51. Ashokbhai Jagubhai Kheni vs. Dy. CIT (Appeals); 405 ITR 179 (Guj); Date of order: 12th March, 2018: A. Ys.: 2011-12, 2013-14 and 2014-15 Section 220(6) and CBDT Circulars – Recovery of tax – Stay of recovery pending appeal – Circular by CBDT that 15% of disputed demand to be deposited for stay – Permits decrease or even increase in percentage of disputed tax demand to be deposited – Requirement reduced to 7.5% on further condition of security for remaining 7.5% to satisfaction of Assessing Authority

For A. Ys. 2011-12, 2013-14 and
2014-15, the Assessing Officer raised a total demand of Rs. 30 crore. The
Assessee filed appeals before the Commissioner (Appeals) and requested for stay
of the demand pending appeals u/s. 220(6) of the Act. The Assessing Officer
required the assessee to deposit 15% of the disputed tax demand, upon which,
the recovery of the remaining amount would be stayed. The assessee approached
the Principal Commissioner, who refused to grant any further relief to the
assessee.

The Gujarat High Court allowed the
writ petition filed by the assessee and held as under:

“i)  The
issue of granting stay of pending appeals is governed principally by two
circulars issued by the CBDT. The first circular was issued on 02/02/1993 being
Instruction No. 1914.

The circular contained guidelines
for staying the demand pending appeal, stating that the demand would be stayed
if there are valid reasons for doing so and mere filing of appeal against the
order of assessment would not be sufficient reason to stay the recovery of
demand. The instructions issued under office memorandum dated 29/02/2016 are
not in supersession of Instruction of Instruction No. 1914 but are in partial
modification thereof. This circular thus lays down 15% of the disputed demand to
be deposited for stay, by way of a general condition.

The circular does not prohibit or
envisage that there can be no deviation from this standard formula. In other
words, it is inbuilt in the circular itself that the percentage of the disputed
tax to be deposited could be either decreased or even increased for an assessee
to enjoy stay pending appeal. The circular provides the guidelines to enable
Assessing Officers and Commissioners to exercise such discretionary powers more
uniformly.

ii)   The
total tax demand was quite high. Even 15% of the disputed tax dues would run
into several crores of rupees. Considering such facts and circumstances, the
requirement of depositing the disputed tax dues was to be reduced to 7.5% in
order to enable the assessee to enjoy stay of pending appeals before the
Commissioner. This would however be on a further condition that he should offer
immovable security for the remaining 7.5% to the satisfaction of the assessing
authority.

iii)  The order passed by the Principal Commissioner was to be modified
accordingly. Both these conditions should be satisfied by April 30, 2018.”