IN THE HIGH COURT OF GUJARAT
R/Special Civil Application No.9825 of 2019
SHRI DALPATSINH UKABHAI VASAVA
THE PRINCIPAL COMMISSIONER OF INCOME TAX – 2
J B Pardiwala & A C Rao, JJ
Dated: June 24, 2019
Appellant Rep by: Mr H R Prajapati
Respondents Rep by: Mr Varun K Patel, Notice Served
Income Tax – Sections 56(2) & 156
Keywords – Income from other sources – High pitched assessment – Reduction of tax deposit – Stay of demand
THE assessee’s return for the relevant AY was selected for limited scrutiny through CASS. The selection was made to verify the genuineness of unsecured loans and an incident of purchase of agicultural property during the relevant AY. The assessee, during the assessment furnished all the details as called for by the AO. On perusal, the AO found that both the transactions were bogus. Ultimately, demand was raised bringing the added income under the head of Income from other sources. Accordingly, a notice of demand was served.
The assessee filed an application for stay of demand citing poor fiancial condition and that the case was one of the high pitch assessment. The Pr. Commissioner directed the writ-applicant to pay 20% of the demand within a stipulated time failing which the stay application would also fail. The assessee reiterated his previous pleas before the High Court alonwith the contention that the Income Tax had no provision to claim a high pitch deposit. The Department contended in asking to deposit 20% of the assessed amount, the order is of discretionary nature and, therefore, the HC may not disturb it in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.
On writ application, the High Court,
Whether despite the reluctance of writ court to interfere with discretionary powers of Revenue authorities to quantify deposit of tax dues as a condition to grant stay of demand, limited intervention is warranted on case to case basis if the assessment is high pitched – YES: HC
++ the issue of granting stay pending appeal is governed principally by the two circulars issued by the CBDT. The first circular was issued way back on February 02, 1993 being instructions no.1914. In that circular, it was stated that the demand would be stayed if there are valid reasons for doing so and mere filing of appeal against the order of assessment would not be sufficient reason to stay the recovery of demand. Another set of instructions issued under the office memorandum dated February 29, 2016 are not in super-session of the instructions no.1914 dated 2nd February 1993 but are in partial modification. The preamble of these instructions provide that in order to streamline the process of grant of stay of standardization of quantum of lump-sum payment to be made as a pre-condition for stay of demand of dispute before the CIT(A), such modified guidelines were being issued;
++ this circular lays down 15% of the disputed demand to be deposited for stay, by way of a general condition. The circular does not prohibit or envisage that there can be no deviation from this standard formula. In other words, it is inbuilt in the circular itself to either decrease or even increase the percentage of the disputed tax demand to be deposited for an assessee to enjoy stay pending appeal. The circular provides the guidelines to enable the AOs and Commissioners to exercise such discretionary powers more uniformly;
++ ordinarily, the court would be slow in interfering with such discretionary exercise of powers by the authority concerned. However, in the present case, the total tax demand is quite high. The issues are at the first appeal stage. Even 20% of the disputed tax dues would run into few lakhs of rupees. In the overall view of the matter, the requirement of depositing the disputed tax dues is reduced to enable the assessee to enjoy stay pending the appeal before the appellate authority to 10%. This would, however, be on a further condition that the assessee shall offer immovable security for the remaining 10% to the satisfaction of the assessing authority. The order passed by the authority concerned stands modified accordingly.
Assessee’s writ application partly allowed
Per: J B Pardiwala:
1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs:
“(a) Your Lordships be pleased to issue a writ of mandamus or any other appropriate writ, order and/or direction and be pleased to quash and set aside the impugned order dated 26.3.2019 passed by the respondent no.1 rejecting the stay application filed in Appeal as being illegal, invalid, null & void, unjust, unfair and violative of Arts.14 & 19 of the Constitution of India.
