« From the Courts » Open DEMAT Account in 24 hrs  Karnataka High Court restrains Bengaluru-based Institute of Chartered Tax Practitioners India from enrolling candidates for its courses  Attachment on Cash Credit of Assessee under GST Act: Delhi HC directs Bank to Comply Instructions to Vacate  Income Tax Addition Made Towards Unsubstantiated Share Capital Is Eligible For Section 80-IC Deduction: Delhi High Court  Inordinate delay in income tax appeal hearings  Income Tax leviable on Tuition Fee in the Year of Rendering of Services: ITAT  Supreme Court invoked its power under Article 142 of Constitution to validate notices issued under section 148 as notices issued under section 148A. However the same shall be subject to amended provisions of section 149.  ITAT refuses to stay tax demand on former owner of Raw Pressery brand  Bombay HC sets aside rejection of refund claims by GST authorities  [Income Tax Act] Faceless Assessment Scheme does not take away right to personal hearing: Delhi High Court  Rajasthan High Court directs GST Authority to Unblock Input Tax Credit availed in Electronic Credit Ledger  Sebi-taxman fight over service tax dues reaches Supreme Court «  Maheshwari Agro Industries vs. UOI (Rajasthan High Court)... High court's I-T relief for MSat... » M/s Maheshwari Agro Industries vs. UOI (Rajasthan High Court) February, 01st 2012 S. 220(6): In high-pitched assessments, AO must ordinarily grant stay of demand   The assessee offered Rs. 3.48 lakhs. The AO made a high-pitched assessment of Rs. 1.44 crores. The AO rejected the assessees stay application and issued s. 226(3) garnishee notices. The assessee filed a Writ Petition to challenge the rejection of the stay application. HELD by the High Court allowing the Petition:   (i) U/s 226 (6) the AO has the discretion not to treat the assessee as being in default during the pendency of the appeal. The AO has to normally use this discretion in favour of assessee particularly when high pitched assessments are made and the demand of tax is several times the declared tax liability in the spirit of Instruction No.95 dated 21.08.1969 and grant stay. The mandate of Parliament in s. 220 (6) is that the AO should normally wait for the fate of the appeal filed by the assessee. Therefore, the discretion conferred by s. 220(6) of not treating the assessee in default should ordinarily be exercised in favour of assessee unless there are overriding and overwhelming reasons to reject the assessees stay application. The application cannot normally be rejected by merely describing it to be against the interest of Revenue if recovery is not made, if tax demanded is twice or more of the declared tax liability. The very purpose of filing of appeal, which provides an effective remedy to the assessee, is likely to be frustrated, if such a discretion was always to be exercised in favour of revenue rather than assessee. (ii) The tendency of making high pitched assessments by the AO is not unknown and it may result in serious prejudice to the assessee and miscarriage of justice & sometimes may even result into insolvency or closure of the business if such power was to be exercised only in a pro-revenue manner. It may be like execution of death sentence, whereas the accused may get even acquittal from higher appellate forums or courts. Therefore, the powers u/s 220 (6) has to be exercised in accordance with the letter and spirit of Instruction No. 95 dated 21.08.1969 which holds the field and is biding on the AO.   (iii) CBDT urged to issue appropriate guidelines for grant of stay in the spirit of Instruction No.95 dated 21.08.1969 to all the subordinate authorities & to clarify that CIT (A) has the power to grant stay of demand.   (iv) On facts, as the assessed income was 47 times the returned income, the applicability of Instruction No.95 dated 21.08.1969 was beyond the pale of doubt and the assessee was entitled to a stay of demand till the disposal of the appeal by the CIT (A).   (v) The CIT (A) has inherent powers to grant stay against recovery of disputed demand of tax if an appeal u/s 246A is filed. The relevant factors to be considered are prima-facie case, balance of convenience, irreparable injury, nature of demand and hardship likely to be caused to the assessee, liquidity available to the assessee etc.