2021 (10) TMI 1110 - HC - Income Tax

Stay of demand - deposit of 20% of the total demand - HELD THAT - Exts.P2 and P8 directing deposit of 20% of the total demand are both made by the Income Tax Officer and not by the Appellate authority. Petitioner has not yet moved any application for stay of the assessment order in the pending appeal, before the 2nd respondent. As rightly pointed out by the learned Standing counsel, the Appellate Authorities are not bound by any office memorandum issued by the department, since they are exercising adjudicatory powers and possess discretionary powers. In considering the grant of stay pending appeal, the High Court of Delhi had clearly observed in Turner General Entertainment Networks case 2019 (1) TMI 1365 - DELHI HIGH COURT that while, the authorities concerned have to apply their mind to decide such applications and pass appropriate orders independent of the office memorandum. The judgment of the High Court of Kerala, produced as Ext.P9, stands on a different footing since, in that case, this Court had directed the consideration of the appeal without insisting on any deposit due to the peculiar nature of the facts involved in that case. Petitioner, if he is so advised, ought to move an appropriate application for stay before the Appellate Authority. If such an application is preferred, needless to say, the appellate authority shall pass appropriate orders within a period of two months from the date of receipt of such an application. Further, if the Appellate Authority feels it desirable to consider and pass orders on the appeal itself, liberty is granted to the Appellate Authority to do so.

Summary

Issues:
1. Challenge to assessment order, demand notices, and communication.
2. Validity of office memorandum directing deposit for stay of demand.
3. Applicability of office memorandum on Appellate Authorities.
4. Judicial observations on granting stay pending appeal.

Analysis:

1. The petitioner challenged an assessment order, demand notices, and communication through a writ petition despite having already filed an appeal before the first respondent. The petitioner was directed to deposit 20% of the total demand based on an office memorandum for grant of stay of the demand notice.

2. The office memorandum dated 29/2/2016, revised on 31/7/2017, required a 20% deposit for granting a stay of the demand imposed by the Income Tax Officer. The petitioner relied on judicial precedents to argue that the Appellate Authorities grant stay only upon depositing 20% of the entire demand as a pre-deposit.

3. The learned Standing Counsel contended that the Appellate Authorities, being quasi-judicial bodies, are not bound by office memoranda. He emphasized that the authorities must consider stay applications independently, without being directed by any office memorandum to make pre-deposits.

4. The judgment highlighted that the Appellate Authorities have discretionary powers and are not bound by office memoranda. Referring to a High Court of Delhi case, it was noted that authorities must independently decide on stay applications. The judgment also differentiated a Kerala High Court case where no deposit was insisted upon due to unique circumstances.

In conclusion, the judge advised the petitioner to file an application for stay before the Appellate Authority for appropriate consideration. The Appellate Authority was directed to pass orders within two months of receiving the application. Additionally, the Authority was granted liberty to consider and decide on the appeal itself if deemed necessary. The writ petition was disposed of accordingly.