2014 (5) TMI 361 - HC - Income Tax

Application u/s 220(6) of the Act Stay application - Assessee not to treat as assessee in default - Whether pending the disposal of the stay application, the assessee should be granted a blanket stay of demand Held that - The FAA granted a stay of demand to the extent of 70% - the assessee was required to deposit approximately 15% of the total demand the petitioner is to be directed to deposit an amount of Rs.6 crores - the balance amount would be stayed till the disposal of the stay application before the CIT (A) Partial stay granted.

Summary

Issues:
1. Stay application for tax demand pending disposal.
2. Whether petitioner should be granted a blanket stay of demand.
3. Amount to be deposited by the petitioner pending disposal of stay application.

Analysis:
1. The petition pertains to the Assessment Year 2011-12, where the petitioner, a statutory authority under the U.P. Urban Planning and Development Act, declared nil income but was assessed by the Assessing Officer at Rs.74.77 crores, leading to a tax demand of Rs.31.86 crores. The petitioner filed a stay application under Section 220(6) and moved an application before the Commissioner of Income Tax (Appeals-I), Agra. The main contention was the cancellation and restoration of registration under Section 12AA of the Income Tax Act, 1961, which is pending appeal. The petitioner sought directions for the disposal of the stay application and to prevent being treated as an assessee in default until the stay application is decided.

2. The petitioner argued for a complete stay of the demand citing precedents from the Delhi High Court and Lucknow Bench. The court refrained from expressing a final opinion on the merits of the case as the appeal before the CIT was pending. Considering previous orders, the court directed the petitioner to deposit Rs.6 crores within two weeks, allowing a stay on the recovery of the balance demand until the CIT (A) disposes of the stay application. This decision aimed to balance the interests of both the revenue and the assessee, ensuring fairness during the appeal process.

3. The court's directive for the petitioner to deposit Rs.6 crores within a specified period, with a stay on the balance demand pending the CIT (A)'s decision, aimed to protect the revenue's interests while providing relief to the petitioner. The CIT (A) was requested to expedite the disposal of the stay application within three months and given the discretion to expedite the appeal itself if feasible. The judgment concluded by disposing of the writ petition without any costs, outlining a structured approach to address the pending tax demand issue effectively.