The Tax Publishers2021 TaxPub(DT) 0767 (Bom-HC) : (2021) 278 TAXMAN 0106

INCOME TAX ACT, 1961

Section 220(6)

Where assessee had a good prima facie case on merit and that apart, the assessee pleaded financial hardship to meet the demand, even to the extent of 20%, accordingly, the Revenue was directed to keep the entire demand in abeyance till disposal of the appeal by CIT (A).

Recovery - Stay of demand - Appeal pending before CIT(A) - Assessee having prima facie case

On the basis of documents, various entries in telephone diary, etc., seized from premises of an entity 'E' as well as statement of one of the partners of 'E' recorded under section 132(4), AO made addition to the income of assessee under section 69A. He alleged that assessee failed to provide satisfactory explanation regarding the transaction with 'E', which was indulged in activities of money lending and borrowing of unaccounted cash. Against the said order of assessment, the assessee preferred an appeal before CIT (A). During pendency of the appeal, the assessee filed an application under section 220(6) for stay of demand. Relying upon CBDT's Instructions and Notification dated 29-2-2016 and 31-7-2017, the Revenue granted conditional stay to the assessee, subject to payment of 20% of the demand. Held: Addition in instant case had been made primarily on the basis of the statement made by partner of 'E' and also on the basis of certain entries in the telephone diary. Further, though summons was issued to the said partner for cross-examination by the assessee, however, he did not appear on the date fixed and therefore, he could not be cross-examined. Thus, reliance placed by Revenue on such uncorroborated and untested statement, while making the addition to the income of the assessee, was highly questionable and that too, when for the previous assessment year, he retracted the statement. In such circumstances, it could not be said that assessee did not have a good prima facie case on merit. That apart, the assessee pleaded financial hardship to meet the demand even to the extent of 20%. Accordingly, the Revenue was directed to keep the demand in abeyance till disposal of the appeal by CIT(A).

REFERRED : Mayur Kanjibhai Shah v. ITO & Ors. [Writ Petition No.812 of 2020, decided on 13-3-2020].

FAVOUR : In assessee's favour

A.Y. :



IN THE BOMBAY HIGH COURT

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