(b) Your Lordships be pleased to issue a writ of mandamus or any other appropriate writ, order and/or direction and be pleased to quash and set aside the impugned order dated 11.2.2019 and 10.5.2019 passed by the respondent no.2 as being illegal, invalid, null & void, unjust, unfair and violative of Arts.14 & 19 of the Constitution of India.
(c) Your Lordships be pleased to direct the respondent no.1 to forthwith decide the Appeal pending before it without insisting for payment of 20% of demand amount.
(d) Your Lordships may be pleased to stay the impugned order dated 26.3.2019 passed by the respondent no.1 and further be pleased to direct the respondent no.1 to decide the appeal filed by the petitioner forthwith without insisting for payment of 20% of the demand amount pending the admission, hearing and final disposal of this petition.
(e) Your Lordships be pleased to grant such other and further relief/s, as are deemed fit, in the interest of justice.”
2. The writ-applicant had electronically filed his return of income for the Assessment Year 2016-17 on 16th October 2016 declaring the total income of Rs.9,09,240=00. The case was selected for limited scrutiny through the Computer Aided Scrutiny Selection (for short, ‘the CASS’) and a notice under Section 143(2) of the Income Tax Act, 1961, was issued on 3rd July 2017 which was duly served upon the writ-applicant. A notice under Section 142(1) of the Act was issued to the writ applicant on 18th September 2017 calling upon him to furnish the details called for. The case of the writ-applicant was selected through the CASS under the limited scrutiny to verify the following issues:
(1) whether the unsecured loans were genuine and from disclosed sources, and
(2) whether the investment and income relating to the properties were duly disclosed.
3. During the course of the assessment proceedings it was noticed that the writ-applicant had purchased agricultural land situated at Tavra, Taluka and District Bharuch, bearing Block/ Survey No.97 for Rs.3,79,92,500=00. The writ-applicant purchased the said property from one Shri Melabhai Naglabhai. Upon verification of the details of the bank account of Shri Melabhai Naglabhai as well as of one M/s.Reva Enterprise from whom the writ-applicant claims to have obtained the unsecured loan and also from one Narendrabhai Parmar from whom he claims to have obtained the unsecured loan of Rs.2,50,00,000=00, the transactions were found to be sham and bogus. Ultimately, the Assessing Officer added the amount of Rs.3,79,92,500=00 to the total income of the writ-applicant under the head ‘Income from other sources’ in accordance with the provisions of Section 56(2) of the Act. The last part of the order of assessment reads thus:
“In view of the above, it is clear that in actual there is no liability is in existence payable by the assessee to Shri Melabhai Vasava i.e. seller and Shri Narendra Singh Parmar and assessee has received the said property without any consideration. This clearly shows that the assessee has not incurred any cost for the purchase of land but by way of adopting the colourable device to acquire the property and obtained the property without any consideration. Therefore, as per the provisions of S.56(2) of the Act, if any persons received the immovable property without consideration stamp duty value of which exceeds Rs.50,000/- than the stamp duty value of the said property will be treated as income of the assessee under the head income from other sources. The provisions of S.56(2)(vii)(b)(i) of the Act is reproduced as under:
“(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following income shall be chargeable to income- tax under the head” Income from other sources”, namely:-
(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 –
1. any immovable property,
1. without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property.”
In the instant case, the assessee has received the immovable property for Rs.3,79,92,500/- and there is no liability on the assesee to payable the said consideration. The assessee has received the said property without consideration as clear from the facts mentioned above. Hence, the amount of Rs.3,79,92,500/- is hereby added to the total income of the assessee under the head income from other sources as per the provisions of S.56(2) of the Act.
Penalty proceedings u/s.271(1)(c) of the Act are initiated separately for concealing particulars of income.
