Bombay HC directs AO to grant stay of demand 20% of the disputed demand paid by Assessee [Read Order]

The Bombay High court directed the Assessing Officer to grant stay of demand 20% of the disputed demand paid by the assessee.

The petitioner, Jet Privilege Private Limited sought the direction regarding calling for records of petitioner’s case so far as related to the adjustment of refund against outstanding demand for A.Y. 2019-20. Petitioner submitted that respondent is yet to refund a sum of Rs.37,63,57,620/- for A.Y. 2019-20 along with applicable statutory interest under Section 244 (A) of the Income Tax Act, 1961.

Mr. Pardiwalla, the counsel on behalf of the petitioner stated that alongwith appeal challenging the demand for A.Y. 2015-16 and 2016-17, Stay Applications were also filed and orders have been stayed upon petitioner depositing 20% of the demand amounts. The fact of petitioner depositing 20% has not been disputed through Mr. Walve states that extension to deposit 20% for A.Y. 2016-17 was not granted but petitioner still went ahead and deposited it. In our view that should not really matter because 20% has been deposited and respondents have accepted the same. The stay for both A.Y. 2015-16 and 2016-17 have to be in force.

Mr. Pardiwalla also submitted in any event, petitioner having deposited 20% amount and stay having been granted under Section 220 (6) of the Act, it would mean that the time to make payment stands extended and petitioner shall not be treated to be an assessee in default for the recovery provisions to be set in motion and therefore, the entire amount refundable after giving credit to the amount already refunded becomes payable together with accumulated interest.

The division bench of Justice Abhay Ahuja and Justice K.R.Shriram noted that the assessing officer shall grant stay of demand where the outstanding demand is disputed on assessee paying 20% of the disputed demand. Admittedly, petitioner has filed an appeal disputing the outstanding demand for A.Y. 2015-16 and A.Y. 2016-17 and have deposited 20% of the amount demanded. Therefore, there is a stay of demand in force. The effect of this deposit would mean that the time to make the payment stands extended and petitioner is not deemed to be an assessee in default for the recovery provisions to be set in motion

“Respondent to refund the amounts to petitioner as determined for A.Y. 2019-20 under intimation issued under Section 143 (1) of the Act with interest thereon as per law within a period of four weeks from the date of receipt of this order,” the bench while allowing the petition said.

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