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TMI Blog2019 (3) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... of the disputed demands in respect of the four (4) assessment years as aforesaid were filed before the Commissioner of Income Tax I, arrayed as first respondent in these Writ Petitions, on 04.10.2018. 4. Inter alia, the petitioner has sought a stay on the sole ground that the addition made is sixty (60) times of the returned income and the assessment order passed is 'high pitched and biased to the interest of the revenue'. 5. Reliance has been placed on the decisions of the Madurai Bench of this Court in the case of N. Jegatheesan vs DCIT (W.P.(MD).No.10171 of 2015 and M.P.Nos. 1 & 2 of 2015 dated 18.11.2015) and Karnataka High Court in the case of Flipkart India Private Limited Vs ACIT (WP. No. 1339- 1342/2017 (T-IT). Reliance is also placed on various circulars in support of the request for stay. 6. The Assessing Authority, arrayed as second respondent in these Writ Petitions, has, vide impugned order dated 11.10.2018 conveyed the order of the Principal Commissioner of Income Tax-1, Chennai rejecting the request for stay as follows: 'Petition is rejected. AO to collect 20 % as per Board's Circular ASAP' 7. The petitioner lays stress on the position that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the three factors as aforesaid that the assessing officer can exercise discretion for the grant or rejection, wholly or in part, of a request for stay of disputed demand. 8. In addition, periodic Instructions/Circulars in regard to the manner of adjudication of stay petitions are issued by the Central Board of Direct Taxes (CBDT) for the guidance of the Departmental authorities. The one oft-quoted by the assessee is Office Memorandum F.No.1/6/69/-ITCC, dated 21.08.1969 that states as follows: '1. One of the points that came up for consideration in the 8th Meeting of the Informal Consultative Committee was that incometax assessments were often arbitrarily pitched at higher figures and that the collection of disputed demand as a result thereof was also not stayed in spite of the specific provision in the matter in s. 220(6) of the IT Act, 1961. 2. The then Deputy Prime Minister had observed as under : ".........Where the income determined on assessment was substantially higher than the returned income, say twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeal provided there were no lapses on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any event within two weeks of the receipt of the petition. Such a decision should be communicated to the assessee and the Assessing Officer immediately. iii. The decision in the matter of stay of demand should normally be taken by Assessing Officer/TRO and his immediate superior. A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances; e.g., where the assessment order appears to be unreasonably high-pitched or where genuine hardship is likely to be caused to the assessee. The higher authorities should discourage the assessee from filing review petitions before them as a matter of routine or in a frivolous manner to gain time for withholding payment of taxes. C. Guidelines for staying demand: 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: It is clarified that in these situations also, stay may be granted only in respect of the amount attributable to such disputed points. Further where it is subsequently found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be known within two months. iii. Appeal effects will have to be given within 2 weeks from the receipt of the appellate order. Similarly, rectification application should be decided within 2 weeks of the receipt t hereof. Instances where there is undue delay in giving effect to appellate orders, or in deciding rectification applications, should be dealt with very strictly by the CCITs/CITs. 3. The Board desires that appropriate action is taken in the matter of recovery in accordance with the above procedure. The Assessing Officer or the TRO, as the case may be, and his immediate superior officer shall be held responsible for ensuring compliance with these instructions. 4. This procedure would apply mutatis mutandis to demands created under other Direct Taxes enactments also.' 10. Instruction 1914 was partially modified by Office Memorandum dated 29.02.2016 taking into account the fact that Assessing Officers insisted on payment of significant portions of the disputed demand prior to grant of stay resulting in extreme hardship for tax payers. Thus, in order to streamline the grant of stay and standardize the procedure, modified guidelines were issued which are as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nless the case falls in the category discussed in para (B) thereunder. Similar references to the standard rate of 15% have also been made in succeeding paragraphs therein. 2. The matter has been reviewed by the Board in the light of feedback received from field authorities. In view of the Board's efforts to contain over pitched assessments through several measures resulting in fairer and more reasonable assessment orders, the standard rate of 15% of the disputed demand is found to be on the lower side. Accordingly. it has been decided that the standard rate prescribed in O.M. dated 29.2.2016 be revised to 20% of the disputed demand, where the demand is contested before CIT(A). Thus all references to 15% of the disputed demand in the aforesaid O.M dated 29.2.2016 hereby stand modified to 20% of the disputed demand. Other guidelines contained in the O.M. dated 29.2.2016 shall remain unchanged. These modifications may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance.' 12. The Circulars and Instructions as extracted above are in the nature of guidelines issued to assist the assessing authorities in the matter of grant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer to examine the existence of a prima facie case as well as call upon the assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. ' 12. My observations and conclusions in the above order would apply equally to the facts and circumstances of the present case and may be read as part and parcel of this order. 13. In the light the above, I am inclined to set aside the impugned order dated 11.10.2018, as being mechanical and passed without application of mind. Equally mechanical is the stay petition filed by the assessee, which simply relies upon the circulars issued without reference to the existence of a prima facie case, financial stringency and balance of convenience. 14. In the light of the above, the Writ Petitions are disposed in the following terms: i) The petitioner will appear before the Principal Commissioner of Income Tax, the first respondent herein, on 05.03.2019 at 10:30 am along with a stay petition covering three (3) aspects as referred to aforesaid. ii) After hearing the petitioner, the Principal Commissioner of Income Tax shall pass appropriate orders in accordance with law within a p ..... 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