Subject to the above remarks and on the basis of details available on record, total income of the assessee is computed as under:
|Returned Income as per return dated 16.10.2016||Rs.9,09,240/-|
|Add: Income from other sources S.56(2)||Rs.3,79,92,500/-|
|Assessed Income u/s.143(3) of Act||Rs.3,89,01,740/-|
Assessed u/s.143(3) of the I.T.Act, 1961. Charged interest u/s.234A, 234B, 234C of the Act as applicable. Give credit for prepaid taxes and issue demand notice/challan/refund order, as the case may be. Entered in D&CR for statistical purpose. Issue penalty notice u/s.271(1)(c) of the Act for concealing the particulars of income.”
4. A notice of demand dated 29th December 2018 came to be served upon the writ-applicant under Section 156 of the Act. Against the order of assessment dated 29th December 2018 passed by the respondent no.2, the writ-applicant preferred appeal before the respondent no.1 in the prescribed form. The writ-applicant thereafter also preferred an application dated 28th January 2019 addressed to the respondent no.2 with a prayer to grant stay against the demand raised by the respondent no.2 pursuant to the order passed under Section 143(3) of the Act. While praying for stay of demand raised pursuant to the order under Section 143(3) of the Act, the writ-applicant contended that the case was one of high pitched assessment. The writ applicant also pointed out his poor financial condition. The writ applicant submitted before the Income Tax Officer that even the deposit of 20% of the total amount was beyond his financial capacity.
5. On 11th February 2019, the application preferred by the writ-applicant seeking stay came to be disposed of in the following terms:
“Please refer to your application dated 18.1.2019 received in this office on 28.1.2019 vide which you have stated that you have preferred an appeal before the learned CIT(A)-2, Vadodara on 25.1.2019 against the order passed under section 143(3) of the Act on 29.12.2018. Further you have requested to keep the demand of Rs.1,73,29,162 in abeyance till the disposal of first appeal. However, as prevailing rules, you have not paid 20% of demand Rs.34,65,832/- of Rs.1,73,29,162/-
2. In this regard, it is seen that he outstanding demand of Rs 1,73,29,162/- is disputed before the learned CIT (A)-2, Vadodara and a such after considering your stay application and in view of the office memorandum issued by the CBDT vide F.No. 404/72/93-ITCC dated 31.7.2017, you are requested to make payment of 20% of outstanding demand of Rs.1,73,29,162/- i.e Rs.34,65,832/-subject to following conditions.
(a) you are requested to submit an undertaking that you will co-operate in the early disposal of appeal failing which the stay order will be cancelled.
(b) This office reserves the right to review the order passed after expire of reasonable period (i.e. 6 months) or if you have not co-operated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or Court after the above situations.
(c) This office reserves the right to adjust refunds arising, if any, against the demand, to the extent of t he amount required for granting stay and subject to the provisions of section 245.
(d) In case of failure in making the payment within seven days (07) of receipt of this letter, then this office reserves right to vacate the stay and appropriate recovery measures as per I.T Act. Act, 1961 and I.T rules, 1962 shall be taken, which may kindly be noted.”
6. The writ-applicant thereafter preferred an application praying for stay of demand before the Principal Commissioner of Income Tax – 2, Vadodara. The Principal Commissioner of Income Tax – 2, Vadodara, directed the writ-applicant to pay 20% of the demand by 28th March 2019. The order reads thus:
“3. I have carefully considered the stay application of the assessee, argument of the A.R. and report of the A.O. On perusal of the assessment order, it is observed that the assessment in this case was finalised after marshalling all relevant facts, providing ample opportunities of being heard and the addition was made on sound grounds. As seen from the assessment order, the transactions entered into by the assessee for acquisition of property is not a normal transaction and the consideration paid by the assessee for the same has been transferred back to the lending parties by way of circular movement of funds, which is not a normal phenomenon. In this case, what appears to be apparent is not found to be real by the AO. In fact, the assesee has received the land without paying any actual consideration. The view taken by the AO is therefore found to be not devoid of merits. Further, as the far a the contentions of he assessee regarding applicability of section 56(2) of the Act is concerned, it is quite evident from the facts of the case that the registered sale deed was executed during FY 2015-16 relevant to AY 2016-17 and hence the provisions of sections 56(2) have been rightly invoked by the AO. Therefore, the contentions raised by the assessee in his submission dated 19.2.2019 is not tenable.
