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TMI Blog2019 (3) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... h orders as he may think fit in the facts and circumstances on the present case, in accordance with law and bearing in mind the prevailing Circulars/Instructions issued by the CBDT and nothing contained in this order shall stand in the way of such adjudication. Such order shall be passed by the Assessing Officer on or before 22.03.2019. The impugned order is set aside. - Writ Petition No. 5923 of 2019 & WMP No.6752 of 2019 - - - Dated:- 6-3-2019 - Dr. Justice Anita Sumanth For the Petitioner : Mr. P.H.Aravind Pandian, Sr. Counsel, for, Mr.T. Vasudevan For the Respondents : Mr. A.P.Srinivas, Sr. Standing Counsel ORDER The impugned order dated 13.02.2019 has been passed under Section 220 (6) of the Income Tax Act, 1961 (in short the Act ), and calls upon the petitioner to remit 20% of the disputed demand of Income tax as a pre-condition for the grant of stay of recovery. 2. Heard Mr.P.H.Aravind Pandian, learned Senior Counsel, appearing for Mr.Vasudevan, learned counsel appearing for the petitioner and Mr.A.P.Srinivas, learned Senior Standing Counsel appearing for the respondents. 3. The petitioner is a Trust that manages a school, affiliated to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search operations, cash of ₹ 2,75 crores, gold coins, and books of account were found and seized. Consequently, assessments u/s.153A were concluded in the above case for A.Y.s 2011-12 to 2017-18 wherein additions were made under various heads raising a demand of ₹ 58,41,20,946/-. The aforesaid assessee is a Trust not registered u/s. 12AA and running educational institution/hostel has filed application for stay of demand for A.Y.s 2011-12 to 2017-18 requesting to stay entire demand of ₹ 58,41,20,946/- as appeal filed by the assessee is pending before the CIT (Appeals), Salem. The major issues on which such undisclosed income was arrived are discussed as under: i. Undisclosed Bank Deposits:- During the search proceedings, the assessee was asked to furnish receipts and payments accounts. It was noticed that the total credits by way of cash/transfer in various bank accounts maintained by the assessee was more than the total receipts as per receipts payments account submitted. When the assessee was asked to explain sources for such bank deposits, no proper explanation was furnished during search proceedings and even during assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not produce invoices for purchase of assets in support of claim made in the return. Consequently, depreciation on such additions to fixed assets were also disallowed. vi. Claim of Adjustment under Sections 10 11: In the computation of total income, assessee has claimed deduction on account of adjustment u/s.10 11. Since the assessee is not registered u/s.12AA of I.T.Act, such claim made was not admissible and hence same was disallowed. vii. Seizure of cash during search:- During the course of search, cash of ₹ 2.75 crores, gold coins of 245 gms were seized and the assessee had offered said cash partly in A.Y.2016-17 and 2017-18. But, as per Sec.69A of I.T.Act, unaccounted cash found has to be taxed in the previous year in which assessee was found to be owner of such cash and accordingly, entire cash seized was assessed to tax in A.Y.2017-18. Further, tax on such undisclosed cash and gold coins were taxed t 75% u/s.115BBE since addition was made u/s.69A of I.T.Act. 2. In the stay petition filed by the assessee, it is contended that high pitched assessment is made in its case, but as could be seen from the above, the additions have been made under each h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a period of 6 months whichever expires earlier in accordance with provisions of Sec.220 (6) of I.T.Act. In case, the assessee fails to make the payment of ₹ 11,68,24,189/- by 18.2.2019, assessee will be treated as in default for payment of entire demand raised in this case for A.Y.s 2011-12 to 2017-18 i.e., ₹ 58,41,20,946/- and coercive steps will be pursued against the assessee. iii. The assessee shall cooperate in early disposal of appeal failing which the stay order will be cancelled. The right to adjust refunds if any arising against the demands due vests with the Department to the extent of the amount required for granting stay subject to provisions of Sec.245 of i.T.Act. 10. The Officer, 1st respondent in the writ petition, proceeds on the basis that the payment of 20% of the tax, as per Office Instruction dated 31.07.2017, is a pre-condition for consideration of stay of demand and therein lies the flaw in the order. I have, in my order, in the case of Mrs.Kannammal V. Income Tax Officer (W.P.No.3849 of 2019 dated 13.02.2019) discussed various Circulars/Instructions issued by the Income Tax Department on the matter of grant of stay, concluding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1914 was issued by the CBDT on 21.03.1996 and states as follows: 1. Recovery of outstanding tax demands [Instruction No. 1914 F. No. 404/72/93 ITCC dated 2-121993 from CBDT] The Board has felt the need for a comprehensive instruction on the subject of recovery of tax demand in order to streamline recovery procedures. This instruction is accordingly being issued in supersession of all earlier instructions on the subject and reiterates the existing Circulars on the subject. 2. The Board is of the view that, as a matter of principle, every demand should be recovered as soon as it becomes due. Demand may be kept in abeyance for valid reasons only in accordance with the guidelines given below : A. Responsibility: i. It shall be the responsibility of the Assessing Officer and the TRO to collect every demand that has been raised, except the following: (a) Demand which has not fallen due;(b) Demand which has been stayed by a Court or ITAT or Settlement Commission;(c) Demand for which a proper proposal for write-off has been submitted;(d) Demand stayed in accordance with paras B C below. ii. Where demand in respect of which a recovery certificate has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer may impose such conditions as he may think fit. Thus he may - a. require the assessee to offer suitable security to safeguard the interest of revenue; b. require the assessee to pay towards the disputed taxes a reasonable amount in lump sum or in instalments; c. require an undertaking from the assessee that he will co-operate in the early disposal of appeal failing which the stay order will be cancelled. d. reserve the right to review the order passed after expiry of a reasonable period, say up to 6 months, or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; e. reserve a right to adjust refunds arising, if any, against the demand. iii. Payment by instalments may be liberally allowed so as to collect the entire demand within a reasonable period not exceeding 18 months. iv. Since the phrase stay of demand does not occur in section 220(6) of the Income-tax Act, the Assessing Officer should always use in any order passed under section 220(6) [or under section 220(3) or section 220(7)], the expression that occurs in the section viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in pars (B) hereunder. (B) In a situation where, (a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court/or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or, (b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/ CIT, who after considering all relevant facts shall decide the quantum/ proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand.' 11. Inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irculars themselves, the financial stringency faced by an assessee and the balance of convenience in the matter constitute the trinity , so to say, and are indispensable in consideration of a stay petition by the authority. The Board has, while stating generally that the assessee shall be called upon to remit 20% of the disputed demand, granted ample discretion to the authority to either increase or decrease the quantum demanded based on the three vital factors to be taken into consideration. 13. In the present case, the assessing officer has merely rejected the petition by way of a non-speaking order reading as follows: 'Kindly refer to the above. This is to inform you that mere filing of appeal against the said order is not a ground for stay of the demand. Hence your request for stay of demand is rejected and you are requested to pay the demand immediately. Notice u/s.221(1) of the Income Tax Act, 1961 is enclosed herewith.' 14. The disposal of the request for stay by the petitioner leaves much to be desired. I am of the categoric view that the Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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