TMI Blog2016 (9) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... nbridled powers under section 220(6) of the Act. However, in view of the circular dated 02.02.1993 as clarified by the circular dated 21.03.1996 and modified by the Office Memorandum dated 29.02.2016 the Assessing Officer’s powers have been circumscribed to the extent provided therein. We quite see the force in Mr. Putney’s contention that the department must safeguard its interest and that its interest may be jeoparadized if the petitioner is entitled to avail of the refund and at the same time enjoy the benefit of the stay. However, the Department is bound by the circular as modified by the Office Memorandum. Had the circulars/Office Memorandum not been in force, it may have been a different matter altogether. In the circumstances, the writ petition is disposed of by holding that the petitioner shall be entitled to a stay of the demand subject to its depositing the installments as required by the order dated 14.06.2016 and that the future refunds can be adjusted only to the extent of the balance amount directed to be paid as a condition for the stay. - Civil Writ Petition No. 13146 of 2016 - - - Dated:- 21-9-2016 - MR. S.J.VAZIFDAR, CHIEF AND MR. DEEPAK SIBAL, JJ. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 230.57 crores. The total tax paid was about ₹ 181.24 crores. The Assessing Officer initiated proceedings of penalty under section 271(1)(C) of the Income Tax Act, 1961 (for short the Act ). Mr. Vohra, the learned senior counsel appearing on behalf of the petitioner invited our attention to the observation in the assessment order to the effect that the books of account were produced and checked. He also relied upon the assessment order in so far as it dealt with the petitioner s case for deductions under sections 80IA and 80IB of the Act in considerable detail. The petitioner s claim for deduction under section 80IA of ₹ 429 crores was restricted to ₹ 203.80 crores . Similarly, the petitioner s claim for deduction under section 80IB was restricted to ₹ 65.75 crores. 5. The petitioner s appeal against the assessment order was disposed of by the order of the Commissioner of Income Tax (Appeals) dated 11.07.2011. Thereafter the revisionary jurisdiction under section 263 of the Act was invoked on issues other than under section 80IA and 80IB. Mr. Vohra relied upon the proceedings under section 263 of the Act to indicate that the petitioner s record ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80IA and 80IB of an aggregate amount of about 492 crores. 10. We do not wish to express any opinion on the correctness of these grounds of challenge as they are the subject matter of appeal before the CIT(A) against the order dated 28.03.2016 dismissing the petitioner s objections and the reassessment order dated 31.03.2016. 11. The petitioner filed Civil Writ Petition No. 6983 of 2016 against the reassessment order. The Writ Petition, however, was disposed of by an order and judgment dated 09.05.2016. The Division Bench relegated the petitioner to the alternative remedy of an appeal before the CIT(A). The merits of the matter were not dealt with. 12. It is in these circumstances that the petitioner filed an appeal before the Commissioner of Income Tax (Appeals) against the reassessment order dated 31.03.2016. 13. On 29.04.2016, the petitioner made an application for stay before the Assessing Officer which was disposed of by an order dated 09.05.2016. The order contains no reasons whatsoever. It only observed that the mere filing of an appeal did not entitle the appellant to a stay. It is not necessary to deal with the correctness of this order for ultimately th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand. 4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914: A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) here under. (B) In a situation where, ( a ) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stay application dated 29.04.2016 filed before the Assessing Officer and various instructions/circulars issued by the CBDT. It stated that the said order passed by the Assessing Officer dated 09.05.2016 did not deal with the various contentions raised in the application for stay and that it was in these circumstances that the petitioner had filed the application before the Pr.CIT. The application thereafter proceeds to raise the preliminary objections as to the jurisdiction and deals with the case on merits as well. The contentions were presumably to establish a strong prima-facie case in support of the application for stay. The petitioner sought a stay of the entire demand. Alternatively, the petitioner submitted that the stay may be directed to be granted subject to its meeting a reasonable part of the demand not exceeding 15% of the demand. This case was based essentially on the aforesaid circulars and in particular the instructions contained in the Office Memorandum dated 29.02.2016. 17. We mentioned earlier that one of the main reasons for rejecting the assessee s application for deduction under sections 80IA and 80IB was that it did not maintain separate books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner is undergoing a liquidity crunch. The audit result indicates a loss of about ₹ 1759 crores. Certain agencies have downgraded the petitioner s rating to the default category. These aspect would in our opinion justify a partial stay but not a stay of the entire demand. 19. Firstly, the petitioner s financial difficulties indicate a need to secure the Revenues outstanding claims. More important, prima-facie at least even assuming that our judgment is applicable to the petitioner s case, it is possible that the appellate authorities may remand the matter to enable the Assessing Officer to consider the application for deduction afresh based on the material available. It cannot, therefore, be stated at this stage that there is no possibility of any part of the claim for deduction being disallowed. We are, therefore, not inclined to grant a stay of the entire demand. 20. The Pr.CIT rightly did not grant a complete stay but considered the petitioner s application in the alternative for a stay subject to its paying 15% of the outstanding demand in terms of the Office Memorandum dated 29.02.2016. Considering the facts of the case, the financial position of the petitioner an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner to seek a clarification before the Pr.CIT. The Pr.CIT by the said order dated 26.08.2016 referred to the guidelines and to the previous order. In particular a reference was made to Clause-C of the original instructions dated 02.02.1993 which reads as under:- C. GUIDELINES FOR STAYING DEMAND. (i) . (ii) In granting stay, the Assessing Officer may impose such conditions are he may think fit. Thus he may,- a) Require the assessee to offer suitable security of safeguard the interest of revenue; b) Require the assessee to pay towards the disputed taxes a reasonable amount in lump sum or in installments; c) Require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; d) Reserve the right to review the order passed after expiry of reasonable period, say upto 6 months, or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situation; e) Reserve a right to adjust refund arising, if any, against the demand. After quoting the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the balance demand. Admittedly, a reference under clause 4(B)(a) was not made by the Assessing Officer to the Pr.CIT. In that event, Clause-4(A) alone would operate. As we mentioned earlier, clause 4(A) provides that where the outstanding amount is disputed before the CIT(A), the Assessing Officer shall grant stay of demand till disposal of the first appeal on payment of 15% of the disputed demand. In other words, the Assessing Officer is bound to grant a stay of the entire demand on payment of 15% of the disputed demand unless the case falls under category-B of clause-4. The Assessing Officer is not entitled to insist upon the assessee depositing a higher amount. 25. Faced with this, Mr. Putney relied upon clause-4(E)(iii). He submitted that the Assessing Officer is entitled to impose such conditions as he thinks fit. A plain reading of the clause, however, militates against the submission on behalf of the Department. It entitles the Assessing Officer to reserve the right to adjust the refunds arising to the extent of the amount required for granting stay Therefore, the right to adjust the refund is limited to the amount to be deposited by the assessee as a condit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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