Stay of Demand
Where an assessee receives a notice of demand following an assessment order and fails to pay the demanded amount within 30 days, or such shorter time as prescribed with approval from the Joint Commissioner, interest and penalty become applicable. However, in genuine hardship cases, the assessee may seek a stay of demand from the Assessing Officer, JCIT(A), CIT(A) or the ITAT.
- Stay of Demand by the Assessing Officer– If the assessee believes that the assessment is excessive or high-pitched, he may file a stay application with the AO. The AO may extend the time for payment, allow payment in instalments, or choose not to treat the assessee as a defaulter during the pendency of the appeal with JCIT(A) or CIT(A).
The Assessing Officer (AO) may grant a stay on the recovery of the demand, subject to payment of 20% of the disputed tax demand [Office Memorandum F. No.404/72/93-ITCC (FTS: 284146) dated 31-07-2017]. This threshold may be increased in the following circumstances:
o Taxpayer has a history of tax litigation with similar issues decided against the assessee;
o Same issue already decided in favour of the Department by a jurisdictional High Court or Supreme Court;
o Tax demand is based on credible evidence collected in search or survey operations.
- Stay of Demand by the ITAT –The assessee may apply to the ITAT for stay of demand. ITAT may grant a stay for up to 180 days, subject to the assessee having deposited or furnished security equivalent to 20% of the tax liability (including interest, penalty, fee, etc.).
If the appeal is not disposed of within 180 days and the delay is not attributable to the assessee, the ITAT may extend the stay. However, the total stay period cannot exceed 365 days in aggregate, and the appeal must be disposed of within the extended stay period. If not disposed of within 365 days, the stay shall be vacated automatically, regardless of whether the delay is attributable to the assessee.
o Procedure for Filing Stay Petition
➢ The stay application must be filed in triplicate, accompanied by a fee of Rs. 500.
➢ Separate applications are required for stay of recovery under different enactments.
➢ Every application shall be neatly typed on one side of the paper, and shall be in English and must include:
o Summary of facts relating to the tax demand;
o Result of the appeal filed before CIT(A);
o Break-up of total demand, undisputed and outstanding amounts;
o Date of filing appeal to ITAT and appeal number (if known);
o Past applications for stay and their results;
o Brief reasons for seeking a stay;
o Details of any security offered;
o Clear and concise prayers;
o Affidavit supporting the contents, sworn by the assessee or authorised agent.
➢ Applications not meeting the above requirements may be summarily rejected.