Stay of Demand under Income Tax Act

Key Takeaways:
Stages of Appeal
Power to Grant Stay
Conditions for Granting Stay
Procedure for Filing Stay Petition

1. Stay of Demand under Income Tax Act CA Jugal Gala

2. Credits & Acknowledgements R Subash

3. Legends Used in the Presentation AO Assessing Officer CIT Commissioner of Income Tax ITAT Income Tax Appellate Tribunal

4. Presentation Schema

5. Stay of Demand . --- Postponement of recovery of demand during pendency of appeal.

6. Appellate Procedure in Brief First Appellate Authority Second Stage of Appeal

7. Application for Stay of Demand Appeal made to CIT(A) Appeal made to ITAT An application for stay of demand shall be disposed off , in any case, within 2 weeks from the receipt of application.

8. Parameters for Granting Stay of Demand by AO AO is satisfied that there is a non-rebuttable presumption that the assessee has a valid reason in appealing at a higher level. To prove that payment of demand would result in financial stringency including undue hardship or irreparable injury. Assessee needs to prove that the loss caused to the assessee would be relatively greater if the stay is not granted. Mere filing of appeal against order will not be sufficient reason. The AO has to examine the existence of the following 3 parameters for granting stay of demand- ( Mrs. Kannammal vs. Income-tax Officer-Ward-1(1), Tirupur [2019] 413 ITR 390 (Madras)/ Shriram Finance vs. Principal Commissioner of Income-tax )

9. Pre-payment for Stay of Demand

10. Is the 20% Prepayment Fixed?

11. Other Conditions In granting stay the AO may impose the following conditions:

12. Application for Stay of Demand Made to CIT (Appeals)

13. Application for Stay of Demand Made to ITAT Rule 35A(2) of Income Tax (Appellate Tribunal) Rules , - Application for stay of demand to be made in Triplicate to Registrar and contain the following: Short facts regarding the demand Result of the appeal filed before the  [ CIT (Appeals) ]   E xact amount of demand outstanding and the portion of such demand disputed the date of filing the appeal before the Tribunal A ny application for stay that was made to the revenue authorities concerned Brief reasons for seeking stay ; Whether the applicant is prepared to offer security , and if so, in what form; Prayers to be mentioned clearly and concisely           The contents of the application shall be supported by an affidavit along with a fee of Rs . 500. Though not specifically provided, a similar application along with relevant enclosures would suffice for applying for stay of demand to AO or CIT (Appeals)

14. Conclusion

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