Assessment, Recovery of Tax Demands
Pay 15% of Disputed Demand to Get A Stay till Disposal of Appeal
Based on recommendation of tax simplification committee report CBDT has now modified the earlier 
on stay of disputed demand . The new instruction has set a very clear direction to A.O and other senior officer about the way a stay petition must be dealt with . The summary of the new rule to get a stay of demand till the disposal of appeal by the CIT(A) are as under :
- There must be an appeal filed before CIT(A)
- Pay 15 % of demand disputed in appeal and apply before the A.O to stay the demand.
- The A.O , within two weeks of receiving application shall pass order of
- stay of demand
- refer the matter to Pr.CIT/CIT for deciding about the quantum if in his opinion there is sufficient material to increase or decrease the minimum payment of 15 %
- The Pr.CIT/CIT will have to pass the order within 2 weeks from getting the reference from A.O.
- If you do not agree to pay even 15 % , you can apply before Pr.CIT or CIT for review and get an order for less .
Instruction on Stay of Disputed Demand
OFFICE MEMORANDUM [F.NO.404/72/93-ITCC], DATED 29-2-2016
Instruction No. 1914 dated 21-3-1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand.
2. In part ‘C’ of the Instruction, it has been prescribed that a demand will be stayed only if there are valid reasons for doing so and that mere filing of an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. It has been further prescribed that while granting stay, the field officers may require the assessee to offer a suitable security (bank guarantee, etc.) and/ or require the assessee to pay a reasonable amount in lump sum or in instalments.
3. It has been reported that the field authorities often insist on payment of a very high proportion of the disputed demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand.
4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914:
| (A) | In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) hereunder. | |
| (B) | In a situation where, |
| (a) | the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or, | |
| (b) | the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/CIT, who after considering all relevant facts shall decide the quantum/proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand. |
| (C) | In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer. | |
| (D) | The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 (C) above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be. | |
| (E) | In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,- |
| (i) | require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; | |
| (ii) | reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; | |
| (iii) | reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245. |
5. These instructions/guidelines may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance.
