Decided on November 20,1992



T.N.C. Rangarajan, Vice-President - (1.) BY this petition, the assessee seeks stay of recovery of disputed taxes.
(2.) The assessee is a company. For the assessment year 1989-90, the assessee filed a return showing an income of Rs. 19,55,413. The assessment was made on 28-2-1992 determining the total income at Rs. 92,44,310 resulting in a demand of Rs. 62,62,670. The appeal of the assessee was partly allowed by the appellate order dated 21-9-1992. As on date of the application for stay, it is stated that an amount of Rs. 42,09,337 being the disputed tax, Rs. 18,82,844 being interest under Section 234B and interest of Rs. 1,70,489 under Section 234C, totalling Rs. 62,62,670 is outstanding. It is also stated that the Income-tax Officer has recovered a sum of Rs. 2,60,369 from the Indian Overseas Bank, two sums of Rs. 1,91,330 and Rs. 43,800 from the Indian Bank by garnishee orders. It is further stated that when the assessee approached the Commissioner of Income-tax for stay of the disputed taxes, a letter dated 9-11-1992 was issued by the Assistant Commissioner (Head Quarters) stating as under :� I am desired by the Commissioner of Income-tax, Central-II, Madras, to inform you that your request for stay of collection of tax for Assessment year 1989-90 has not been acceded to. You are requested to pay the taxes immediately. According to the assessee, it has been advised of fair chance of success in the appeal which is pending and it does not have any liquid funds apart from that required to pay salaries to employees for meeting the demand. It is also stated in the petition that the assessee had offered to pay a sum of Rs. 5 lakhs and had also requested the Income-tax Officer to adjust the refunds due for the earlier years amounting to Rs. 5.5 lakhs. It was submitted that in the circumstances the rejection of the assessee's request for stay of collection of tax and the attachment of the bank accounts had caused undue hardship. On the other hand, it was submitted on behalf of the Revenue that once the appeal of the assessee has been disposed of by the CIT(A), there is no question of granting any stay and further that the Commissioner was only giving administrative instructions as if the assessee was making a complaint against the Income-tax Officer and, therefore, there is no need to consider the various aspects stressed by the assessee for making a speaking order. We have considered the submissions of both sides and we have perused the provisions of the Act and the relevant decisions of the courts. It has been the practice of this Tribunal to insist that the assessee approach the Department for redress in the first instance and to entertain stay petitions only in really deserving cases. The present situation is that while the assessee has to pay interest at the rate of 2% for every month (equivalent to 24% per annum) for which the taxes are outstanding, the Revenue pays interest only at 15% per annum. At the same time, due to heavy backlog of cases, the assessees may have to wait for a couple of years or more before the appeals are disposed of. In cases where heavy demands are made which are likely to be reduced on appeal to the Tribunal, it is obvious that the assessees are put in a disadvantageous situation. No doubt, the Revenue has a duty to collect the taxes but then it has always been understood that it need not be a painful exercise. This is the reason why the Act itself enables the Income-tax Officer not to treat the assessee as in default under certain conditions.
(3.) CHAPTER XVII-D lays down the procedure relating to collection and recovery of taxes. Section 220 enables the Income-tax Officer to issue a notice demanding payment. Sub-section (3) provides that on the application of the assessee, the assessing officer may extend the time for payment or allow payment by instalments subject to such conditions as he thinks fit to impose in the circumstances of the case. Sub-section (6) provides that where an assessee has filed an appeal, the assessing officer may in his discretion and subject to such conditions as he may think fit to impose, treat the assessee as not being in default until the disposal of the appeal. The Revenue now assumes that because of this provision, as soon as an appeal is disposed of the assessee has to be treated as in default. We are unable to accept this proposition because Sub-section (6) is a specific provision relating to the period when the first appeal is pending for disposal. But the provisions of Sub-section (3) still remain even after the first appeal is disposed of and an appeal is pending in the Tribunal. That is the reason why the Tribunal usually requires the assessees to approach the Income-tax Officers first before coming up with an application for stay.;

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