2015 (10) TMI 1708 - AT - Income Tax

Stay of recovery proceedings - Demand including interest u/s .234A to 234D - Assessments passed u/s 153A read with sec.143(3) - Held that - In the facts and circumstances of the case, when the claim was earlier allowed for the assessment year 2004-05 which has not been disturbed by the AO till date and further the assessees before us have already paid about 65% and 56% respectively of the total outstanding demand which includes the levy of interest u/s 234A to 234D then the assessees have made out a prima facie good case for grant of stay against the balance outstanding demand. In the case of Shri Dinesh Kumar Singhi, the total demand includes levy of interest u/s 234D amounting to ₹ 26.44 crores for the assessment years 2005-06 and 2006-07 and the assessment for those assessment years were already completed prior to the date of search u/s 132, therefore, assessment u/s 153A for these two assessment years would be re-assessment and not a regular assessment. Thus, the assessee has also made out a prima facie case on the point of levy of interest u/s 234D. Accordingly, having considered the totality of the facts of the case, we are of the considered opinion that the assessees before us have made out a good arguable case on merits as well as for grant of stay of the balance outstanding demand when the assessees have already made the payment of more than 50% of the total outstanding demand. Hence, the balance outstanding demand in case of these two assessees for all these assessment years before us is stayed for a period of 180 days or till disposal of the appeals, whichever is earlier. - Decided in favour of assessee.

Summary

Issues involved:
Stay petitions by related assessees seeking stay of outstanding demand arising from assessments passed u/s 153A read with sec.143(3) of the Income-tax Act,1961 for the assessment years 2005-06 to 2007-08 and 2010-11 to 2011-12.

Analysis:
The case involves related assessees seeking a stay of outstanding demand from assessments under the Income-tax Act for specific assessment years. The petitioners had already paid a significant portion of the total demand, including interest. The primary issue revolved around the denial of deduction u/s 10B and the imposition of interest u/s 234D. The petitioners argued that the denial of the deduction was based on a change of opinion without new material and that they had established a prima facie case for a stay of the outstanding demand until the appeal's disposal.

In the case of Shri Dinesh Kumar Singhi, the Assessing Officer withdrew the claim of deduction u/s 10B during reassessment, leading to the outstanding demand. The petitioner had paid over 65% of the total demand, including interest. The petitioner contended that interest u/s 234D was not applicable post-reassessment, citing relevant judgments. The Tribunal noted that the AO had allowed the deduction u/s 10B in a previous assessment, which remained undisturbed, supporting the petitioner's case.

Regarding Ms. Snehalath Singhi, a similar situation arose for the assessment years 2010-11 and 2011-12. The petitioner had paid a significant portion of the demand and argued for a stay based on the lack of new material for denying the deduction u/s 10B. The Tribunal acknowledged the petitioner's substantial payment and the prima facie case made for a stay of the outstanding demand until the appeal's resolution.

The Departmental Representative opposed the stay, emphasizing pending approvals related to establishing 100% EOU. However, the Tribunal found the issue debatable, especially considering the previous allowance of the deduction u/s 10B and the substantial payments made by the petitioners. The Tribunal granted a stay for 180 days or until the appeal's disposal, highlighting the petitioners' strong case on merits and payment history.

In conclusion, the Tribunal granted a stay on the outstanding demand for the petitioners, emphasizing their substantial payments, the lack of disturbance in previous assessments, and the debatable nature of the issues raised by the AO. The Tribunal directed expedited hearings for the appeals, cautioning against adjournments without sufficient cause to maintain the stay granted.