TMI Blog2018 (4) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed demand. Likewise, there is a further clause in the circular for reduction of 20% deposit if the petitioner makes out a case, it has also not been considered. In straightway, direction of deposit of 20% of the disputed demand has been made which is not the correct way of deciding the application for stay of the disputed demand. Set aside and the matter is remitted to the competent authority to consider afresh the matter - Writ Petition (T) No.59 of 2018, Writ Petition (T) No.60 of 2018 - - - Dated:- 10-4-2018 - Hon'ble Shri Justice Sanjay K. Agrawal For the Petitioner : Mr. Sumit Nema, Senior Advocate with Mr. Anand Dadariya, Advocate For the Respondents : Mrs. Naushina Afrin Ali, Advocate ORDER 1. Since common question of law and fact is involved in both the writ petitions, they are heard together and are being disposed of by this common order. 2. The petitioner was subjected to order of assessment by the assessing officer by order dated 30-12-2017. Feeling aggrieved and dissatisfied with the order of assessment, the petitioner preferred an appeal under Section 246A of the Income Tax Act, 1961 (for short, 'the Act of 1961') before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT circular dated 29- 2-2016 modified by another circular dated 31-7-2017, as such, the impugned orders are supportable in law and the writ petitions deserve to be dismissed. 5. I have heard learned counsel for the parties and considered the rival submissions made herein-above and also went through the record with utmost circumspection. 6. Section 119 of the Act of 1961 provides for instructions to subordinate authorities. Sub-section (1) of Section 119 of the Act of 1961 provides as under: - 119. (1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board : Provided that no such orders, instructions or directions shall be issued- (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been followed with approval by the Supreme Court in the matter of Catholic Syrian Bank Limited v. Commissioner of Income Tax, Thrissur (2012) 3 SCC 784 and while dealing with the effect of circulars, the Supreme Court held as under: - 23. Now, we shall proceed to examine the effect of the circulars which are in force and are issued by the Central Board of Direct Taxes (for short the Board ) in exercise of the power vested in it under Section 119 of the Act. Circulars can be issued by the Board to explain or tone down the rigours of law and to ensure fair enforcement of its provisions. These circulars have the force of law and are binding on the Income Tax Authorities, though they cannot be enforced adversely against the assessee. Normally, these circulars cannot be ignored. 24. A circular may not override or detract from the provisions of the Act but it can seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act. (Refer to UCO Bank v. CIT, (1999) 4 SCC 599.) 9. Thus, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing 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) hereunder. (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, (b) 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 lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/CIT, who after considering all relevant facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stay application and/or before stay application is taken up for consideration on merits, the assessee is required to deposit 15% of the disputed demand as pre-deposit is absolutely based on misinterpretation and/or misreading of the modified Instructions dated 29th February 2016. What Clause-4 provides is that the Assessing Officer may/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 mentioned in para 4 [B] of the modified instructions dated 29th February 2016. Under the circumstances, the impugned decision of the respondent No. 2 in rejecting the stay application and consequently directing the petitioner to deposit 100% of the disputed demand on the ground that the petitioner has not deposited 15% of the disputed demand as a pre- deposit before his application for stay is considered on merits cannot be sustained and the same deserves to be quashed and set-aside. The matter is required to be remanded to the Assessing Officer to consider the stay application in accordance with law and on merits, in light of the modified instructions dated 29th February 2016 and observations made by us in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. (b) In cases where the assessed income under the impugned order far exceeds returned income, the authority will consider whether the assessee has made out a case for unconditional stay. If not, whether looking to the questions involved in appeal, a part of the amount should be ordered to be deposited for which purpose, some short prima facie reasons could be given by the authority in its order. (c) In cases where the assessee relies upon financial difficulties, the authority concerned can briefly indicate whether the assessee is financially sound and viable to deposit the amount if the authority wants the assessee to so deposit. (d) The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order. (e) We clarify that if the authority concerned complies with the above parameters while passing orders on the stay application, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst his order: the matter must be considered from all its facets, balancing the interest of the assessee with the protection of the Revenue. 20. After having noticed the manner of disposing the appeal as highlighted by the Bombay High Court in the two judgments noticed herein-above and agreeing with the same, it would appear that the competent authority, in the instant case, while considering the application simply held that the appeal proceedings are separate and distinct from recovery proceedings and further proceeded to hold that 20% of the disputed demand has not been deposited in accordance with the guidelines dated 31-7-2017 and passed the order dated 7-3-2018. Thus, it is quite vivid that the application for stay of demand has not been considered in the manner it was required to be considered and dealt with. Deposit of 20% of the disputed demand has been made condition precedent for hearing the application for stay which is not contemplated either under the Act of 1961 or the CBDT guidelines dated 29-2-2016 modified by the office memorandum dated 31-7-2017. It is only when the competent authority is of the opinion that the assessee has made out a case for grant of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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