4. Besides, this, the assessee has not placed anything on records, which could prove that the assessee is genuine financial difficulties to pay the demand. Therefore, the stay petition of the assessee is hereby rejected and the assesee is directed to pay 20 % of the demand positively by 28.3.2019 in view of the amended instruction no. 1914 issued by the CBDT.”
7. The writ-applicant thereafter put forward a proposal for payment of 20% of the demand as under:
“1. The Assessee agrees to pay 20% of the outstanding demand of Rs.1,73,29,16 i.e. Rs.34,65,832. Further, your kind office may oblige the assessee by granting installment to pay the demand of Rs.34,65,832 as under:
a. The Assessee would pay Rs.5,00,000 as first installment.
b. For liquidating the balance demand of Rs.29,65,832, the assessee agrees to pay monthly installment of Rs.1,00,000 each.
2. It is submitted that the assessee’s financial position is very bad and he is not capable to liquidate the demand of Rs 34,65,832 at one go. We submit that the business of assessee is passing through a very bad phase which has resulted into financial crisis and it is not possible for the assessee to discharge the demand of Rs 34,65,832 at one go. Hence, it is requested to your kind office to grant the above installments towards payment of demand of Rs.34,65,832/-“
8. The Income Tax Officer, Ward-3, Nadiad, vide communication dated 10th May 2019, informed the writ applicant as under:
“As discussed with you, installment of Rs.5,00,000/- instead of Rs.1,00,000/- vide your above letter is granted till the demand of 20% Rs.34,65,832/- which commence from May 2019 to November 2019 for Rs.5,00,000/- each month. Please note that if you failed to do so stay of above demand will be rejected and further action for recovery of demand as per provisions of Income Tax Act, 1961 will be taken. Further, you are requested to pay first installment of Rs 5,00,000/- today then bank account will be revoke. Please note the above.”
9. Being dissatisfied with the order dated 26th March 2019 referred to above, the writ-applicant has come up with this petition.
10. The principal argument of Mr.Prajapati, the learned counsel appearing for the writ-applicant is that this being a case of high pitched assessment, the writ-applicant should not be asked to deposit 20% of the total amount as it is beyond his financial capacity and there is no such statutory provision in the Act empowering the authority to ask the writ-applicant to deposit 20% of the total amount for the purpose of entertaining the appeal. Mr.Prajapati submitted that the appeal against the order of assessment merits consideration on various legal grounds. If the writ-applicant is unable to deposit the amount of 20%, then his appeal would not be entertained and coercive steps may be taken for the recovery of the requisite amount. In such circumstances referred to above, Mr.Prajapati prays that there being merit in this petition the same may be allowed and the writ-applicant may be exempted from depositing 20% of the total amount and his appeal may be ordered to be heard on merits.
11. Mr. Prajapati places reliance on one order passed by a Division Bench of the Bombay High Court in the similar set of facts and circumstances. Mr. Prajapati seeks to rely on the order passed in the case of Bhupendra Murji Shah v. Deputy Commissioner of Income Tax-15(1)(1) and others (Writ Petition No.2157 of 2018 and Writ Petition No.2160 of 2018, decided on 11th September 2018 = 2018-TIOL-2283-HC-MUM-IT. The order reads thus:
“2. It is undisputed that the petitioner has challenged the demand raised in the first petition No.2157 of 2018 in the sum of Rs.11,15,99,897/- for Assessment Year 2015-2016 by approaching the Commissioner of Income Tax (Appeals). Thus, an Appeal against the Assessment Order raising this demand is filed and is pending.
