Appeal
This query is : Resolved
05 March 2009
Sir,
When an assessee appeals against an assessment order requiring payment, does the appeal stall the requirement to pay the amount demanded?
Should the assessee pay the full amount or is partial payment sufficient? Is there anything legally recognized as 'paying in protest'?
Pointers to specific sections of the laws/circulars/rules, would be appreciated.
Sincerely
Naren
When an assessee appeals against an assessment order requiring payment, does the appeal stall the requirement to pay the amount demanded?
Should the assessee pay the full amount or is partial payment sufficient? Is there anything legally recognized as 'paying in protest'?
Pointers to specific sections of the laws/circulars/rules, would be appreciated.
Sincerely
Naren
05 March 2009
You may file an application before the appelate authority to stay the amount in demand.
Appellate authority has the power to stay the amount in full or partial say 10% etc. depending upon the mertits of the case involved
Appellate authority has the power to stay the amount in full or partial say 10% etc. depending upon the mertits of the case involved
05 March 2009
If I do not want the headache of asking for a stay, is there legal prejudice to the pending appeal by paying in full? If I do not want to compromise my rights in appeal, is there anything I need to do, while paying the amount in full?
05 March 2009
If an assessee does not pay the amount demanded under the notice issued u/s 156 within 30 days or within shorter time prescribed by the Assessing Officer then he will be treated as an assessee deemed to be in default. Once the assessee is treated as assessee deemed to be in default the recovery proceedings can be initiated against him. The assessee has right u/s 220(6), where the defaulting assessee has preferred an appeal u/s 246A, to make an Application for Stay of demand. It is the right of the assessee to make an Application for Stay if the appeal is filed u/s 246A. If no appeal is filed and demand raised against the assessee is accepted but the assessee does not have means to make the full payment then also he has a right to make an Application for Stay of the demand and make out a case based on the facts. The obligation of the assessee is to make the payment within the stipulated time under section 220(1) or make an Application for Stay within the stipulated time under section 220(3). The Stay Application u/s 220(3) must be made before the amount stated in the notice of demand becomes due for payment.
Once a Stay Application is filed before an AO or TRO, then he has a power to grant Stay or has a power to Stay the demand by asking the assessee to make certain payments within such time as he deems fit. He has an obligation to give an opportunity to the assessee and has to consider the facts judiciously submitted before him. He cannot summarily reject the Stay Application without giving reasons. The AO and TRO has power to stipulate such conditions as he deems fit which is reasonable for Stay of demand or for permitting the assessee to make the payments in instalments. AO and TRO must consider the following:
Instructions and Circulars issued by CBDT:(i) Circular 530 dt. 6-3-1989
(ii) Circular 589 dt. 16-1-1991
(iii) Instruction No. 1914 dt. 27-8-1997
The AO must also consider the observation of the Bombay High Court in the case of KEC International Ltd. 251 ITR 158. The Hon. High Court has given guidelines to the Income Tax Authorities which should be kept in mind while deciding the Stay Application.
Under Income-tax Act, 1961 there are no specific powers given to the CIT (Adm) for Stay of demand. The Stay Application u/s 220(6) can be made only before the AO and the AO only has a right to Stay the demand. However, the CIT (Administration) being the administrative head of the particular charge where the jurisdiction of the assessee lies, the CIT (Administration) can consider the Stay Application. In fact, the CIT (Administration) exercises the power and considers the Stay Application where the AO rejects the Stay Application of the assessee. The Income Tax Appellate Tribunal also insists (though not rightly) for the rejection of the Stay of demand by CIT (Administration) before considering the Stay Application in cases where appeal is pending before ITAT.
If an assessee does not pay the amount demanded under the notice issued u/s 156 within 30 days or within shorter time prescribed by the Assessing Officer then he will be treated as an assessee deemed to be in default. Once the assessee is treated as assessee deemed to be in default the recovery proceedings can be initiated against him. The assessee has right u/s 220(6), where the defaulting assessee has preferred an appeal u/s 246A, to make an Application for Stay of demand. It is the right of the assessee to make an Application for Stay if the appeal is filed u/s 246A. If no appeal is filed and demand raised against the assessee is accepted but the assessee does not have means to make the full payment then also he has a right to make an Application for Stay of the demand and make out a case based on the facts. The obligation of the assessee is to make the payment within the stipulated time under section 220(1) or make an Application for Stay within the stipulated time under section 220(3). The Stay Application u/s 220(3) must be made before the amount stated in the notice of demand becomes due for payment.
Once a Stay Application is filed before an AO or TRO, then he has a power to grant Stay or has a power to Stay the demand by asking the assessee to make certain payments within such time as he deems fit. He has an obligation to give an opportunity to the assessee and has to consider the facts judiciously submitted before him. He cannot summarily reject the Stay Application without giving reasons. The AO and TRO has power to stipulate such conditions as he deems fit which is reasonable for Stay of demand or for permitting the assessee to make the payments in instalments. AO and TRO must consider the following:
Instructions and Circulars issued by CBDT:(i) Circular 530 dt. 6-3-1989
(ii) Circular 589 dt. 16-1-1991
(iii) Instruction No. 1914 dt. 27-8-1997
The AO must also consider the observation of the Bombay High Court in the case of KEC International Ltd. 251 ITR 158. The Hon. High Court has given guidelines to the Income Tax Authorities which should be kept in mind while deciding the Stay Application.
Under Income-tax Act, 1961 there are no specific powers given to the CIT (Adm) for Stay of demand. The Stay Application u/s 220(6) can be made only before the AO and the AO only has a right to Stay the demand. However, the CIT (Administration) being the administrative head of the particular charge where the jurisdiction of the assessee lies, the CIT (Administration) can consider the Stay Application. In fact, the CIT (Administration) exercises the power and considers the Stay Application where the AO rejects the Stay Application of the assessee. The Income Tax Appellate Tribunal also insists (though not rightly) for the rejection of the Stay of demand by CIT (Administration) before considering the Stay Application in cases where appeal is pending before ITAT.
05 March 2009
Many thanks for the detailed reply, but my question was different. If I do not want the headache of asking for a stay or for installment payment, and assuming I wish to just pay now, do I inadvertantly compromise my rights in the pending appeal? I think the answer is no, but just want to be sure. In particular, I am worried whether the payment will be used by the govt as some sort of admission of liability.
05 March 2009
Many thanks for the detailed reply, but my question was different. If I do not want the headache of asking for a stay or for installment payment, and assuming I wish to just pay now, do I inadvertantly compromise my rights in the pending appeal? I think the answer is no, but just want to be sure. In particular, I am worried whether the payment will be used by the govt as some sort of admission of liability.
05 March 2009
By paying taxes you can avoid headache,payment of taxes doen not mean admission of liability.If Appeal goes in your favour you will get the refund alongwith interest.
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05 March 2009
Resolved.. Many thanks to both the experts...
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