Whether ITAT can waive off the mandatory condition of pre-deposit of tax of 20%?

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Whether ITAT can waive off the mandatory condition of pre-deposit of tax of 20%?

Recently, the Mumbai ITAT BENCH ‘K’ in the case of Hindustan Lever Ltd. v. Deputy Commissioner of Income-tax, Circle 1(1)(1) has held as under:

  1. Inherent powers of ITAT u/s 254(1) does not mean power to grant stay of demand by waiving off 20% pre-deposit required u/s 254(2A).
  2. Inherent powers of ITAT u/s 254(1) covers power to grant a stay of demand but that does not mean that ITAT can grant stay of demand in violation of conditions stipulated u/s 254(2A) including pre-deposit by appellant of at least 20% of disputed demand.

The case citation is as under:

[2022] 143 taxmann.com 2 (Mumbai – Trib.)

It may be noted that section 254(2A) imposes the condition for stay of demand and it reads as under:

(2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or sub-section (2) of section 253 :

Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order 84[subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnishes security of equal amount in respect thereof] and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order:

 

 Provided further that no extension of stay shall be granted by the Appellate Tribunal, where such appeal is not so disposed of within the said period of stay as specified in the order of stay, unless the assessee makes an application and has complied with the condition referred to in the first proviso and the Appellate Tribunal is satisfied that the delay in disposing of the appeal is not attributable to the assessee, so however, that the aggregate of the period of stay originally allowed and the period of stay so extended shall not exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed:

Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee.

Section 254(2A) clearly provides that non stay can be granted unless and until 20% is paid and the same is again confirmed by the Mumbai ITAT.

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