3. In the meanwhile, the petitioner approached the Assessing Officer/Deputy Commissioner of Income Tax, Circle 15(1)(1), Aayakar Bhavan, Mumbai. He may have made an application and termed it as a request for stay, but what essentially he was worried and concerned about was that since the Appeal is pending and yet to be decided, nor was there any consideration of application for stay by Appellate Authority, this Deputy Commissioner will treat the petitioner/assessee as ‘assessee in default’. Thereupon, he will recover the amount by coercive means. It is in these circumstances, this letter was addressed and we have carefully perused that letter. That records that the subject matter of tax is in dispute. The Assessment Order is challenged. The Appeal under Section 246-A of the Income Tax Act 1961 challenging the Assessment Order dated 30th December 2017, received on 1st August 2018 is pending. The request of the petitioner/assessee is that the demand be kept in abeyance till the disposal of this Appeal.
4. With marginal difference in the figures, the issue raised in the second petition No.2160 of 2018 is also identical. Both petitions are taken up together. It is not disputed before us that in terms of Chapter XX styled as Appeals and Revision, the order of the Assessment Officer is appealable under section 246 subsection (1). Once it is an appealable order and the Appeal has been filed, it is pending, then, the petitioner/appellant should have been given either an opportunity to seek a stay during the pendency of the appeal, which power is also conferred admittedly in the Commissioner or this Deputy Commissioner should have held the demand in abeyance as prayed by the petitioner/assessee. He does neither, but proceeds to communicate to the petitioner/ assessee that his application for stay is dismissed. The petitioner/ assessee should pay 20% of the outstanding amount as prescribed in some Circulars of the Revenue and particularly, dated 29th February 2016 and produce the challan and seek stay of demand again, failing which collection and recovery will continue.
5. We are not concerned here with the Circular of the Central Board of Direct Taxes. We are not concerned here also with the power conferred in the Assessing Officer of collection and recovery by coercive means. All that we are worried about is the understanding of this Deputy Commissioner of a demand, which is pending or an amount, which is due and payable as tax. If that demand is under dispute and is subject to the appellate proceedings, then, the right of appeal vested in the petitioner/assessee by virtue of the Statute should not be rendered illusory and nugatory. That right can very well be defeated by such communication from the Revenue/Department as is impugned before us. That would mean that if the amount as directed by the impugned communication being not brought in, the petitioner may not have an opportunity to even argue his Appeal on merits or that Appeal will become infructuous, if the demand is enforced and executed during its pendency. In that event, the right to seek protection against collection and recovery pending Appeal by making an application for stay would also be defeated and frustrated. Such can never be the mandate of law.
6. In the circumstances, we dispose both these petitions with directions that the Appellate Authority shall conclude the hearing of the Appeals as expeditiously as possible and during pendency of these Appeals, the petitioner/appellant shall not be called upon to make payment of any sum, much less to the extent of 20% under the Assessment Order/Confirmed Demand or claim to be outstanding by the Revenue.”
12. On the other hand, this petition has been vehemently opposed by Mr. Varun Patel, the learned counsel appearing for the Revenue. Mr. Patel submitted that no error, not to speak of any error of law, could be said to have been committed by the authority in asking the writ-applicant to deposit 20% of the assessed amount. The impugned order is discretionary in nature and, therefore, this Court may not disturb the same in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.
