HIGH COURT application for stay of demand has not been considered in the manner it was required to be considered and dealt with. Deposit of 20% of the disputed demand has been made condition precedent for hearing the application for stay which is not contemplated either under the Act of 1961 or the CBDT guidelines dated 29-2-2016 modified by the office memorandum dated 31-7-2017. It is only when the competent authority is of the opinion that the assessee has made out a case for grant of interim relief stay can be granted subject to deposit of 20% of the disputed demand. Likewise there is a further clause in the circular for reduction of 20% deposit if the petitioner makes out a case it has also not been considered. In straightway direction of deposit of 20% of the disputed demand has been made which is not the correct way of deciding the application for stay of the disputed demand. Since similar question is involved in this matter the impugned order is set-aside and the matter is remitted to the competent authority to consider it afresh in light of the guidelines as stated above and pass a reasoned order within a period of 4 weeks from the date of receipt of a copy of this order.

Summary

The Court considered a petition challenging an order requiring the deposit of 20% of the outstanding amount during the pendency of an appeal. The petitioner argued that the order was not in line with established guidelines and precedents set by the Bombay High Court. The Assessing Officer rejected the stay application due to the petitioner's failure to pre-deposit the 20% amount demanded by the Revenue. The petitioner contended that the tax liability was wrongly assessed due to the non-availability of PAN cards of marginal maize farmers. The Court noted that a similar issue had been addressed in a previous case, where guidelines were laid down for considering stay applications pending appeals. The Court held that the competent authority did not consider the application for stay of demand in the required manner and set aside the impugned order, remitting the matter back to the competent authority for reconsideration in line with the established guidelines. The Court allowed the writ petition, directing the competent authority to pass a reasoned order within four weeks.