In high-pitched assessments, AO must ordinarily grant stay of demand
Maheshwari Agro Industries Vs. UOI (Rajasthan HC) – the income assessed by the Assessing Officer is almost 47 times of the income declared by the assessee viz. Rs. 1,44,42,320/- against the declared income of Rs.3,48,140/-. The disputed demand of tax also would be almost the same multiples of the declared and admitted tax liability or may be more because of interest and penalties. The main additions are trading additions on the basis of GP rates, the validity of which is subject matter of appeal before the C.I.T. (Appeals). Therefore, applicability of Instruction No.95 dated 21.08.1969, in the present case, is beyond the pale of doubt. Against the net demand of Rs. 58 lacs raised vide Annex-5 dated 21.01.2011 for AY 2008-09, the assessee has been made to pay Rs. 5 lacs already besides his admitted tax liability as already paid by him before filing the return of income. Thus, this Court would stay the recovery of entire balance amount from the petitioner-assessee, while directing the C.I.T. (Appeals) to dispose of the pending appeal of the assessee within a period of six months from today. The attachment of bank accounts of the petitioner-assessee already attached by the respondent-Assessing Authority are also be lifted and the assessee will be free to operate its bank accounts.
As already held, since the C.I.T. (Appeals) also has inherent and implied powers to grant stay, the assessee-petitioner may also file stay application before the C.I.T. (Appeals), who may also consider such stay application on its own merits upon the relevant factors as enumerated above viz. prima facie case, balance of convenience, irreparable injury, nature of demand and hardship likely to be caused to the assessee, liquidity available to the assessee etc. It is directed that all the first appellate authorities in the cases of other appellant assessees within the State of Rajasthan also, would entertain stay applications filed before them during the pendency of appeals and would decide the same on their own merits in future also. The assessing authorities will also decide applications under Section 220 (6) of the Act in accordance with Instruction No.95 dated 21st August, 1969 and observations made herein before.
DR. VINEET KOTHARI, J.
JUDGMENT
1. The important question which requires consideration in the present case is as to whether the first appellate authority, namely, Commissioner of the Income-tax (Appeals) or Deputy Commissioner (Appeals) under Income-tax Act, 1961, (for short hereinafter referred to as ‘Act’) have power to grant stay and decide the stay application filed along-with appeal/s filed before them under Section 246/246A of Act respectively or not. The concomitant question, which would arise is whether the power of the Assessing Officer under Section 220(6) of the Act of 1961 to grant stay is there with the Assessing Authority during the pendency of the appeal before the appellate authority; and how such powers of ‘treating the assessee as not being in default in respect of amount in dispute in the appeal’, have to be exercised by such Assessing Officer under Section 220(6) of the Act.
2. Before coming the provisions of the Act and interpretation thereof, a brief look at the facts in which the present writ petition arises would be necessary.
3. The petitioner-assessee, M/s. Maheshwari Agro Industries, Jodhpur, engaged in the business of manufacturing and trading of oils, for assessment year 2008-09, as a partnership firm filed its return of income through e-filing system on 30.09.2008 declaring the income of Rs. 3,48,140/-. Initially, the case was processed under Section 143(1) of the Act on 22.04.2009 on refund, however, the case of the assessee was selected for scrutiny, since a survey was conducted on 18.03.2007 at the business place of the petitioner under Section 133A of the Act, his case was fixed for assessment upon scrutiny, and accordingly, a notice under Section 143 (2) of the Act was issued to him on 24.04.2009. The assessee produced relevant record and Books of Account before the Assessing Authority and the Assessing Authority ultimately passed the impugned assessment order Annex-1 for the said Assessment Year 2008-09 on 20.12.2010 and making additions in the declared income of Rs. 3,48,140/-, the total income assessed by the Assessing Authority was to the tune of Rs. 1,44,42,320/-. The interest under the provisions of Sections 234A, 234B, 234C, 244A (3) and 234D was charged separately, and also penalty proceedings under Section 271 (1) (c) of the Act for concealment of income were initiated separately. The nature of the additions in the declared income was briefly likely this:
