Akshay Shah

A. INTRODUCTION

1. As per Article 265 of the Constitution of India ‘No tax shall be levied or collected except by authority of law’. In any civilized system, the assessee is bound to pay the tax to the government for which he is liable under the law. The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee. The entire object of administration of tax is to secure the revenue for the development of the Country and not charge assessee more tax than that which is due and payable by the assessee.

In India the Direct tax – GDP ratio was almost 6 percent in the Financial Year 2017-18 which compared to several other countries, is lower and the reason for this is narrow tax base. Only around 4% of the country’s population pay income tax. There is large scale of tax evasion. Over the last one decade the government has made several steps to raise tax – GDP ratio. The main hurdle is the prevalence of black economy.

2. As per Economic Survey 2018 report of March 2017, there were approximately 1.37 lakh direct tax cases under consideration at the level of Income-tax Appellate Tribunal (‘ITAT’), High Courts and Supreme Court. Claims for indirect and direct tax stuck in litigation (Appellate Tribunal level and upwards) for the quarter ended March 2017, were a staggering 7.58 lakh crore, which translates to over 4.7 percent of the GDP. Delays and pendency of such cases is taking a severe toll on the economy in terms of contested tax revenue and that’s why the revenue department is now trying to curb this area in order to collect and recover the tax demand at the earliest.

The Income-tax Act, 1961 (‘the Act’) has provided rigorous powers to the revenue department to recover the tax demand including the power to arrest and detain is provided under the Act. Therefore, it’s important to understand the provisions for collection and recovery of tax demand and the provisions of filing stay application against such demand as provided under the Act. Relevant section under the Income-tax Act, 1961 that deals with recovery of tax and stay of demand are:

Section Description
201 Consequences of failure to deduct or pay
220 When tax payable and when assessee deemed in default
221 Penalty payable when tax in default
222 Certificate to Tax Recovery Officer
223 Tax Recovery Officer by whom recovery is to be affected
224 Validity of certificate and cancellation or amendment thereof
225 Stay of proceedings in pursuance of certificate and amendment or cancellation thereof
226 Other modes of recovery
227 Recovery through state government
228A Recovery of tax in pursuance of agreements with foreign countries
229 Recovery of penalties, fine, interest and other sums
230 Tax clearance certificate
232 Recovery by suit or under other law not affected
254 Orders of Appellate Tribunal
276 Removal, concealment, transfer or delivery of property to thwart tax recovery
276B Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B
276BB Failure to pay the tax collected at source.
276C Wilful attempt to evade tax, etc.
281 Certain transfers to be void
281B Provisional attachment to protect revenue in certain cases

3. The dictionary meaning of recovery is the action or process of regaining possession or control of something stolen or lost”.If we understand its meaning taken into consideration the Income-tax Act the word ‘something’ denotes ‘income-tax’, thereby, it’s the recovery of income-tax which has been stolen or not paid to the revenue department.

In a situation wherein the assessee steals or not pay the tax to the department, he is termed as assessee in default or deemed to be assessee in default under the Act. Now let’s understand its meaning by some questions and answers.

Q1. Who is an assessee in default?

A1. As per the provisions of section 220 of the Act, an assessee is termed as assessee in default on account of following points:

a. Wherein notice of demand has been issued under section 156 of the Act;

b. The assessee has not paid the demand within 30 days of the service of notice or within such extended time as provided under sub-section (3) of section 220 of the Act.

Q2. When assessee is deemed to be as assessee in default?

A2. a. Sub-section 1 of section 201 talks about the situation wherein assessee is deemed to be in default when he is required to deduct the tax in accordance with the provisions of the Act and does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then regarding such tax he is considered as deemed to be an assessee in default. Similarly, when any person is responsible for collecting tax in accordance with section 206C of the Act and such person does not collect the whole or any part of the tax or after collecting fails to pay the tax as required by or under this Act, he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax.

