As
per Section 220 of the Income Tax Act Any tax, interest or any demand order if
passed under any section of the Act it becomes payable within 30 days of the
service of notice of demand. Therefore,
unless the demand is stayed, the demand has to be paid within that time
notwithstanding an appeal has been filed by the assessee against the demand or
rectification under Section 154 is filed or not.
A Stay of realization
of tax cannot be allowed just because an appeal has been preferred or filed. Therefore,
it is very significant for assessees to take steps to prevent any coercive
methods from being taken by the Department to recover the outstanding dues
either through attachment of Bank account or adjustment of demand against any
refund due to the assessee.
As CPC
has uploaded demands against orders in various sections raised by the
department on the website. Now a days department send the notice under section
245 for adjustment of demand known or not known to the assessee. At the time of filing Online response against such
notice if assessee opts for the Appeal
Filed before CIT Appeal and enters the date of such appeal immediately he gets
the POP up option for date of application for stay of demand. However ‘STAY OF
DEMAND’ term is not used by AO as per the directions of CBDT but in common
language this term is used to keep the assessee not in default till the time
appeal orders confirming such demands are passed.
Now at
the time of response to the under section 245 for non- adjustment of demands
against any other refund due to the assessee this term of Stay of Demand
Application has got a significant importance.
Points
to remember while drafting Stay Application:
There
is no format given or prescribed by the department and it can be drafting as
per facts and circumstances of the case but following points can be considered :
ü The Assessment history of the assesse to prove that
assesse is not in default regularly
ü Willing ness and Good conduct of the assesse for
discharging tax liability Cooperation of the assessee with the Income Tax Department
in the past
ü Appeal filed with CIT (A) and brief of grounds of appeal
and even copy of appeal filed can be enclosed along with receipt of the same.
ü Financial position and hardships for payment of demand immediately
ü Facts and merits of the case and brief of justification or
judgments considered framing of such opinion that there was no tax liability on
disputed matter.
ü That assesse has to prove the basis on which he is not
agreeing to the demand and his willingness and good conduct in discharge of
tax liabilities in past. Even if there are no financial difficulties, stay can
be granted if a strong prima facie merits of
the case.
ü It is important to include in case in past the demand on similar
issues have been cancelled and case has been decided in favor of the assessee.
ü Even if the earlier decision of the appellate authority or
court has been decided on similar facts on same issue in favor of any other
aseessee the stay can be granted on that basis also. And in case the assessee’s
relies on a judgement in similar case in other courts the assessee should give
comparison that how he has the similar facts and can include the extracts of
the judgement which establishes that his case is sound for the stay of demand.
ü In case assessee finds any mistake in calculation and the
mistake is apparent on record and assessee has filed rectification request under
Section 154 then such fact should also be included in stay application.
ü Lastly assessee should pray in the stay application to the
effect that no coercive recovery measures may be taken till the disposal of the
rectification application
ü A prayer requesting an opportunity of being heard must be
made in the end.
