TMI Blog2024 (3) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ible right upon the assessee to claim a stay of a tax liability by merely offering or consenting to deposit 20% of the outstanding liability. Ultimately, it is for the authorities to examine and consider what amount would be sufficient to securitise the interest of the Revenue and thus a just balance being struck. The quantum of the deposit that would be required to be made would ultimately depend upon the facts and circumstances of each case. The position which thus emerges is that while 20% is not liable to be viewed as an entrenched or inflexible rule, there could be circumstances where the respondents may be justified in seeking a deposit in excess of the above dependent upon the facts and circumstances that may obtain. This would have to necessarily be left to the sound exercise of discretion by the respondents based upon a consideration of issues such as prima facie, financial hardship and the likelihood of success. This observation we render being conscious of the indisputable position that the OM applies only upto the stage of the appeal pending before the CIT(A) and being of little significance when it comes to the ITAT. All that we additionally deem appropriate to observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . SCs with Mr. Sanjeev Menon Ms. Sakshi Shairwal, Jr. SCs, Ms. Abhipriya, Mr. Vivek Gurnani and Mr. Rajat Sen, Advs. ORDER YASHWANT VARMA, J. 1. The writ petitioner impugns the order dated 08 March 2024 passed by the Income Tax Appellate Tribunal [ITAT] rejecting its application for stay on the recovery of demand during the pendency of appeal. Before the ITAT, the petitioner appears to have addressed various contentions assailing the order of assessment as framed by the Assessing Officer [AO] and which had subsequently been affirmed by the Commissioner of Income Tax (Appeals) [CIT (A)]. 2. Having heard learned counsels for respective sides at some length, according to us the only issue which would warrant a fresh trial by the ITAT emanates from the submission of the petitioner that it was entitled to a stay of the resultant demand upon deposit of 20% of the amount outstanding and which was cursorily rejected by the ITAT with it being observed that each application for stay is liable to be decided on its own facts and circumstances and a general prescription would not apply. Of equal significance is the fact of certain moneys having been recovered by the respondents in the interregn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covery of demand before the AO. That application came to be disposed of by the AO on 28 October 2021 with a direction to the petitioner to deposit 20% of the outstanding tax liability. It becomes pertinent to note that the aforesaid order does not appear to have been either questioned or assailed by the petitioner. It may be additionally noted that the AO while passing the aforesaid order had clearly provided that in case the petitioner fails to deposit 20% of the total demand, it would be treated as an assessee in default . The petitioner admittedly failed to comply with the aforesaid condition as imposed by the AO. 6. No further steps appear to have been taken by the petitioner subsequent thereto and consequently on 09 January 2023, the respondents issued a letter requiring it to deposit and liquidate the outstanding tax liability. This led to the petitioner moving a second application for stay under Section 220(6) before the AO on 27 January 2023. However, and as would appear from the record, the appeal itself came to be dismissed by the CIT(A) on 28 March 2023. That application was thus rendered infructuous. 7. Aggrieved by the order passed by the CIT(A), the petitioner approac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that since Section 139(4B) of the Act provides that all the provisions of this Act shall apply to a return filed by a political party as if it were a return furnished under subsection (1) of Section 139 , therefore, it would encompass sub-section (4) of Section 139 of the Act also. 33. In our view, the said argument is quite misplaced as it would negate the purpose for which the third Proviso has been inserted by the Finance Act, 2017. Moreover, the third Proviso contains the expression the due date under section 139 and a plain reading of the provisions shows that the due date for the purpose of Section 139 is defined in terms of Explanation 2 below Section 139 (1) of the Act and that such 'due date' is not controlled by the provisions of sub-section (4) of Section 139, which merely permits filing of belated returns. 10. Proceeding further, the ITAT has also on a prima facie consideration negatived the contentions which were addressed with reference to clause (d) of the First Proviso to Section 13A of the Act. While dealing with this question, it has held as under: - 39. After having perused the orders of the authorities below as well as other material, it is borne out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) of the first Proviso. Each of the conditions laid down in clauses (a), (b), (c) and (d) of the first Proviso are to be mandatorily complied with in order to claim exemption under Section 13A of the Act, as per the ratio of the judgment of the Hon'ble Delhi High Court in the case of the assessee (supra). For a reference, the following discussion by the Hon'ble High Court is relevant: - 77. . . . . . . While it is true that income by way of voluntary contributions is not identified as a separate head of income in Section 14 of the Act, the legislative intent was not to exclude it altogether from the taxable income. It would be excluded only subject to fulfilment of the conditions stipulated under Section 13A of the Act. It could never have been the legislative intention that voluntary contributions received by a political party that does not satisfy the requirement of Section 13A of the Act-viz., maintaining books of accounts, keeping a record of voluntary contributions in excess of Rs. 10,000 and getting the accounts audited-would be exempt from tax. If the above conditions are not fulfilled, the income of a political party by way of voluntary contributions would be inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be granted since the Indian National Congress (I) did not place on record the factual basis for such a claim. 