However, the first proviso to sub-section 1 of section 201 provides a situation wherein the assessee would not be deemed to be in default. As per such proviso, the person who fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B of the Act on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—

  (i) has furnished his return of income under section 139;

 (ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in Form No. 26A as per rule 31ACB of the Income-tax Rules, 1962

b. As per sub-section 3 of section 140A of the Act, when an assessee fails to pay the whole or any part of the self assessment tax (or interest or fee) in accordance with section 140A(1) of the Act, he shall be deemed to be an assessee in default.

 B. CONSEQUENCES OF BEING ASSESSEE IN DEFAULT

The consequences of being assessee in default are as under:

1. Levy of Interest u/s 220 of the Act

The assessee shall be liable to pay simple interest at one per cent for every month or part of a month from the end of the period as mentioned under sub-section 1 and sub-section 3 of section 220 of the Act. However, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may reduce or waive the amount of interest paid or payable by an assessee under the said sub-section if he is satisfied that—

√ payment of such amount has caused or would cause genuine hardship to the assessee ;

√ default in the payment of the amount on which interest has been paid or was payable was due to circumstances beyond the control of the assessee ; and

√ the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.

2. Penalty u/s 221

Assessing Officer may direct payment of a penalty which can be any amount or amounts not exceeding the tax in arrears. However, where the assessee proves to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons, no penalty shall be levied by the AO.

3. Recovery Proceedings under the Act

a. The recovery under the Act can be undertaken by either the Assessing officer or by Tax Recovery Officer (‘TRO’). Before drawing of certificate to TRO, the recovery of the demand is the responsibility of AO. Once certificate is drawn the recovery power shifts to TRO.

b. Normally the recovery proceedings that we see or deal with are initiated post completion of assessment by way of issue of notice under section 156 of the Act. However, there might be an instance where during the ongoing proceedings the assessee may divert the funds so that no recovery can be made post assessment. The law is well drafted and cover even such scenario by way of section 281B of the Act, which gives power to the AO to provisionally attach the property of the assessee in the manner provided in the Second Schedule during the pendency of any proceedings for the assessment or reassessment of any income. In order to exercise such power the AO in order to protect the interest of the revenue require to take a prior approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director, by order in writing. As per Circular No. 179, dated 30-9-1975, such provision was made in order to protect the interests of the revenue in cases where the raising of demand is likely to take time because of investigations and there is apprehension that the assessee may thwart the ultimate collection of that demand.

Such power of provisional attachment is a drastic and extraordinary power and has been held by apex court in, Raman Tech & Process Engg.Co. v. Solanki Traders (2008) 2 SCC 302 that such power should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the rule.

c. Combing back to the recovery proceedings once assessee is in default, the following provisions play a vital role:

I. The AO or TRO can undertake the recovery as per the modes specified under section 226 of the Act

As per section 226 of the Act:

i. If any assessee is in receipt of any income chargeable under the head “Salaries”, the Assessing Officer or Tax Recovery Officer may require any person paying the same to deduct from any payment subsequent to the date of such requisition any arrears of tax due from such assessee, and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Central Government or as the Board directs :

Provided that any part of the salary exempt from attachment in execution of a decree of a civil court under section 60 of the Code of Civil Procedure, 1908 (5 of 1908), shall be exempt from any requisition made under this sub-section

ii. Sub-section 3 of section 226 is applicable only when money is due to the assessee-in-default from any person (Garnishee proceedings). As per this sub-section:

    • The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount.
    • A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub-section, the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal.
    • A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or Tax Recovery Officer, and in the case of a joint account to all the joint holders at their last addresses known to the Assessing Officer or Tax Recovery Officer.
    • Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.
    • Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.
    • Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessee’s liability for any sum due under this Act, whichever is less.
    • If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the Assessing Officer or Tax Recovery Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222.

iii. The Assessing Officer or Tax Recovery Officer may apply to the court in whose custody there is money belonging to the assessee for payment to him of the entire amount of such money, or, if it is more than the tax due, an amount sufficient to discharge the tax.

iv. The Assessing Officer or Tax Recovery Officer may, if so authorised by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner by general or special order, recover any arrears of tax due from an assessee by distraint and sale of his movable property in the manner laid down in the Third Schedule.

