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2021 (4) TMI 495 - ITAT MUMBAIStay on collection/ recovery of tax and interest demands - deemed dividend distribution of accumulated profits in the course of a demerger transaction which took place in the period relating to assessment year 2018-19 - Demand in question is on account of genuine differences about tax implications of a wholly internal business restructuring transaction - garnishee proceedings already initiated by the Assessing Officer - HELD THAT:- It is not a fit case of unconditional stay on collection or recovery of the entire impugned demands of tax and interest aggregating to ₹ 3,786.34 crores. It is a fit case in which the assessee must pay or provide reasonable security for at least 20% of the disputed demand, and this amount, which comes to ₹ 757.26 crores, is rounded off to ₹ 760 crores. We must also take into account the fact that the amount of ₹ 760 crores is so substantial an amount, more so in these pandemic days, that such a huge cash outgo would cripple functioning of that business and bring it to a halt at least temporarily, and the fact that the conduct of the assessee, in not seeking any adjournment at all and thus making every effort for expeditious disposal of appeal, has not been wanting at all. While, on one hand, revenue authorities must safeguard and protect their legitimate interests, revenue authorities must take a pragmatic stand with compassion and with larger interest of the nation in mind. The assessee applicant is a well-established business houses, with firm roots, in India, the delay in disposal of appeal is on account of the delay in appointment of, and availability of, counsel by the income tax department, and the assessee has not been evasive or wanting in compliance or in conduct- at least so far as the appellate proceedings before this Tribunal are concerned. The demand in question is on account of genuine differences about tax implications of a wholly internal business restructuring transaction. Considering all these factors, while we have declined an unconditional stay on collection/ recovery of disputed demands, we also consider it fit and proper to permit the assessee to furnish a reasonable security of the value of ₹ 760 crores or more, in lieu of making payment of the aforesaid amount, to the satisfaction of the Assessing Officer, and we also deem it fit and proper to direct the Assessing Officer to accept such a security for the time being and keep all the coercive recovery proceedings in abeyance till the disposal of this appeal. As to what will constitute reasonable security is something which is in the exclusive domain of the Assessing Officer, and unless his decision is perverse or grossly unreasonable, obviously there is no occasion for any other authority to interfere in the matter. In case the assessee is aggrieved of the stand taken by the Assessing Officer in this regard, the Assessing Officer will give the assessee a period of two weeks, on the same lines as directed by Hon’ble jurisdictional High Court in assessee’s own case, before taking any recovery measures, so that the assessee can seek legal remedies, if so advised, against the same. The garnishee proceedings already initiated by the Assessing Officer shall also remain suspended, even if not withdrawn by the Assessing Officer, in the meantime. Even on merits, we have directed the assessee to furnish securities worth ₹ 760 crores, to the satisfaction of the Assessing Officer, which works out to almost 20% of disputed demands anyway, we see no need to deal with the broader question about the impact of amendment in the scheme of Section 254(2A) which is said to restrict powers of the Tribunal in granting the stay, unless the assessee makes a pre-deposit of 20% of the impugned demands or provides security in respect thereof. We grant a stay on collection/ recovery of the disputed impugned demands on account of dividend distribution tax, and interest thereon, aggregating to ₹ 3786.34 crores on the following conditions: a) The assessee shall provide a reasonable security for an amount of ₹ 760 crores or more, to the satisfaction of the Assessing Officer, at the earliest possible, and, in no case, not later than two weeks from today; Provided, however, in case the Assessing Officer is, for any reasons whatsoever, not satisfied with the security offered by the assessee, the Assessing Officer shall pass a detailed speaking order in respect of the same, and will give a two week notice to the assessee, on the same lines as was directed by Hon’ble jurisdictional High Court in assesee’s own case (supra), before initiating any coercive recovery proceedings, so that the assessee can pursue appropriate legal remedies against the stand of the Assessing Officer, if so advised. b) The assessee will fully cooperate in expeditious disposal of appeal before this Tribunal, and will not seek any adjournment of hearing; and c) This stay will be in operation till 180 days from the date of this order, till the order on the related appeal is pronounced or till further orders- whichever is earlier.
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