124. The legal position is that no deduction can be allowed with respect to the expenditure incurred by the political party for any purpose whatsoever if it fails to comply with the basic requirements of section 13A of the Act. 125. Therefore, the only way to proceed in the present matter is to wholly disallow the expenditure claimed by the Indian National Congress (I) as relatable to income from other sources . On the receipts side, the Revenue will simply have to go by whatever is disclosed by the Indian National Congress (I) as income by way of voluntary contributions in the return as originally filed and treat that as income from other sources. 126. Consequently, the court disagrees with the decision of the Commissioner of Income-tax (Appeals) restricting the expenditure of the assessee to 60 per cent of the amount claimed and order of the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal to that extent are set aside. (underlined for emphasis by us) Although an appeal against the aforenoted judgment of this Court appears to have been preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtensive arguments were being advanced, the Appeal pending before the Tribunal may be taken up for hearing on merits to facilitate an expeditious disposal of the same. The learned Standing Counsel had no objection to the same, while the learned Senior Counsel appearing for the Applicant did not opt for the same. Be that as it may, we are pointing out the aforesaid only to emphasize that the power to grant the stay is exercised inter alia, in cases where a delay can be expected in the determination of the pending Appeal in the due course. So however, in the instant case, the delay in determination of Appeal, if any, is not attributable to the Revenue. 13. Having perused the judgment rendered by the ITAT, we find that it has accorded due consideration upon the merits of the challenge which stood raised. It would, therefore, be incorrect to accept the submission that the ITAT had failed to apply its judicial mind for the purposes of a prima facie evaluation of the questions which stood posited. We are cognizant of the ITAT while considering an application for stay being obliged to consider the existence of a prima facie case, undue hardship as well as examining the likelihood of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first issued as far back as on 06 July 2021 and the first application for complete stay came to be rejected on 28 October 2021, no concrete steps appear to have been taken by the petitioner to either consider securitizing the outstanding demand or to seek appropriate interim protection. It admittedly failed to comply with the condition which was imposed by the AO in terms of its order of 28 October 2021. In fact, no step appears to have been taken or pursued for almost two years till a demand letter came to be issued on 09 January 2023. Although, the CIT(A) had dismissed the appeal on 28 March 2023 and the petitioner had instituted the appeal before the ITAT on 24 May 2023, a stay application in that appeal came to be filed only on 14 February 2024. This would clearly appear to suggest that the petitioner has been far from vigilant and clearly lax in pursuing the legal remedies which were otherwise available. 18. As we read the impugned order, what ultimately appears to have weighed upon the ITAT is of the petitioner having firstly been remiss in taking peremptory steps in respect of a demand which had remained outstanding right from 2021. It failed to abide by the conditions which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose lines before the ITAT. The tone and tenor of submissions clearly appear to have been concentrated upon the merits of the assessment order. Although the issue of payment of 20% of the outstanding demand appears to have been raised, the same came to be summarily rejected by the ITAT in cryptic terms. Notwithstanding the above, it becomes pertinent to observe that the 20% deposit which is spoken of in the OM dated 31 July 2017 is not liable to be viewed as a condition etched in stone or one which is inviolable. The OM merely seeks to provide guidance to the authorities to bear in mind certain aspects while considering applications for stay of demand pending an appeals remedy being pursued. The OM is not liable to be read as conferring an indefeasible right upon the assessee to claim a stay of a tax liability by merely offering or consenting to deposit 20% of the outstanding liability. Ultimately, it is for the authorities to examine and consider what amount would be sufficient to securitise the interest of the Revenue and thus a just balance being struck. The quantum of the deposit that would be required to be made would ultimately depend upon the facts and circumstances of each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opriate to observe is that merely because the AO had disposed of the stay application on 28 October 2021 or the fact that the petitioner failed to comply with the conditions so imposed, would not detract from the right of the ITAT to independently consider whether appropriate interim measures were liable to be framed for the purposes of protecting the interest of the assessee and at the same time securitizing the outstanding demand. 26. In the end, we take note of an amount of Rs. 65.94 crores having been recovered by the respondents in the interregnum and that amount translating to roughly 48% of the outstanding demand. This changed circumstance is an aspect which, in our considered opinion, would merit consideration by the ITAT in case the petitioner chooses to move a fresh application for stay. 27. Notwithstanding the refrain of the ITAT and which had also taken note of the continued adjournments which were sought by the writ petitioner as well as it having turned down its offer for the appeal itself being put down for final hearing, we deem it appropriate to accord liberty to the writ petitioner to move a fresh application for stay before the ITAT bearing in mind the developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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