II. Additionally, the TRO has been granted specific power under section 222 of the Act (The TRO can exercise the recovery under this section, notwithstanding that proceedings for recovery have been undertaken by any other modes)

Section 222: Certificate to Tax Recovery Officer
When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in Form No. 57 (such statement is referred to as “certificate”) specifying the amount of arrears due from the assessee and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule—

(a) attachment and sale of the assessee’s movable property;

(b) attachment and sale of the assessee’s immovable property;

(c) arrest of the assessee and his detention in prison;

(d) appointing a receiver for the management of the assessee’s movable and immovable properties.

Under this section, the assessee’s movable or immovable property shall include any property which has been transferred, directly or indirectly on or after the 1st day of June, 1973, by the assessee to his spouse or minor child or son’s wife or son’s minor child, otherwise than for adequate consideration, and which is held by, or stands in the name of, any of the persons aforesaid; and so far as the movable or immovable property so transferred to his minor child or his son’s minor child is concerned, it shall, even after the date of attainment of majority by such minor child or son’s minor child, as the case may be, continue to be included in the assessee’s movable or immovable property for recovering any arrears due from the assessee in respect of any period prior to such date.

Once the certificate is drawn up by the TRO, it shall not be open to the assessee to dispute its correctness on any ground as per the provision of section 224 of the Act. But it shall be lawful for the TRO to cancel the certificate if, for any reason, he thinks it necessary so to do, or to correct any clerical or arithmetical mistake therein.

There is one more section under the Act which protects the interest of the revenue and states certain transfers to be void made during pendency of any proceeding under this Act or after the completion thereof. Section 281 states that before the service of notice by TRO as per rule 2 of second schedule, any assessee creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise. In this section, “assets” means land, building, machinery, plant, shares, securities and fixed deposits in banks, to the extent to which any of the assets aforesaid does not form part of the stock-in-trade of the business of the assessee.

The section also provides two condition wherein the charge or transfer shall not be void if it is made:

√ for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee ; or

√  with the previous permission of the Assessing Officer.

(To understand the procedure of recovery, kindly go through Second Schedule of the Act)

4. Prosecution Proceedings

The consequences do not stop at mere imposition of interest, penalties and steps to recover arrears but include the risk of being prosecuted under Chapter XXII of the Act as per sections 276, 276B, 276BB, 276C depending upon the nature and gravity of the default.

Section Name Provision/ Description
276 Removal, concealment, transfer or delivery of property to thwart tax recovery Whoever fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, intending thereby to prevent that property or interest therein from being taken in execution of a certificate under the provisions of the Second Schedule shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine
276B Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B Punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.

 

276BB Failure to pay the tax collected at source. Punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
276C Wilful attempt to evade tax, etc.

 

(1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or 63[imposable, or under reports his income,] under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable,—

(i) in a case where the amount sought to be evaded 64[or tax on under-reported income] exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine.

(2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and shall, in the discretion of the court, also be liable to fine.

Explanation.—For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person—

(i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or

(ii) makes or causes to be made any false entry or statement in such books of account or other documents; or

(iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or

(iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof.

 

C. OTHER CONNECTED POINTS TO REMEMBER

Against the demand raised by the revenue department, the Act provides the assessee to file stay application before the following authorities:

1. Assessing officer 

220(3) – Where Appeal is not filed by the assessee 220(6) – Where an Appeal has been filed before CIT(Appeals)
On an application made by the assessee before the expiry of the due date under sub-section (1) of section 220, the Assessing Officer may extend the time for payment or allow payment by installments, subject to such conditions as he may think fit to impose in the circumstances of the case Where an assessee has presented an appeal under section 246 or section 246A the Assessing Officer may, in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of.

