Exceptional circumstances warranting stay of demand without pre-deposit during the pendency of the appeal.

ANUPINDER SINGH GREWAL, J.

The petitioner has impugned order dated 25.11.2016 (Annexure P-1) whereby respondent No.2 has declined to stay the recovery of demand for assessment year 2013-14 during the pendency of the appeal as well as the demand notice dated 29.11.2016 (Annexure P-14).

2. The petitioner institute is a Society established by Government of Punjab on 07.07.1994 and registered under the Societies Registration Act, 1860 on 10.10.1994. It was granted registration under Section 12AA of the Income Tax Act (hereinafter referred to as ‘the Act’) on 01.11.2000 by the Commissioner of Income Tax (for short ‘CIT’), Chandigarh. The Society is said to have been set up with the object of providing education, training, research and related infrastructure in various branches of health sciences and working for the advancement of scientific knowledge aimed at enhancing the quality of patient care. It has been filing income tax returns and claiming exemption of its entire income under Section 11 of the Act. The registration of the petitioner under Section 12AA was cancelled by the CIT by order dated 24.10.2013 (Annexure P-3). The petitioner preferred appeal there against and the Income Tax Appellate Tribunal, Amritsar allowed the same on 29.09.2015. This order is stated to have attained finality.

For the assessment year 2006-07, the total demand of Rs. 20,77,10,765/- on account of tax, penalty and interest had been raised by the Department where against appeals ITA Nos.271 and 274 of 2014 preferred by the petitioner, are pending adjudication before this Court. After the cancellation of the registration of the petitioner under Section 12AA of the Act, the assessments of the petitioner for the assessment year 2007-08 to 2010-11 were re-opened and total demand of Rs. 72,19,07,560/- was raised. The appeals are stated to be pending before the CIT (Appeal). For the assessment year 2013-14, a demand of Rs. 65,13,78,090/- was raised and the appeal preferred there against by the petitioner is pending before the respondent No.2. The respondents issued letter dated 03.02.2016 asking the petitioner to deposit the outstanding demand failing which recovery proceedings were to be initiated. The petitioner was also put on notice by the respondents letter dated 14.03.2016 for an outstanding amount for the assessment years 2006-07 to 2010-11 which was replied by the petitioner on 23.03.2016 (Annexure P-9 Colly.). The matter is stated to be pending before the CIT (Exemptions). Thereafter, assessment for the assessment year 2013-14 was also framed by the letter dated 30.03.2016 and further demand was created. The respondents sought the payment of outstanding amount vide order dated 04.05.2016 (Annexure P-12). The petitioner is stated to have preferred appeal against the additional demand for the assessment year 2013-14 which is pending before the CIT. In the meantime, the petitioner preferred application for stay of the demand of Rs. 65,13,78,090/- for the assessment year 2013-14. This application was dismissed by the impugned order dated 25.11.2016 (Annexure P-1) by referring to office memorandum issued by Central Board of Direct Taxes (hereinafter referred to as ‘CBDT’) on 29.02.2016 modifying the Instructions No. 1914 dated 21.03.1996 for deposit of at least 15% of the demand for the stay of the order till the disposal of the appeal. On 12.12.2016 it was directed by this Court that no coercive steps be taken against the petitioner.

3. Learned counsel for the petitioner has contended that the impugned order refusing to stay the demand during the pendency of the appeal has been passed arbitrarily and without application of mind and, therefore, deserves to be set aside. He further contended that the petitioner institute has been set up and is maintained by the Government for promoting the health and well being of the public. It has a good prima facie case for setting aside the raised demand and the appeal before the CIT is likely to succeed as th