13. Mr. Patel laid much emphasis on the following averments made in the affidavit-in-reply:
“3. It is further submitted that the petitioner-assessee is engaged in the trading of Petrol, Diesel and oil through its firm called M/s. Kilraj Petroleum. In the present case, the petitioner-assessee had filed his Income Tax Return for the A.Y. 2016-17 declaring total income of Rs.9,09,240/-. Thereafter, the case of the petitioner-assessee was selected for limited scrutiny though computer Aid scrutiny Selection (CASS). During the assessment proceedings under section 143(3) of the Income Tax Act (hereinafter referred to as “the Act), the assessing Officer noticed that the assessee had purchased agriculture land in District Bharuch for Rs.3,97,92,500/-. After scrutinizing the said transaction of purchase of land by the petitioner-assessee in detail, the assessing officer in the assessment order had observed that the said transaction is a sham transaction done by the assessee in connivance with Shri Melabhai Vasava, the seller and Shri Narendrasinh Parmar. The assessing officer also found that there are series of transactions of unsecured loan between the aforesaid parties including the seller and the assessee, which are not genuine and sham transaction. The assessing officer then, concluded that the assessee has received the said property without paying any consideration to the seller by adopting the colorable device. The assessing officer after recording aforesaid findings in detail, made addition under section 56(2)(vii)(b)(i) of the Act of Rs.3,87,92,500/- in the assessment order dated 29.12.2018 (Annexure A, page 15). The assessing officer then, issue demand notice under section 156 of the Act dated 29.12.2018 (Annexure-B, page 23) against the assessee for a sum of Rs.1,73,29,162/- pursuant to the said assessment order.
The petitioner-assessee has thereafter preferred an appeal (Annexure-D, page 29) before the Commissioner of Income Tax II (Appeals), Baroda against the said assessment order. Pending the aforesaid appeal before the CIT(A), the petitioner-assessee as per the provisions of Section 220 of the Act has made application to the assessing officer for granting stay of the said demand of Rs.1,73,29,162/- vide his letter dated 28.1.2019 (Annexure-E, page 34). The said application for stay of demand was decided by the assessing officer by order dated 11.2.2019 (Annexure-H, page 41) and the assessee was requested to pay 20% of total outstanding demand of Rs.1,73,29,162/- (i.e Rs.34,65,832/-) as per CBDT’s Circular dated 31.7.2017. Annexed hereto and marked as Annexure-R1 are the copies of the CBDT’s circular dated 31.7.2017 and 29.2.2016.
It is submitted that the petitioner-assessee being aggrieved by the said order of assessing officer dated 11.2.2019 has preferred stay/review application before the Principal Commissioner of Income Tax-II (PCIT), Baroda by letter/application dated 18.2.2019 (page 43). The PCIT had, thereafter, passed the order dated 26.3.2019 (Annexure J page 48) rejecting the said application of the petitioner assessee and directing the assessee to pay 20% of the demand. The PCIT in the said order discussed and rejected the contentions of the assessee on merits. The PCIT had also observed that the assessee had not placed anything on the record to prove the gaminess of his alleged financial difficulties to pay the demand. The petitioner-assessee had thereafter preferred another application to the assessing officer seeking complete stay of demand by his letter dated 3.5.2019. It is submitted that in view of the aforesaid orders of the assessing officer and PCIT with respect to stay of demand, another application for stay of demand made by the assessee to the assessing officer is not maintainable in law. The assessing officer has then, issued the orders under section 226(3) of the Act upon the bankers of the petitioner (Annexure M, pages 55 and 57) for payments towards the aforesaid outstanding demand against the assessee from his bank accounts. The petitioner assessee had then, made another application dated 10.5.2019 whereby the petitioner has agreed to pay 20% of the outstanding demand i.e Rs.34,65,832/- of Rs.5,00,000/- as first monthly installments and thereafter each installment of Rs.1,00,000/-. The assessing officer by his letter dated 10.5.2019 had partially accepted the said proposal of he petitioner by directing him to pay all the monthly installment of Rs.5,00,000/- each instead of Rs.1,00,000/-. The petitioner-assessee had thereafter, paid first installment of Rs.5,00,000/- each instead of Rs.1,00,000/-. The petitioner-assessee had thereafter, paid first installment of Rs.5,00,000/-. However, before the second installment of Rs.5,00,000/- was due and payable, the petitioner assessee has filed present petition challenging the said order of the PCIT dated 26.3.2019 as also the orders of assessing officer dated 11.2.019 and 10.5.2019.
