Tax authorities must follow established procedures when collecting disputed amounts, ensuring fairness and adherence to guidelines for stay of demands pending appeal decisions.

JUDGMENT

Manmohan, J. (Oral)

C.M. No.47165/2021

Exemption allowed, subject to all just exceptions.

Accordingly, the application stands disposed of.

W.P.(C) 14937/2021 & C.M.No.47164/2021

1. Present writ petition has been filed seeking refund of Rs.6,05,46,907/- which was recovered in excess of 20% of the total disputed tax demand for the Assessment Year 2016-17 against the refunds due for the Assessments Years 2018-19 and 2020-2021 along with statutory interest. Petitioner also seeks directions to the Respondents to hear and dispose of the appeal filed against the order dated 07th December, 2019 under Section 143(3) of the Income Tax Act, 1961 [for short `the Act'] that is currently pending.

2. Learned counsel for the Petitioner states that under Section 220(6) of the Act, the Assessing Officer has been conferred with the power to grant stay on recovery of outstanding tax demand subject to fulfillment of appropriate conditions. He states that in order to provide guidance and lay down principles regarding stay of demand, the Central Board of Direct Taxes has issued various Circulars/Notification from time to time including Office Memorandums dated 29th February, 2016 and 31st July, 2017, prescribing that in cases where an assessee challenges the additions/disallowances made in the assessment order by way of an appeal before the first appellate authority, i.e., CIT(A), and during pendency thereof deposits 20% of the total disputed outstanding tax demand, the assessing officer is empowered to grant stay of recovery of the balance outstanding demand.

3. Learned counsel for the Petitioner submits that upon payment/recovery of the standard rate of 20% of the disputed outstanding tax demand, the assessing officer is mandated to grant stay on recovery of the balance disputed outstanding tax demand till disposal of first appeal of the assessee, unless the case of the assessee falls in the category mentioned in paragraph (B) of the Office Memorandums dated 29th February, 2016 and 31st July, 2017. He states that the Respondents in violation of the provisions of the Office Memorandums recovered the disputed outstanding tax demand in excess of 20% by way of adjustment of refunds due for the subsequent assessment years.

4. He states that while 20% of the disputed amount for the Assessment Year 2016-17 was Rs.2,00,93,653/- (20% of Rs.10,04,68,268/-), the Respondents adjusted Rs.8,06,40,561/- being 80.26% of the demand and, that too, without deciding Petitioner's application for stay.

5. Learned counsel for the Petitioner states that the Petitioner had preferred W.P(C) No.1449/2020 before this Court wherein the Petitioner had challenged the assessment proceedings, attachment of bank account and recovery of Rs.2,13,06,741/-, which was 21.21% of the disputed demand. He states that this Court vide order dated 07th February, 2020 had allowed the Petitioner to file a stay application before the CIT(A) and directions were given to the CIT(A) to decide the stay application by passing a speaking order within two weeks. However, he states that despite directions of this Court and several requests of the Petitioner, the stay application dated 18th February, 2020 of the Petitioner has not been decided till date.

6. Issue notice. Mr. Zoheb Hossain, learned standing counsel accepts notice on behalf of the Respondents. He states that in the present case, the Petitioner had not willfully deposited the 20% of the tax demand.

7. Having heard learned counsel for the parties, this Court finds that the Respondents had recovered 21.21% of the disputed demand before the order dated 07th February, 2020 was passed by the learned predecessor Division Bench, which had also directed the CI