The CBDT has issued Office memorandum dated 29.02.2016 by which it has revised Instruction No. 1914 dated 21.03.1996 and issued fresh guidelines for stay of demand at the first appeal stage
F.No.404/72/93-ITCC
Government of India
Ministry of Finance
Central Board of Direct Taxes (CBDT)New Delhi, Dated: 29th February, 2016
Office Memorandum
Sub: Partial modification of Instruction No. 1914 dated 21.03.1996 to provide for guidelines for stay of demand at the first appeal stage.
Instruction No. 1914 dated 21.03.1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand.
2. In part ‘C’ of the Instruction, it has been prescribed that a demand will be stayed only if there are valid reasons for doing so and that mere filing of an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. It has been further prescribed that while granting stay, the field officers may require the assessee to offer a suitable security (bank guarantee, etc.) and/ or require the assessee to pay a reasonable amount in lump sum or in instalments.
3. It has been reported that the field authorities often insist on payment of a very high proportion of the disputed demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand.
4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914:
(A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in pars (B) hereunder.
(B) In a situation where,
(a) the assessing officer is of the view khat the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court /or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or,
(b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/ CIT, who after considering all relevant facts shall decide the quantum/ proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand.
(C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/ CIT for a review of the decision of the assessing officer.
(D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/ CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 (C) above, the same shall also be disposed of by the Pr. CIT/ CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be.
(E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,-
(i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled;
(ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations;
(iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.5. These instructions/ guidelines may be immediately brought to the notice of all officers working in your jurisdiction for proper compliance.
(A.K. Sinha)
Director (ITCC)
I WANT TO KNOW THIS 15% RECOVERY AMOUNT ON APPEAL MATTER IS APPLICABLE IN THE CASE OF A.Y. 2010-11 WHOSE ORDER DATE IS 14-5-2014. AS ITO SAYS THAT CBDT NOTIFICATION COMES IN MARCH 2017 AND MY ORDER DATE IS BEFORE THAT. SO I AM NOT ELIGIBLE FOR RECOVERY OF 15% ON DISPUTED AMOUNT HENCE HE ADJUST OUTSTANDING DUES FROM MY CURRENT YEAR REFUND AMOUNT. PLS HELP WHAT TO DO IN THIS CASE.
After paying 15% of demand, if you loose your appeal do you need to pay interest on the remaining amount till the disposalof the case?
can it be paid in 18 installments ?
In case of unreasonable dismissal of first Appeal by CIT(A), how can CIT/Pr.CIT/CCIT/ITAT be approached for continuing Stay of Demand till ITAT disposes second Appeal in view of various SC/HC/ITAT judgments covering the matter in favour of Assessee but not been followed by CIT(A) ?
Seems reasonable as long as field officers Act reasonably while reviewing
A well laid out road map
At times we experience that reckless additions are made to creat high demands and then insist on the payment eventhough an assessee is in appeal and there are good chances of the appeal beimg decided in favour of the assessee either on facts of the case or in law decided by the , ITAT,H C or the S C . Though the decisions of all these authorities are binding on the lower authorities , the Department is in habit of ignoring the same, inspite of the fact that not following the decisions, amounts to contempt of court.The Appellate authorities should also be directed to dispose of the appeals promptly to avoid unnecessary harassment to the Assessees by the lower authorities.
Agreed Sir. Expeditious time bound disposal of appeals is also essential . For this section 250(6A) of income tax act, 1961 will require some tweaking. Presently the section is :
“Section 250(6A)-inserted by Finance Act, 1999w.e.f. 1-6-1999- in every appeal , the Commissioner(Appeals), where it is possible, may hear and decide such appeal within a period of one year from the end of the financial year in which such appeal is filed before him under section (1) of section 246A.” the delay in disposal of appeals is because of the words ” where it is possible” used in this section. If the Hon. FM deletes these 4 words the CIT(A) will have to dispose the appeal within one year from the end of financial year in which the appeal is filed. This will give adequate time to CIT(A) to dispose of the appeal and at same time safeguard interest of assessee.
At last after about 20 years the CBDT had taken a conscious note of the willful mischief being played by the Assessing Officers and their bosses. These instructions are crystal clear and open for any one. In yesterday’s budget also the FM had restricted the penalty provisions also.
These will speak volumes how the short sighted officers of the department behaved with public.