It is submitted that the petitioner-assessee having agreed to pay 20% of the total demand in installments has accepted the aforesaid orders in principle. It is, therefore, not open for the petitioner-assessee to file the present petition challenging the aforesaid orders of the respondent. It is further submitted that in the present petition, the assessee has alleged the case of financial difficulty in paying the outstanding demand against him. It is however, submitted that the assessee has completely failed to prove his case of financial difficulties with supporting evidence either before the assessing officer or the PCIT or before this Hon’ble Court in the present petition. Rather, the last income-tax return of the assessee for the A.Y. 2018-19 along with the balance sheet clearly establishes that the case of financial difficulty pleaded by the petitioner assessee is baseless and without any merits. Annexed hereto and marked as Annexure-R2 are the copies of the income tax return along with the balance-sheet and P & L of the petitioner-assessee for the A.Y. 2018-2019. It is submitted that the petitioner had not uploaded the annexures to balance-sheet and P& L account along with his return.
In any case, having regard to the facts of the present case as also in view of the observations of assessing officer in the assessment order, the petitioner-assessee has no prima facie in an appeal before the CIT(A) and the balance of convenience is also not favour of the assessee. It is therefore, submitted that in view of what is stated hereinabove, the present petition does not deserve to be entertained by this Hon’ble Court and the petitioner is not entitled to get any relief including the interim relief as prayed for in the present petition.”
14. The issue of granting stay pending appeal is governed principally by the two circulars issued by the CBDT. The first circular was issued way back on 2nd February 1993 being instructions no.1914. The circular contained guidelines for staying the demand pending appeal. It was stated that the demand would be stayed if there are valid reasons for doing so and mere filing of appeal against the order of assessment would not be sufficient reason to stay the recovery of demand. The instructions issued under the office memorandum dated 29th February 2016 are not in super-session of the instructions no.1914 dated 2nd February 1993 but are in partial modification thereof. The preamble of these instructions provide that in order to streamline the process of grant of stay of standardization of quantum of lump-sum payment to be made as a pre-condition for stay of demand of dispute before the Commissioner of Income Tax (Appeals), such modified guidelines were being issued. The relevant portion of these instructions read as under:
“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) 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 shall decide the quantum/proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand.
(C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer.
(D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 © above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be.
(E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia –
(i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled;
(ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations;
(iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.”
15. This circular thus lays down 15% of the disputed demand to be deposited for stay, by way of a general condition. The circular does not prohibit or envisage that there can be no deviation from this standard formula. In other words, it is inbuilt in the circular itself to either decrease or even increase the percentage of the disputed tax demand to be deposited for an assessee to enjoy stay pending appeal. The circular provides the guidelines to enable the Assessing Officers and Commissioners to exercise such discretionary powers more uniformly.
16. Ordinarily, the court would be slow in interfering with such discretionary exercise of powers by the authority concerned. However, in the present case, the total tax demand is quite high. The issues are at the first appeal stage. Even 20% of the disputed tax dues would run into few lakhs of rupees. To be precise, approximately 34 lakh.
17. In the overall view of the matter, we reduce the requirement of depositing the disputed tax dues to enable the writ-applicant to enjoy stay pending the appeal before the appellate authority to 10%. We are informed that the writ applicant has so far deposited Rs.5 lakh. We clarify that this would, however, be on a further condition that the writ-applicant shall offer immovable security for the remaining 10% to the satisfaction of the assessing authority. The order passed by the authority concerned stands modified accordingly.
18. Both these conditions shall be satisfied latest by 31st July 2019.
19. The writ-applicant is directed to file an affidavit before the registry whether he would abide by these conditions and undertake to fulfill them within the time permitted. Such affidavit shall be filed latest by 5th July 2019.
20. It is clarified that if the writ-applicant does not file any such affidavit, or in such affidavit, declares that he does not wish to be bound by such conditions, or having in such affidavit agreed to fulfill the conditions, fails to do so by 31st July 2019, the relief granted under this order would stand automatically withdrawn and the impugned order would revive.
21. Petition is disposed of accordingly.