Stay of demands. - Income Tax - 1282/CBDT

INSTRUCTION NO. 1282/CBDT Dated : October 4, 1979 In the context of large tax demand stayed by the departmental authorities, it was stated before the Public Accounts Committee in May, 1978 that representative sample study of a few cases would be undertaken to bring out the reasons for the stay of the demands. 2. Directorate of Inspection (Research, Statistics Publication) was, accordingly requested to undertake a study of about 200 cases where demands had been stayed by the departmental authorities. On the basis of the study a report has since been submitted to the Board covering 240 cases in 12 Commissioners' charges. The study has mainly revealed the following: (i) 93.57% of the demand was stayed because it was disputed; 3.07% was stayed on account of financial difficulties and the remaining 3.36% pending settlement with the assessees. Miscellaneous additions and estimates of gross profit constituted 41.7% of the stayed demand which showed that high-pitched assessments were still being made. (ii) In most of the cases (53.3%) the demand was stayed by the Income-tax Officers. (iii) Security was insisted upon in only 17 out of 240 cases (7.1%). (iv) In 67.5% of the cases, demand was stayed pending disposal of the first appeal. In none of the cases, where demand was stayed pending decision of appeals by Tribunal any request was made for hearing the appeals out of turn. 3. After examining the reasons for the stay and the recommendations made by Directorate of Inspection (Research, Statistics Publication) Board desires to reiterate that high pitched assessments should be avoided to reduce disputed demands. Full use should be made by the Inspecting Assistant Commissioners of the powers under section 144A and 144B to oversee the investigation and to see that needless additions are not made. 4. Where the demand is stayed pending disposal of appeals by the AAC or the CIT (Appeals), requests would be made for their early hearing by the IACs in respect of appeals pending before the CsIT (Appeals). This is in addition to the requests being made at present for early disposal of high demand appeals. Similarly where the demand is stayed by the Tribunal it should be a matter of ordinary practice to request of the early disposal of the appeal. In appropriate cases, Commissioners may follow up the request by personal contact with the President and Vice-Presidents of the Tribunal. Similarly, for accelerating disposal of reference applications and appeals before the Courts involving stayed demand, the Standing Counsels should be requested to move the Courts. 5. A constant watch should be kept on the progress of appeals in cases of disputed demand where stay has been granted to ensure that as soon as the appeals are decided, immediate steps are taken to recover the tax found due. 6. You are requested to issue suitable instructions on the above lines to all the officers in your charge so that the recovery out of the demand stayed which stood at Rs.155 crores on 31.3.79 can be made expeditiously.