TMI Blog2009 (2) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 - SANJAY KISHAN KAUL, SUDERSHAN KUMAR MISRA JJ JUDGMENT The judgment of the court was delivered by 1. Sanjay Kishan Kaul J.-Rule DB. 2. Counsel for the respondent states that she wants to take instructions. 3. List for directions on March 13, 2009. CM No. 2320/2009 (stay) 4. Notice which is accepted by learned counsel for the respondents. 5. Heard learned counsel for the parties. 6. Learned counsel for the petitioner submits that the returns for the year 2005-06 filed by the petitioner declared total income of Rs. 46,41,070 while the assessment order in respect of the said year assessed the income at Rs.1,67,02,35,990 which is almost 350 times the returned income. The same is stated to be on account of two additions made. The first addition of Rs. 1,46,55,94,922 is on account of alleged unaccounted sales while a sum of Rs. 20,00,00,000 is on account of cash credits. Learned counsel for the petitioner submits that this alleged unaccounted sales have also been added as income in the hands of sister concerns and in so far as cash credits are concerned the details of the PAN numbers of the assessees who have carried out the transaction have been furnished to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income determined is substantially higher than the returned income, that is, twice the latter amount or more, then the collection of tax in dispute should be held in abeyance till the decision on the appeal is taken. In this case/as we have noted above, the assessment is almost 8 times the returned income. Clearly, the above extract from Instruction No. 96 dated August 21, 1969 would be applicable to the facts of the case. 9. Learned counsel for the assessee has drawn our attention to several decisions of various High Courts which have interpreted the aforesaid Instruction in the way that we have read it. Some of these decisions are N. Rajan Nair v. ITO [1987] 165 ITR 650 (Ker), Mrs.R.Mani Goyal v. CIT [1996] 271 ITR 641 (All) and I. V. R. Constructions Ltd. v. Asst. CIT [1998] 231 ITR 519 (AP). Under the circumstances, we are of the view that the assessee would, in the normal course, be entitled to an absolute stay of the demand on the basis of the above Instruction." (emphasis supplied) Learned counsel for the respondent seeks to plead that the aforesaid circular does not reflect the current procedure being followed by the respondent in view of a subsequent Instruction N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the above observations of the then Deputy Prime Minister be brought to the notice of all the Income-tax Officers and that the powers of stay on recovery in such cases be exercised, up to the stage of first appeal, by the Inspecting Assistant Commissioner/Commissioner of Income-tax. Noting the above instruction, this court observed as under (page 130): '41. A perusal of paragraph 2 of the aforesaid extract would show that where the income determined is substantially higher than the returned income, that is, twice the latter amount or more, then the collection of tax in dispute should be held in abeyance till the decision of the appeal is taken. In this case, as we have noted above, the assessment is almost eight times the returned income. Clearly, the above extract from Instruction No. 96 dated August 21, 1969 would be applicable to the facts of the case. . . 43. Under the circumstances, we are of the view that the assessee would, in normal course, be entitled to an absolute stay of the demand on the basis of the above Instruction.' Mr. Jolly, who appeared on behalf of the respondent, submits that Instruction No. 96 which formed the basis of the decision of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) A demand will be stayed only if there are valid reasons for doing so. Mere filing an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. A few illustrative situations where stay could be granted are : ' Relying upon the said Instruction No. 1914 of 1993, Mr. Jolly submitted that all previous instructions stood superseded which included the supersession of said Instruction No. 96. He further submitted that paragraph No. 2(c), which deals with guidelines for staying demand, specifically requires that a demand be stayed only if there are valid reasons for doing so and that a mere filing of an appeal against the assessment order will not be a sufficient reason for staying recovery of a demand. Having considered the arguments advanced by the learned counsel for the parties, we are of the view that although Instruction No. 1914 of 1993 specifically states that it is in supersession of all earlier instructions, the position obtaining after the decision of this court in Valvoline Cummins Ltd. [2008] 307 ITR 103 is not altered at all. This is so because paragraph No. 2(A) which speaks of responsibility specifically indicates that it sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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