IS IT MANDATORY TO PAY TAX IN APPEAL

[arindam_647]

I HAVE FILED AN APPEAL FOR 09-10 A.Y WHERE THE COMMISSIONER IMPOSED A DEMAND OF RS.3,34000/- AND I HAVE FILED A STAY LETTER ALSO.

NOW THE DEPARTMENT SAID THAT I HAVE TO PAY THE TAX AMOUNT BEFORE APPEAL. IS IT MANDATORY??

[ashutosh majumdar]

Well s. 220(1) provides that the demand has to be paid within 30 days of service of the notice of demand. Failure to do so renders the assessee in default and the department is entitled to exercise coercive measures against him.

The pendency of the appeal before the CIT (A) does not mean that the demand does not have to be paid though S. 220(6) empowers the AO to treat the assessee as not being in default if a stay application is filed.

I suggest you pursue the stay application and come to terms with the department. Typically, the department will demand that you pay 50% of the demand though if you bargain hard and have a good case on merits, you may be able to reduce the amount. You may have to provide some security to the department.

[pawansingla]

It is not mandatory to pay taxes  /demand raised after 143(3) for filing of appeal.only condition is that he should have paid tax on returned income.The rajasthan High court has taken a view that CIT(A) have inherent power to grant stay of appeal.