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TMI Blog2019 (3) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuant to search and seizure action under Section 132 of the Act conducted on 25.04.2016. Several assets were seized including cash and gold coins as well as rough note books. Appeals have been filed before the Commissioner of Income Tax (Appeals), challenging the aforesaid assessments, dated 26.12.2018, and the same are pending. 4. In the meanwhile, the petitioner also filed an application dated 24.01.2019 seeking a stay of recovery of the disputed demands in response to which the first respondent has passed an order dated 13.02.2019, now impugned before me. 5. Mr.Pandian submits that the petitioner has a prima facie case in the appeals and does not have the liquidity to make the payment of the amount demanded, being 20% of the total demand, amounting to a sum of Rs. 11,68,24,189/-. He thus prays that the recovery be kept in abeyance, till the appeals are disposed of by the Commissioner of Income Tax (Appeals). He also points out that the petitioner has remitted a sum of Rs. 1,00,00,000/- towards the disputed demand of a sum of Rs. 58,41,20,946/-. 6. Mr.Srinivas, for his part, submits that the impugned order is a discretionary one that does not warrant any interference. He dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de with the return of income. In these circumstances, excess of credits in bank accounts as compared to receipts shown in income & expenditure account have been brought to tax. ii. Excess Salary claimed in books:- During the course of search, details of salaries paid to teaching and non teaching staff written in books were seized but, as per the returns of income filed, the claim made was more than the expenses noted in seized records. Further, the average salary paid to non-teaching staff was almost equal to teaching staff and also assessee failed to furnish details of TDS made on salaries paid. In these circumstances, salary claimed in excess of material found in seized materials were disallowed. iii. Expenses claimed in seized materials:- During the course of search, certain books maintained by correspondent of the Trust containing payments made to various persons were seized. When the assessee was asked to explain the entries made in those registers, proper explanation for sources of such payments made were not furnished during assessment proceedings, which resulted in disallowance u/s.69C of I.T.Act. iv. Annual Day and Food Expenses:- In the Income & Expenditure Account, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not registered u/s.12AA but, had not filed the returns of income after paying due taxes before due date. As could be seen from the above, all the additions in this case are made on account of provisions of I.T.Act and facts of the case s noticed during search proceedings and also as the assessee did not produce proper evidences during assessment proceedings. 3. Now, coming to the claim made by the assessee that it is not in position to pay the demand, as it will constrain the financial position of the trust, the assessee has not furnished details of fixed deposits / balances in bank accounts held by it in order to examine the claim made by it.' 9. So far so good. The officer is, while adjudicating upon a request for stay of recovery, required to test the existence of a prima facie case, financial stringency and the balance of convenience in the matter and the assessing officer has, in this matter, proceeded to do just so. The operative portion of the Officers' order is as extracted below: 'The assessee's kind attention is also invited to CBDT Memorandum in F.No.404/72/93-ITCC dt.29.2.2016 modifying CBDT Instruction No.1914 dt.9.2.2016, all earlier Instructions in regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venience in the matter. Thus, the Office Instruction directing the Assessing Authority to call upon the assessee to remit 20% of the disputed tax, is, at best, only a thumb rule and not a mandatory pre-condition, cast in stone. I extract below, the operative portion of my order as aforesaid, for sake of clarity. '7. The parameters to be taken into account in considering the grant of stay of disputed demand are well settled - the existence of . 'Financial stringency' would include within its ambit the question of 'irreparable injury' and 'undue hardship' as well. It is only upon an application 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h measures as are necessary to collect the demand. It must be understood that mere issue of a show cause notice with no followup is not to be regarded as adequate effort to recover taxes. B. Stay Petitions: i. Stay petitions filed with the Assessing Officers must be disposed of within two weeks of the filing of petition by the tax- payer. The assessee must be intimated of the decision without delay. ii. Where stay petitions are made to the authorities higher than the Assessing Officer (DC/CIT/CC), it is the responsibility of the higher authorities to dispose of the petitions without any delay, and in 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand raised and communicate his decision in the form of a speaking order. D. Miscellaneous: i. Even where recovery of demand has been stayed, the Assessing Officer will continue to review the situation to ensure that the conditions imposed are fulfilled by the assessee failing which the stay order would need to be withdrawn. ii. Where the assessee seeks stay of demand from the Tribunal, it should be strongly opposed. If the assessee presses his application, the CIT should direct the departmental representative to request that the appeal be posted within a month so that Tribunal's order on the appeal 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board's O.M. of even number dated 29.2.2016 Instruction No. 1914 dated 21.3.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. Vide O.M. N0.404/72/93-ITCC dated 29.2.2016 revised guidelines were issued in partial modification of instruction No 1914, wherein, inter alia, vide para 4(A) it had been laid down that 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) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted April 11, 1955) requires the officers of the department 'to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs. .... Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other......'. Thus, notwithstanding that the assessee may not have specifically invoked the three parameters for the grant of stay, it is incumbent upon 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. ' 11. In the present case, the officer proceeds to mechanically call upon the petitioner to remit 20% of the demand without examining the appropriateness of the direction to the facts and circumstances of the petitioners' case. For this sole reason, I am constrained to set aside the impugned order. 12. The petitioner will appear before the first respondent on 13.03.2019 w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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