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2022 (11) TMI 1262 - MADRAS HIGH COURTStay of demand - recovery proceedings - pre-condition for grant of stay of recovery - pre-condition for deposit of 20% of the total demand - HELD THAT:- The stay application has come to be dismissed by way of impugned order that contains a fatal flaw, being that the Assessing Authority proceeds on the basis that there is a pre-condition for deposit of 20% of the total demand for the grant of stay till disposal of first appeal. This view patently erroneous insofar as the Income Tax Act does not provide for any pre-condition for grant of stay of recovery, as this Court has made clear on several occasions. Office Memorandum (OM) referred to by the Assessing Authority in F.No.404/72/93-ITCC dated 31.07.2017 only increases the rate of disputed demand from 15% as set out under Instruction No.1914 dated 21.03.1996 to 20%. However, the actual tax to be demanded, ranging from 0% to 100%, would depend upon the existence of three factors, viz., (i) prima facie case, (ii) financial stringency and (iii) balance of convenience and it is only upon a consideration of the aforesaid factors that the officer would dispose an application for stay. This discussion does not find place in the present impugned order and rather, the Assessing Authority proceeds on the basis that 20% is the standard demand that the petitioner must be called upon to remit. Thus impugned order is quashed. The stay petition is restored to the file of the Assessing Officer, who shall call upon the assessee, consider materials, if any, placed by the assessee before him in support of the aforesaid three conditions and pass orders upon the stay application, within a period of six (6) weeks from today.
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