Stay of Demand of Income Tax does not require and Pre-deposit of Tax by Assessee as has been held in following case where the Assessing Officer rejected the application for grant of stay unless the assessee deposits a sum of 15% of the demand of income tax due
Stay of Demand of Income Tax does not require any Pre deposit of Tax by Assessee- Case decided- Jagdish Gandabhai Shah vs. Pr CIT (Gujarat High Court)
The Assessing Officer has rejected petitioner’s stay application solely on the ground that the assessee has failed to deposit 15 percent of the disputed demand either at the time of the submission of stay application or before the application of stay is considered. Thus, as per the Assessing Officer, the assessee is required to deposit a sum equal to 15 percent of the disputed amount as a pre-deposit before the submission of the stay application and/or considered on merits. The interpretation mentioned above is absolutely based on the misconception and/or misinterpretation of the modified instructions issued by the CBDT dated 29th February 2016.
Under modified instructions of CBDT, the assessee is no under any obligation to pre-deposit 15 percent of the disputed demand
Considering the Clause 4 of the modified instructions issued by CBDT dated 29th February 2016, as and when the assessee submitted the stay application requesting to award stay of demand until the first appeal is disposed of, it is for the Assessing Officer to pass a proper order and grant stay till disposal of the first appeal on payment demand (15% of the disputed amount); unless the instant case drops in the discussed category in para [B] of Clause 4 of the modified instructions issued by the CBDT dated 29th February 2016. After considering the modified instructions entirely, the assessee is no under any obligation to pre-deposit 15 percent of the disputed demand either at the time of submission of the stay application or before the stay application is considered on merits.
In certain situations, Assessing Officer may refer the matter to Principal Commissioner of Income Tax/Commissioner of Income Tax
In the instant case, the AO is of the opinion that any deviance from clause 4 [A] is warranted ie., if the AO is the view that case drops within considerations of Clause 4 [B](a) ie., the AO is of the view that the nature of additional amount resulting in the demand (disputed demand) is such that the lump sum payment amount higher than 15 percent is warranted, in that instant case, the AO is required to refer the matter of the case to the concerned Principal Commissioner of Income Tax/Commissioner of Income Tax, who shall, after considering the significant facts, decide the quantum of demand required to be paid by the assessee as lump sum amount for awarding a stay of the balance demand.
Where Assessing Officer in a case grants stay of demand for the payment of 15 percent of the demand (15 percent of the disputed demand) and on the other hand the assessee is still aggrieved, in that situation, the assessee has a further right to approach the jurisdictional Principal Commissioner of Income Tax/Commissioner of Income Tax for the review of the decision of the Assessing Officer.
Under the conditions, for the reasons mentioned above, the questioned decision of the Assessing Officer rejecting the application of stay can’t be sustained and the decision of the Assessing Officer deserves to be quashed.