In a recent ruling, the Madras High Court ruled that the Office Memorandum (Instruction No.1914) of the Central Board of Direct Taxes ( CBDT ) does not mandate 20% remittance of the disputed tax for stay application. The bench noted that the appellate authority did not examine whether the petitioner had made out a prima facie case.
The Petitioner, The Arni Agri Producers Coop Marketing Society Limited challenged the assessment order dated 01.03.2023 pertaining to assessment year 2018-19 was challenged through a statutory appeal, subsequently leading to a stay application.
The stay application was decided on 29.03.2024, granting stay until the disposal of the first appeal on the condition that the petitioner pays 20% of the disputed tax demand. This writ petition is aimed at challenging this order.
The petitioner’s counsel argued that the petitioner’s explanation regarding its limited resources and entitlement to deduction under Section 80P of the Income Tax Act was not considered while issuing the impugned order. Reference was made to a judgment of the Delhi High Court, asserting that the office memorandum dated 31.07.2016 does not mandate a 20% deposit and that traditional principles for granting interim stay should be followed.
Dr. B. Ramaswamy, senior standing counsel for the respondents, contended that the impugned order was issued in accordance with the office memorandum and that interference is unwarranted when the appellate authority has exercised discretion appropriately.
The court noted that the grant of stay involves discretionary jurisdiction, and it does not sit in appeal over such discretion. However, it observed that the appellate authority did not examine whether the petitioner had made out a prima facie case and that the petitioner’s assertion of limited resources warranted consideration. It was also highlighted that the office memorandum does not mandate a 20% deposit.
Consequently, a Single bench of Justice Senthilkumar Ramamoorthy set aside the impugned order and remanded the stay application for reconsideration by the appellate authority, emphasising the application of classical principles. The petitioner was allowed to file an additional affidavit and supporting documents within two weeks for consideration. Accordingly, the writ petition was disposed of.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
