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TMI Blog2018 (4) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... iled an application for stay of demand under Section 220(6) of the Act of 1961 followed by another application dated 28- 2-2018 for staying the demand of Rs. 8,86,98,510/-. The applications filed by the petitioner were rejected by the learned assessing officer on 7-3-2018 stating that in accordance with the memorandum dated 31-7-2017 issued by the Central Board of Direct Taxes, deposit of 20% of the demand due is imperative. Questioning legality, validity and correctness of the orders dated 7-3-2018, these writ petitions have been preferred. 3. Mr. Sumit Nema, learned Senior Counsel appearing for the petitioner, would submit that the circular issued by the Central Board of Direct Taxes (CBDT) under Section 119(1)(a) of the Act of 1961 has the force of law, but the assessing officer was required to consider the application for stay on merits and if he comes to the conclusion that the petitioner has prima facie case for grant of stay, then the question of deposit could have been considered, but the pre-deposit of 20% cannot be made condition precedent to consider the application for grant of interim relief. He would further submit that the application for stay of demand has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, Calcutta v. Commissioner of Income Tax, W.B. (1999) 4 SCC 599 in which the Supreme Court considering the object and nature of the CBDT circulars held that CBDT can issue circulars, inter alia, to tone down the rigour of law and ensure a fair enforcement of its provisions and such circulars are binding on the Income Tax Authorities and Revenue also and observed as under: - "9. ... Under sub-section (2) of Section 119, without prejudice to the generality of the Board's power set out in sub-section (1), a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special orders in respect of any class of incomes or class of cases setting forth directions or instructions, not being prejudicial to assessees, as the guidelines, principles or procedures to be followed in the work relating to assessment. Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cannot be enforced adversely against the assessee and normally, these circulars have not to be ignored. 10. Clause 4(C) of the office memorandum dated 29-2-2016 provides for remedy of review as under: - "4(C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer." 11. The above-stated provision only provides the remedy of appeal against the order granting stay of demand subject to payment of 15% of the said demand, if the assessee is still aggrieved against that order. Present is a case where no order of stay has been granted in favour of the petitioner and there is no remedy of review against the order refusing stay of disputed demand. Therefore, the plea of the Revenue that alternative remedy is available sans merit and is accordingly overruled. 12. The circular dated 29-2-2016 issued for considering the application for stay has been filed along with the writ petition and this circular has been modified by the circular dated 31-7-2017 and payment of 15% of the disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxx xxx xxx xxx xxx" 13. A careful perusal of the aforesaid office memorandum would show that guidelines have been issued to the assessing officers for considering the application for stay. Even the field officers may require the assessee to file a suitable security (bank guarantee, etc.) or pay a reasonable amount in lump sum or in installments and in para 4 for streamlining the process of grant of stay and to standardize the quantum of lump sum payment, and furthest guidelines have been issued that in case where the outstanding demand is disputed before the Commissioner of Income Tax (Appeals), the assessing officer shall grant stay of demand till the disposal of appeal on payment of 20% of the disputed demand, unless the case falls in the category discussed in para (B) of the said notification/office memorandum. 14. Thus, in the considered opinion of this Court, the assessing officer has to consider the case of the particular assessee on merits and if he comes to the conclusion that the assessee has a case for grant of stay, then subject to deposit of 20% of the disputed demand, the outstanding demand may be stayed and in certain cases where the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned decision of the respondent No.2- Assessing Officer rejecting the stay application cannot be sustained and the same deserves to be quashed and set-aside. So far as the decision of the respondent No. 1 is concerned, it appears that after the decision rendered by the respondent No. 2, the assessee filed stay application before the respondent No. 1 and the respondent No. 1 has passed the impugned order mainly considering the order of the Assessing Officer. Therefore, first, the Assessing Officer is required to take appropriate decision on the stay application, as per the modified instruction dated 29th February 2016 and unless the case falls within Clause 4 [B](a) & (b), he is required to pass appropriate order on the stay application, granting stay on payment of 15% of the disputed demand. In case, the Assessing Officer is of the opinion that the case falls within Clause 4 [B](a) or (b), in that case, he is required to follow the procedure as observed hereinabove; more particularly, Clause 4 [B] where the Assessing Officer is required to refer the matter to the administrative Principal CIT/CIT and thereafter, the Principal CIT/CIT to take appropriate decision." 16. I am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain give reasoned order." 19. The aforesaid guidelines have been followed later-on again by the Bombay High Court in the matter of UTI Mutual Fund v. Income Tax Officer 19(3)(2) and others 2012 SCC OnLine Bom 390 in which Dr. D.Y. Chandrachud, J (as then His Lordship was) while following the decision rendered in KEC International Ltd. (supra) again held some more guidelines as under: - "These are, we may say so with respect, sage observations which must be borne in mind by the assessing authorities. Consistent with the parameters which were laid down by the Division Bench in KEC International and the observations in the judgment in Coca Cola Coca Cola India P. Ltd. v. Addl. CIT, (2006) 285 ITR 419, we direct that the following guidelines should be borne in mind for effecting recovery : 1. No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; (b) Disposal of a stay application, if any, moved by the assessee and for a reasonable period thereafter to enable the assessee to move a higher forum, if so advised. Coercive steps may, however, be adopted where the authority has reason to believe that the assessee may defeat the demand, in which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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