Income Tax Act does not invite any pre-deposit for stay of demand. 20 per cent amount prescribed by CBDT Instruction can be reduced at the discretion of AO-High Court
ABCAUS Case Law Citation:
ABCAUS 2882 (2019) (04) HC
Important Case Laws Cited/relied upon by the parties
The petitioner assessee was an educational institution registered under section 12AA of the Income Tax Act, 1961 (the Act). The petitioner had filed a Writ Petition against direction by the Assessing Officer (AO) to make a pre-deposit of 20% of the disputed tax before providing an interim protection.
The Hon’ble High Court observed that though there is some advisory issued by the CBDT vide Instructions no. 1914 supplemented through subsequent advisories on the issue of pre-condition of deposit for the purpose of interim stay but it is also undisputed that the Income Tax Act, 1961 (the Act) does not invite any pre-deposit for invoking the appellate jurisdiction.
The Hon’ble High Court opined that it is thus completely at the discretion of the Appellate Authority or the competent authority concerned, to direct for any deposit in case the assessee seeks interim protection pending disposal of the appeal preferred against the assessment order
The Hon’ble High Court observed that the petitioner being registered under section 12AA of the Act was entitled to certain exemptions despite the matter contested by the Revenue which was pending consideration before the Appellate Authority.
With regard to the issue of pre-deposit, the Hon’ble High Court observed that the guidelines issued by the Department from time to time do prescribe an amount of about 20% or so for obtaining an order of stay on recovery process but which limit could be reduced at the discretion of the Assessing Authority. However, in the present case, no such discretion was exercised and by the order impugned the petitioner had been directed to deposit of 20% of the disputed amount, for availing the interim protection.
The High Court noted that the petitioner university had already deposited Rs. 40 lakhs towards the disputed demand and admittedly a discretion is vested in the statutory authority to go below the limit of 20% so fixed in the instructions issued, and also that the institution is registered under section 12AA of the ‘Act’, the conduct of the petitioner was satisfactory to grant interim protection until the disposal of the appeal.
Accordingly the petition was allowed with direction that no coercive measures be taken by the Department towards the recovery of the balance amount until disposal of the appeal pending before the Commissioner of Income Tax (Appeals) who was accordingly advised to consider and dispose of the appeal expeditiously.