Conditional Deposit Constitutes Prima Facie Case for Stay of Demand.
Issue: When an assessee deposits 20% of the demanded tax as per the condition imposed by the Tribunal for interim protection, can it be concluded that the assessee has made out a prima facie case for a partial stay on the recovery of the remaining outstanding demand?
Facts:
- For the assessment year 2016-17, a demand was raised on the assessee pursuant to an assessment order.
- The assessee filed a stay application before the Tribunal.
- The Tribunal, through an order sheet entry, granted interim protection to the assessee.
- This interim protection was conditional upon the assessee depositing 20% of the total demand, as per an undertaking given by the assessee.
- The assessee duly complied with the Tribunal’s condition and deposited the stipulated 20% of the demand.
Decision: The court held in favor of the assessee, affirming that the assessee had indeed made out a prima facie case for the grant of a partial stay on the recovery of the outstanding demand, subject to the precondition of depositing 20% of the outstanding amount, which the assessee had fulfilled. Consequently, the stay on the recovery of the balance outstanding demand was granted for a period of 180 days or until the disposal of the corresponding appeal, whichever was earlier.
Key Takeaways:
- Compliance with the Tribunal’s condition of depositing a portion of the demanded tax (in this case, 20%) can establish a prima facie case for the grant of a stay on the recovery of the remaining demand.
- When an assessee demonstrates a willingness to comply with the conditions set by the appellate authorities for interim relief, it strengthens their case for a temporary stay on the recovery of the disputed tax.
- Tribunals have the authority to grant conditional stays on tax demands pending the outcome of appeals, and the fulfillment of these conditions by the assessee is a significant factor in determining whether to continue the stay.
IN THE ITAT DELHI BENCH ‘H’
BMW India (P.) Ltd.
v.
DCIT
Ramit Kochar, Accountant Member
AND YOGESH KUMAR US, Judicial Member
AND YOGESH KUMAR US, Judicial Member
SA No. 228 (Delhi) of 2025
IT Appeal No. 480 (Delhi) of 2021
[Assessment Year 2016-17]
IT Appeal No. 480 (Delhi) of 2021
[Assessment Year 2016-17]
APRIL 4, 2025
Divyanshu Agrawal, Adv., for the Appellant. Ashish Tripathi, Sr. DR, for the Respondent.
ORDER
Ramit Kochar, Accountant Member.- The assessee has filed this stay application in SA No. 228/Del/2025 which has arisen from ITA no. 480/Del/2021 for assessment year 2016-17, seeking stay on recovery of the outstanding demand of Rs. 11,31,66,287/-,which demand has arisen pursuant to assessment order dated30.03.2021[DIN-ITBA/AST/S/143(3)/202021/1031941491(1)], passed by the Assessing Officer u/s 143(3) read with sections 143(3A) & 143(3B) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). Notice of demand dated 30.03.2021[DIN & Notice No. ITBA/AST/S/156/2020-21/1031941595(1)]as well computation of income arealso enclosed by the assessee.
2. The assessee is engaged in the business of manufacturing of automobiles and motorcycles. The assessment was framed against the assessee wherein total adjustment of 1,25,88,46,392/- was made to the income of the assessee on substantive basis u/s 92CA. Total demand of Rs. 11,31,66,290/- was raised on the assessee vide assessment order and computation sheet dated 30.03.2021 and accordingly notice of demand u/s 156 dated 30.03.2021 was issued vide DIN & Notice No. ITBA/AST/156/2020-21/1031941595(1). There were further additions to the tune of Rs. 178,36,19696/- being made on protective basis. It is the say of the learned counsel for the assessee that the assessee filed stay application bearing no. 71/Del/2021 in ITA no. 480/Del/2021 for A.Y. 2016-17 which has been disposed of by the Tribunal vide order dated 19.03.2025 with liberty to the assessee to file fresh application for extension of stay,if so advised and in the mean time Revenue was restrained to take any coercive measure against recovery of demand. The assessee has filed this application pursuant to order of the Tribunal dated 19.03.2025 in SA No. 71/Del/2021. It was also brought to the notice of the Bench that Tribunal vide order-sheet entry dated 14.06.2021 had granted interim protection to the assessee on the condition that the assessee deposits 20% of the demand as per the undertaking given by the learned counsel for the assessee. The said ordersheet entry is placed on record at page 41 of the PB. It was submitted that in compliance thereof with of the order of the Bench dated 14.06.2021,the assessee duly deposited an amount of Rs. 2,26,33,258/- with Government Treasuryon account of income tax on companies (corporation tax) through ICICI Bank vide challan serial no. 04787 dated 17.06.2021 (BSR Code 6390340).
3. Learned counsel for the assessee submitted that since 20% of the amount has already been deposited by the assessee, stay on the recovery of the balance demand be granted.It was submitted that assessee has not sought any adjournment since the filing of the corresponding appeal and in fact it is the Department which is seeking adjournment from time to time and prayer was made to grant the stay on the recovery of the outstanding demand.
3.1 It was also brought to the notice of the Bench that the Tribunal in assessee’s own case for assessment year 2010-11in ITA No. has set aside the matter to the file of TPO/AO to determine the ALP of the international transaction of AMP expenses afresh in accordance with the decision of Hon’ble Delhi High Court in Sony Ericsson Mobile Communications India Pvt. Ltd (Delhi)(Del HC). However, the Tribunal in ITA no. 1514/Del/2016 for A.Y. 2011-12 dated 25.01.2019 has held that the incurring of AMP expenditure in question does not give rise to any international transaction. Similar view has been taken in assessee’s own case for AY 2012-13 in ITA no. 1163/Del/2017 vide order dated 14.06.2019.
3.2 It was also submitted that in ITA no. 1406/Del/2015 for AY 2010-11 vide order dated 10.11.2017, the Tribunal has decided this issue of IT support services by seffing aside the matter to the file of TPO/AO for determining the ALP of this transaction afresh. Similar view has been taken by the Tribunal for assessment year 2011-12 and 2012-13. Prayer were made that since amount of 20% of the outstanding demand has been deposited, the stay on the recovery of the remaining outstanding demand of income tax and interest thereon may be granted.
4. The ld. DR fairly left the matter to the Bench. He could not controvert the contentions of the ld. Counsel for the assessee.
5. We have considered rival contentions and perused the material on record. Keeping in view factual matrix as brought to our notice as well the history of the assessee’s case, and without adverting to the merits of the issue’s arising in the appeal as the facts may vary from year to year and principles of resjudicate being not applicable to the income-tax proceedings albeit consistency is to be maintained., we are of the view that the assessee has made out a prima-facie case for grant of partial stay on the recovery of the outstanding demand with the precondition that the assessee deposits 20% of the outstanding demand. However, we note that the assessee has already deposited 20% of the demand on 17.06.2021, as directed by the Tribunal vide order dated 14.06.2021. The AO is directed to verify the same. Accordingly, we grant stay on the recovery of the balance outstanding demand for a period of 180 days or till the disposal of the corresponding appeal in ITA no. 480/Del/2021, whichever is earlier. Further, the assesseewill co-operate in speedy disposal of the appeal in ITA No. 480/Del/2021 by ITAT, and will not seek any un-necessary adjournments before the Tribunal in the appellate proceedings in ITA No. 480/Del/2021. The terms of stay on recovery of outstanding demand were announced by Division Bench during the course of hearing of stay application in open Court. We once again clarify that we have not commented on the merits of the issues arising in the appeal. We order accordingly.
6. The stay application is partially allowed in the manner as indicated above.