2019 (4) TMI 669 - AT - Income Tax

Stay of recovery of demand - disallowance made u/s. 80JJAA - HELD THAT - We find that assessee has already complied with the direction of the Jurisdictional High Court and remitted 20% of the disallowance made u/s. 80JJAA. Further assessee s appeal for preceding assessment year which are on substantially similar grounds has been heard by this Tribunal and orders has been reserved. In the circumstances, we are of the opinion that it is a fit case for grant of stay. We stay the balance demand for a period of six months or till the disposal of the appeal whichever is earlier. In the result, the stay petition of the assessee stands allowed.

Issues:
Stay of recovery of demand comprising tax and interest, similarity of issues with preceding assessment year, Writ Petition before Jurisdictional High Court, compliance with High Court's direction, grant of interim stay by High Court, stay petition before ITAT Chennai.

Analysis:

1. Stay of Recovery of Demand:
The assessee filed a stay petition seeking a stay of recovery of demand amounting to ?6,79,82,100, which included tax of ?4,37,62,536 and interest of ?2,42,19,564. The counsel for the assessee argued that the issues raised in the current assessment year were similar to those in the preceding year, except for one issue related to additional depreciation. The assessee had also moved a Writ Petition before the Jurisdictional High Court seeking a stay of recovery. The High Court had ordered an interim stay subject to the condition that the assessee paid 20% of the disputed amount. The assessee had complied with this direction by remitting ?13,50,000. Considering these circumstances, the ITAT Chennai granted a stay of the balance demand for six months or until the disposal of the appeal, whichever was earlier.

2. Similarity of Issues with Preceding Assessment Year:
The counsel for the assessee highlighted that the issues raised in the current appeal were substantially similar to those in the appeal for the immediate preceding assessment year, which had already been heard by the Tribunal. The Tribunal had reserved its orders on the preceding year's appeal. The Jurisdictional High Court's judgment emphasized the importance of following the principles of judicial discipline and previous orders of higher authorities. The High Court granted an interim stay based on these principles and directed the assessee to remit a portion of the disputed amount. Given the compliance with the High Court's direction and the similarity of issues with the preceding year, the ITAT Chennai found it appropriate to grant a stay of recovery.

3. Writ Petition before Jurisdictional High Court:
The assessee had approached the Jurisdictional High Court through a Writ Petition seeking a stay of recovery of demand for the current assessment year. The High Court's judgment highlighted the need for fair treatment of taxpayers and avoidance of harassment without causing losses to the exchequer. The High Court emphasized the importance of considering the broader perspective of the tax liability for the entire disputed period rather than treating each assessment year independently. This approach led to the High Court granting an interim stay and directing the assessee to remit a portion of the disputed amount before proceeding with the appeal.

4. Compliance with High Court's Direction:
The ITAT Chennai noted that the assessee had complied with the direction of the Jurisdictional High Court by remitting 20% of the disallowance made under Section 80JJAA of the Income Tax Act. This compliance demonstrated the assessee's willingness to cooperate and abide by the High Court's orders, which influenced the ITAT's decision to grant a stay of the balance demand.

5. Grant of Interim Stay by High Court:
The High Court, in its judgment, recognized a prima facie case for the grant of interim orders in the assessee's favor. The High Court considered the pending appeal listed for final hearing before the Tribunal and directed the assessee to remit a portion of the disputed demand before proceeding with the appeal. This proactive approach by the High Court, coupled with the assessee's compliance, played a crucial role in the ITAT Chennai's decision to allow the stay petition.

6. Stay Petition before ITAT Chennai:
The ITAT Chennai, after considering the submissions, orders of lower authorities, and the stay petition filed by the assessee, granted a stay of the balance demand for a specified period. The Tribunal took into account the compliance with the High Court's direction, the similarity of issues with the preceding assessment year, and the principles of judicial discipline emphasized by the High Court. The ITAT's decision aimed at ensuring a fair and just resolution of the tax dispute while upholding the legal principles and directions provided by the higher authorities.

In conclusion, the ITAT Chennai's judgment reflected a balanced approach towards granting a stay of recovery based on the compliance with the High Court's direction, similarity of issues with the preceding assessment year, and the principles of judicial discipline and fairness in tax matters.

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