 

a. The phrases ‘the AO may in his discretion’ and ‘subject to such conditions as he may think fit’ as mentioned in section 220(6) of the Act has been explained through several judicial precedents and circulars issued by the Central Board of Direct Taxes (‘CBDT’).  It is respectfully submitted that it is a well-settled principle of law that when discretion is vested with an Assessing Officer, such discretion should be exercised judiciously and reasonably. The CBDT through various instructions have stated the situations under which the AO should grant stay on an application being made by the assessee. The relevant instruction is Instruction No. 1914 from F.No.404/72/93-ITCC dated 2 December 1993, the guideline as stated in such instruction has been modified vide O.M. No. 404/72/93-ITCC dated 29 February 2016 and further partially modified vide O.M. [F.No. 404/72/93-ITCC], dated 31st July 2017. The instruction states that stay shall be granted in the following circumstances:

 “(a) if the demand in dispute relates to issues that have been decided in Assessee’s favor by an assessee authority or court earlier; or

(b) if the demand in dispute has arisen because the Assessing Officer had adopted an interpretation of law in respect of which there exist conflicting decisions of one or more High Courts (not of the High Court under whose jurisdiction the Assessing Officer is working); or

 (c) if the High Court having jurisdiction has adopted a contrary interpretation but the Department has not accepted that judgment.”

b. Also, the instruction mentions that the stay application filed with the assessing officers must be disposed of within two weeks of the filing of petition by the tax- payer and the assessee must be intimated of the decision without delay.

c. Further, the Bombay High Court in the case of KEC International Ltd. vs. B.R. Balakrishnan [2001] 119 TAXMAN 974 (BOM.) have laid down certain parameters which are required to be followed by the authorities in cases where a stay application is made by an assessee pending appeal to the first appellate authority.

 “Parameters :

(a)While considering the stay application, the authority concerned will at least briefly set out the case of the assessee.

(b)In cases where the assessed income under the impugned order far exceeds returned income, the authority will consider whether the assessee has made out a case for unconditional stay. If not, whether looking to the questions involved in appeal, a part of the amount should be ordered to be deposited for which purpose, some short prima facie reasons could be given by the authority in its order.

(c)In cases where the assessee relies upon financial difficulties, the authority concerned can briefly indicate whether the assessee is financially sound and viable to deposit the amount if the authority wants the assessee to so deposit.

(d)The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order, and

(e)We clarify that if the authority concerned complies with the above parameters while passing orders on the stay application, then the authorities on the administrative side of the department like respondent No. 2 herein need not once again give reasoned order.”

Therefore, in exercising the powers of stay, the Income Tax Officer should not act as a mere tax gatherer but as a quasi judicial authority vested with the public duty of protecting the interest of the Revenue while at the same time balancing the need to mitigate hardship to the assessee. The matter must be considered from all its facets, balancing the interest of the assessee with the protection of the Revenue.

2. CIT(Appeals)

a. Under the Act the provisions of Sections 246, 246A, Section 250 and 251 of the Act do not confer any specific power on such first appellate authority to grant stay against the recovery of disputed demand. Such power of stay to CIT(Appeals) be read as ‘inherent powers’ and the stay applications filed before such appellate authorities should be decided on merits touching upon the relevant factors for grant of stay like prima facie case, irreparable injury, balance of convenience and nature of demand etc.

b. Though, there is no specific provision in the Act, it is judicially accepted that the CIT(A) has the inherent powers to stay the recovery of taxes in appropriate cases, while deciding the appeal pending before it. As held by Rajasthan High Court in the case of Maheshwari Agro Industries vs. Union of India [2012] 17 taxmann.com 68 (Raj.):

“The powers of the Appellate Authorities are indisputably concurrent and co-extensive with that of the Assessing Authority but wider and superior in nature. Section 251 clearly stipulates that in disposing of an appeal, the Commissioner (Appeals) can confirm, reduce, enhance or annul the assessment. Section 251(1)( c) further provides that in other cases, he may pass such orders in appeal as he thinks fit. These words harmoniously read, definitely mean that powers of Appellate Authorities under the Act are wide enough. Such powers could not be intended to be drained out or rendered meaningless, if the power to grant stay against the recovery of disputed demand is to be taken away from the first appellate authority. Such implied, necessary and inherent power must necessarily be read into these provisions conferring the powers upon the Appellate Authority to modify the impugned assessment order in any manner. In specific terms, the first Appellate Authority can even enhance the taxable income, while he has the power to reduce or completely set at naught the assessment. The words “as he thinks fit” in section 251(1)(C ) are not redundant, as no such redundancy can be attributed to the Parliament. Therefore, mere absence of words “power to grant stay” in section 251 cannot mean that such powers are specifically excluded from the jurisdiction of the first Appellate Authority”

c. The same has been held in various cases such as:

