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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> High Court of Delhi Tax authorities are entitled to grant stay on deposit of amounts lesser than twenty percent of the disputed demand MANU/DE/1529/2022 - (02 May 2022) </td> </tr> <tr> <td align="left" valign="top">Seven Seas Hospitality Private Limited vs. Principal Commissioner of Income Tax Central, Delhi-3 and Ors.</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">Present writ petition has been filed challenging the orders passed by Respondents No.1 and 2, without considering the submissions made by the Petitioner. The Petitioner states that, the Petitioner Company filed an application for stay of demand under Section 220(6) of the Income Tax Act, 1961 (IT Act) for the assessment years 2013-14 to 2019-20 on the ground that the appeal filed by the Petitioner before the CIT(A) against the additions made by Respondent No.2 is pending adjudication and the Petitioner Company is under financial stress on account of COVID-19 pandemic and further on account of the fact that the accounts of the Petitioner Company have been declared as NPA by all the banks due to non-payment of principal installment and interest amount to banks. 
The Petitioner states that, Respondents Nos.1 and 2 have passed the impugned orders rejecting the plea of the Petitioner to stay the demand and directed the Petitioner to pay 20% of the total outstanding demand of Rs.37,52,08,576. He submits that, Respondents Nos.1 and 2 have also rejected the stay application filed by the Petitioner in a cryptic manner. 
In view of two office memorandums dated 29th February, 2016 and 31st July, 2017, this Court is of the view that, the requirement of payment of twenty percent of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases. The said pre-condition of deposit of twenty percent of the demand can be relaxed in appropriate cases. In fact the Supreme Court in PCIT vs. M/s LG Electronics India Pvt. Ltd. has held that tax authorities are entitled to grant stay on deposit of amounts lesser than twenty percent of the disputed demand in the facts and circumstances of a case. 
In the present case, the impugned orders are non-reasoned orders as Respondent Nos. 1 and 2 have not considered the submissions of the Petitioner in the stay applications and thus, the discretion vested in Respondents Nos. 1 and 2 has not been exercised judiciously. Further, neither the Assessing Officer nor the PCIT have considered the three basic principles i.e. the prima facie case, balance of convenience and irreparable injury while deciding the stay application. 
Consequently, the impugned orders and notices are set aside and the matter is remanded back to the PCIT for fresh adjudication on the applications for stay. However, before deciding the stay applications, the PCIT shall grant a personal hearing to the authorised representative of the Petitioner. Till the stay applications filed by the Petitioner are not decided, no coercive action shall be taken by the Respondents against the Petitioner in pursuance to the demands arising out of the orders. Petition disposed off.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Stay applications, Pre-deposit, Discretion</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>