Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Saturday, April 30, 2016

Procedure for filing Stay Application of Demand

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.

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.

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