2012 (11) TMI 837 - AT - Income Tax

Stay of recovery - penalty under section 271(1)(c) of the Income Tax Act Held that - there was adequate disclosure of the facts in the notes to the return of income about the interest income of Rs. 8.10 crores receivable from MBPL and the Assessee s action in not having been considered as income by the assessee. As to whether the stand of the assessee was correct or not is not relevant in the context of penalty proceedings. - there is a prima facie case made out by the assessee. The assessee has already wound up its business activities. - the bank balance of the assessee as on 31/12/2011 is only Rs. 3,95,471/-. - Keeping in view the existence of a prima facie case, balance of convenience and hardship, there should be a stay of recovery of outstanding demand pending disposal of the appeal of the assessee by the Tribunal or for a period of six months from to-day whichever is earlier. - Stay granted.

Summary

Issues:
1. Application for grant of stay of recovery of outstanding demand of Rs. 2,55,34,154 arising from penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Imposition of penalty for concealing particulars of income due to non-disclosure of interest income from a loan waiver.
3. Prima facie case analysis for granting a stay of recovery of outstanding demand pending appeal.

Issue 1: Application for Stay of Recovery of Outstanding Demand:
The case involved an application for stay of recovery of an outstanding demand of Rs. 2,55,34,154 by the assessee, arising from a penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The demand was confirmed by the CIT(A) and related to the imposition of penalty due to non-disclosure of interest income from a loan waiver.

Issue 2: Imposition of Penalty for Concealing Income:
The penalty was imposed by the AO on the assessee for allegedly concealing particulars of income amounting to Rs. 8.10 crores. This income was related to interest accrued from a loan advanced to another entity, which the assessee waived off. The CIT(A) upheld the penalty, leading to the appeal before the Tribunal. The Tribunal found that the interest income was not accounted for by the assessee, leading to the penalty for concealing income.

Issue 3: Prima Facie Case Analysis for Stay of Recovery:
In the assessment of whether to grant a stay of recovery of the outstanding demand pending appeal, the Tribunal considered various factors. The assessee argued for a stay based on adequate disclosure of facts regarding the interest income in the return of income. The Tribunal found a prima facie case in favor of the assessee, noting the balance of convenience and hardship faced by the assessee, who had wound up its business activities. Considering the financial position of the assessee, the Tribunal ordered a stay of recovery pending the appeal hearing, or for a period of six months, whichever is earlier.

This detailed analysis of the judgment highlights the issues of the application for stay of recovery, imposition of penalty for concealing income, and the assessment of a prima facie case for granting a stay of recovery of the outstanding demand.