UTI Mutual Fund vs. ITO (Bom); WP(L) No. 523 of 2013 dated 06-03-2013:
In respect of the A. Y. 2010-11, the application of the petitioner u/s. 220(6) for keeping the demand in abeyance till the disposal of the appeal was rejected by the Assessing Officer. The Assessing Officer refused to follow the order of the Bombay High Court (see. UTI Mutual Fund vs. ITO; 345 ITR 71 (Bom); wherein stay was granted in similar circumstances for the preceding year. CIT also rejected application for stay.
On a writ petition filed by the Petitioner challenging the order of rejection, the Department relied on the order of the Karnataka High Court in CIT vs. IBM India Pvt. Ltd.(Kar); ITA No. 31 of 2013 dated 04-02-2013, taking the view that in a revenue matter an interim order should be passed only in the case of genuine financial hardship and not otherwise.
The Bombay High Court allowed the writ petition and held as under:
“i) The order of the Karnataka High Court cannot be read to mean that consideration of whether an assessee has made out a strong prima facie case for stay of enforcement of a demand is irrelevant. Nor is the law to the effect that except a case of financial hardship, no stay on the recovery of demand can be granted even though a strong prima facie case is made out.
ii) In considering whether a stay of demand should be granted, the Court is duty bound to consider not merely the issue of financial hardship if any, but also whether a strong prima facie case raising a serious triable issue has been raised which would warrant a dispensation of deposit. That is a settled position in the jurisprudence of our revenue legislation. In CEAT Ltd. vs. UOI; 2010 (250) E.L.T. 200 (Bom), the Division Bench of this Court has held as follows. “If the party has made out a strong prima facie case, that by itself would be a strong ground in the matter of exercise of discretion as calling on the party to deposit the amount which prima facie is not liable to deposit or which demand has legs to stand upon, by itself would result in undue hardship of the party.”
iii) Where a strong prima facie case is made out calling upon the petitioner to deposit, would itself occasion undue hardship. Where the issue has raised a strong prima facie case which requires serious consideration as in the present case, the requirement of predeposit would itself be a matter of hardship.
iv) Finally, we express our serious disapproval of the manner in which the Revenue has sought to brush aside a binding decision of this Court in the case of the assessee on the issue of the stay on enforcement for the previous year. The rule of law has an abiding value in our legal regime. No public authority, including the Revenue, can ignore the principle of precedent. Certainty, in tax administration is of cardinal importance and its absence undermines public confidence.
v) For these reasons, we direct that pending the disposal of the appeals for the A. Y. 2010-11 and for a period of six weeks thereafter, no coercive steps shall be taken against the assessee for the recovery of the demand in pursuance of the impugned notices dated 25-02-2013.”