√ MK Mohammed Kunhi 71 ITR 815 (SC)

Keshav Cashew Co v DCIT 210 ITR 1014 (Ker)

Prem Prakash Tripathi v. CIT(1994) 208 ITR 461 (All) (High Court)

Paulsons Litho Works v. ITO(1994) 208 ITR 676 (Mad) (High Court)

Agricultural Produce Market Committee vs. CIT (2005) 279 ITR 371 (Pat.)(High Court)

Idea Cellular Ltd. v. CIT (2012) 75 DTR 105 (MP) (High Court)

3. Income-tax Appellate Tribunal

a. The proviso to sub-section 2A of section 254 of the Act deals with the time limit for which stay to be granted by the Appellate Tribunal.

√ As per first proviso the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order.

√ As per second proviso where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed.

√ As per third proviso if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee.

b. Against the third proviso, various courts have held that the tribunal have power to grant stay beyond period of 365 days, where the delay in disposing the appeal is not attributable to the assessee. While passing such judgments the courts have considered the validity of the expression “’even if the delay in disposing of the appeal is not attributable to the assessee”– inserted by virtue of the Finance Act, 2008 as per Article 14 of the Constitution.

The courts have held that by inserting such expression the unequals have been treated equally. As assessees who, after having obtained stay orders and by their conduct delay the appeal proceedings, have been treated in the same manner in which assessees, who have not, in any way, delayed the proceedings in the appeal. The two classes of assessees are distinct and cannot be clubbed together and such  clubbing together has led to hostile discrimination against the assessees to whom the delay is not attributable. The Delhi High Court in the case of Pepsi Foods Pvt Ltd (376 ITR 87) (Del HC) have held that “The clubbing together of ‘well behaved’ assessees and those who cause delay in the appeal proceedings is itself violative of article 14 of the Constitution and has no nexus or connection with the object sought to be achieved. The said expression introduced by the Finance Act, 2008 is, therefore, struck down as being violative of article 14 of the Constitution of India. Consequently, it is held that, where the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to grant extension of stay beyond 365 days in deserving cases.”

c. The stay application is required to be filed as per Rule 35A of the Income-tax (Appellate Tribunal) Rules, 1963

D. CONCLUSION 

In Padrauna Raj Krishna Sugar works Ltd. v. Land Reforms Commissioner, UP and others (1970) 75 ITR 358(SC), it was held that “the power exercisable by the Collector in recovering arrears of income-tax which are recoverable as arrears of land revenue are not restricted to the Land Revenue Code; the Collector is entitled to exercise all the powers of a civil Court for the purpose of recovery of an amount due under a decree under the Code of Civil Procedure, 1908 and the Code of Civil Procedure imposes no obligation to recover the dues by sale of movables or by arrest and detention of the defaulter before immovable property may be attached.”

With the revenue collection targets to be met in the current period the recovery may take an endless path. Therefore, it’s important for the assessee to be aware about its rights as provided under the law and to know when to pull the plug. As stated by a judge in case of Glaxo Smithkline Asia v. Addl. CIT [2015] 2 SOT 457 (Delhi) “If the rights of the citizens are allowed to be crushed in this manner which is akin to the Tsunami wave, then the day is not far when we shall be driven into utter anarchy where people will tend to forget what “Rule of Law” is” and in case of UTI Mutual Fund v. ITO [2012] 19 taxmann.com 250 the Bombay High Court held that administrative directions for fulfilling recovery targets for collection of revenue should not be at expense of foreclosing remedies which are available to an assessee.

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