Stay of demand during pendency of appeal before CIT A granted @ 10% in place of 20%.
 108 tax mann . com 265 (Gujarat)
HIGH COURT OF GUJARAT
Dalpatsinh Ukabhai Vasava
Principal Commissioner of Income-tax*
Held by Court:
4. The issue of granting stay pending appeal is governed principally by the two circulars issued by the CBDT. The first circular was issued way back on 2nd February 1993 being instructions no.1914. The circular contained guidelines for staying the demand pending appeal. It was stated that the demand would be stayed if there are valid reasons for doing so and mere filing of appeal against the order of assessment would not be sufficient reason to stay the recovery of demand. The instructions issued under the office memorandum dated 29th February 2016 are not in super-session of the instructions no.1914 dated 2nd February 1993 but are in partial modification thereof. The preamble of these instructions provide that in order to streamline the process of grant of stay of standardization of quantum of lump-sum payment to be made as a pre-condition for stay of demand of dispute before the Commissioner of Income Tax (Appeals), such modified guidelines were being issued. The relevant portion of these instructions read as under:
“4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT(A), the following modified guidelines are being issued in partial modification of Instruction No.1914:
In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) hereunder.
In a situation where,
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
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.
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.
The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 © above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be.
In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia –
require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled;
reserve the right to review the order passed after expiry of reasonable period (say 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;
reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.”
15. This circular thus lays down 15% of the disputed demand to be deposited for stay, by way of a general condition. The circular does not prohibit or envisage that there can be no deviation from this standard formula. In other words, it is inbuilt in the circular itself to either decrease or even increase the percentage of the disputed tax demand to be deposited for an assessee to enjoy stay pending appeal. The circular provides the guidelines to enable the Assessing Officers and Commissioners to exercise such discretionary powers more uniformly.
16. Ordinarily, the court would be slow in interfering with such discretionary exercise of powers by the authority concerned. However, in the present case, the total tax demand is quite high. The issues are at the first appeal stage. Even 20% of the disputed tax dues would run into few lakhs of rupees. To be precise, approximately 34 lakh.
17. In the overall view of the matter, we reduce the requirement of depositing the disputed tax dues to enable the writ-applicant to enjoy stay pending the appeal before the appellate authority to 10%. We are informed that the writ-applicant has so far deposited Rs.5 lakh. We clarify that this would, however, be on a further condition that the writ-applicant shall offer immovable security for the remaining 10% to the satisfaction of the assessing authority. The order passed by the authority concerned stands modified accordingly.
18. Both these conditions shall be satisfied latest by 31st July 2019.
19. The writ-applicant is directed to file an affidavit before the registry whether he would abide by these conditions and undertake to fulfill them within the time permitted. Such affidavit shall be filed latest by 5th July 2019.
20. It is clarified that if the writ-applicant does not file any such affidavit, or in such affidavit, declares that he does not wish to be bound by such conditions, or having in such affidavit agreed to fulfill the conditions, fails to do so by 31st July 2019, the relief granted under this order would stand automatically withdrawn and the impugned order would revive.