In the matters of grant of stay the authorities have to exercise their wisdom keeping into account interest of both parties in dispute. The higher the authority the greater shall be expectation for wisdom and understanding.
The Delhi ITAT in (2023] 106 ITR (Trib) 130 (ITAT[Del]) stalled recovery proceedings subject to payment of 20% of demand citing section 254(2A) proviso shackles in a DRP appeal matter with following candid observations:
“At the time of stay application, what is to be seen is whether a prima facie case had been made out by the assessee and whether balance of convenience is in favour of the assessee. In our considered opinion, in order to come to a conclusion whether a prima facie case has been made out or not itself requires extensive verification of facts and documents. In view of the provisions of section 254(2A) of the Income-tax Act, 1961 read together with its proviso thereon, we deem it fit and appropriate to direct the assessee to pay 20 per cent. of the outstanding demand in two equal instalments in August and September, 2023.”
In regard to appeals pending before Commissioner (Appeals) the CBDT through its office memorandum F.No. 404/72/93-ITCC dated 29/02/2016 prescribed that tax authorities may grant stay subject to payment of 15% of the demand which is currently 20%. This 20% requirement can be further reviewed by the PCIT/CIT who can modify it keeping hardships of the taxpayer.
In the matters reaching Tribunal the Act however provide minimum 20% deposit requirement for grant of stay which is somewhat absurd because the higher authority is to be powered with more discretion than the previous level.
This this minimum 20% criteria in section 254(2A) should be halved to 10% in keeping the order of hierarchy in disposal of appeals.