Review of stay matters in case of disputed dues and applications for stay of balance instalments fixed earlier, new demands etc.

[CA DEV KUMAR KOTHARI]

Latest circular:

The Board has issued Circular vide  F.No.404/72/93-ITCC 29th February, 2016 which is very important step towards reduction of harassment by Assessing Officers by making high pitched assessments and then pressing hard for recovery of disputed dues. This also found mention in the budget speech on 29.02.16.

Past experience:

Cases have been where assessment orders were passed contrary to judgments of even High Court of jurisdiction and also in case of assessee himself, still AO demanded recovery of full demand in few instalments. This is duly recognised by the Board also in latest circular.

Many assessee paid instalments because otherwise assessee would have to face more harassment in other years. Many paid instalments just as a goodwill gesture, maintaining good relations with AO and manly to avoid further harassment.

Let us hope that Assessing Officers will follow instructions and act accordingly. Past experience is not good. We have noticed complete disregard of Circulars by Assessing Officers  while passing assessment orders, refusing or not considering petitions, collecting tax etc.

Action must be taken against erring officers, however, there seems no action, rather we find appreciation by senior authorities ( may be even by CBDT) when tax is collected even forcibly. In fact in past we have seen communications/ circular appreciating recovery of tax even if it was forcibly and against law. We hope that honourable Finance Minister  will not allow officers to act contrary to such instructions, as has been in past.

Review and petitions:

Assessee who faced such demands and instalments being fixed can now review the matter in light of new circular and apply for stay of demands / instalments already fixed but remaining un-paid etc. Applications can be suitably drafted giving full facts of demand, stay petition, instalments paid and balance remaining etc.

An illustrative chart about applicability of Circular is given below:

LATES CIRCULAR DATED   vide F. No.404/72/93-ITCC
29.02.16 EXAMINED IN CASE OF   ……..

From circular	Applicability in our case – illustrations
2. In part ‘C’ of the Instruction, it has been prescribed that a demand will be stayed only if there are valid reasons for doing so and that mere filing of an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. It has been further prescribed that while granting stay, the field officers may require the assessee to offer a suitable security (bank guarantee, etc.) and/ or require the assessee to pay a reasonable amount in lump sum or in instalments.	As per earlier circular in our case full demand deserves to be stayed  …  IN VIEW OF  ….. binding judgments …..
3. It has been reported that the field authorities often insist on payment of a very high proportion of the disputed demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand.	In AY 2012-13 the learned AO insisted for full payment including interest.   instalment are  pending , which may be waived
4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914:
A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in pars (B) hereunder.	No recovery at all  is desirable because demand is due to not following binding judgments which have attained finality in our own case/ in case of   …….
( (B) In a situation where,
a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court /or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or,	Not applicable in our case. Because ……..
( (b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/ CIT, who after considering all relevant facts shall decide the quantum/ proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand.	Not applicable in our case because in our case demand is due to contrary stand taken by learned AO instead of following judgments in favor of assessee in his own case.
(C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/ CIT for a review of the decision of the assessing officer.
(D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/ CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 (C) above, the same shall also be disposed of by the Pr. CIT/ CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be.	We expect that full demand shall be stayed by the learned AO
(E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,-
(i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled;	Yes we undertake, in fact we have already filed written submission and paper book and the learned CIT(A) must decide appeal as matter is covered in our favour by judgments in our  own case/ judgment of Supreme Court / High Court / Tribunal relied on by us.
(ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii)reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.	Not applicable in our case.

The circular is reproduced below with highlights added:

F.No.404/72/93-ITCC

Government of India

Ministry of Finance

Central Board of Direct Taxes (CBDT)

New Delhi, Dated: 29^th February, 2016

Office Memorandum

Sub: Partial modification of Instruction No. 1914 dated 21.03.1996 to provide for guidelines for stay of demand at the first appeal stage.

Instruction No. 1914 dated 21.03.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand.

2. In part ‘C’of the Instruction, it has been prescribed that a demand will be stayed only if there are valid reasons for doing so and that mere filing of an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. It has been further prescribed that while granting stay, the field officers may require the assessee to offer a suitable security (bank guarantee, etc.) and/ or require the assessee to pay a reasonable amount in lump sum or in instalments.

3. It has been reported that the field authorities often insist on payment of a very high proportion of the disputed demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand.

4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914:

(A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in pars (B) hereunder.

(B) In a situation where,

(a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court /or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or,

(b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/ CIT, who after considering all relevant facts shall decide the quantum/ proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand.

(C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/ CIT for a review of the decision of the assessing officer.

(D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/ CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 (C) above, the same shall also be disposed of by the Pr. CIT/ CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be.

(E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,-

(i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled;

(ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations;

(iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.

5. These instructions/ guidelines may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance.

(A.K. Sinha)
Director (ITCC)