Giving significant relief to the taxpayers by reducing arbitrariness in the disposal of stay petitions, a much misused and harassment- prone discretionary power of the Assessing Officer (A.O) to grant stay of demand has been withdrawn by the Central Board of Direct Taxes (CBDT), by issuing an Office Memorandum. The CBDT has revised guidelines for stay of demand at the stage of first appeal. The move comes soon after the first set of recommendations by the Justice RV Easwar committee to simply the Income Tax Act that also suggested an automatic stay on demand to the taxpayer on payment of seven and a-half per cent of the demand till the first appellate order is passed.
In the revised guidelines, CBDT has ordered that now Assessing Officers can grant a stay of demand until the first appeal is disposed if the taxpayer pays 15 per cent of the disputed demand. This stay of demand is a feather in the cap and will rank as one of the stellar decisions in this regard.
The CBDT has further said that in case of any deviation from the standard pre-payment of 15 per cent by the Assessing Officer, the case will be referred to the administrative Principal Commissioner or Commissioner will take a final call. In case, despite a 15 per cent stay, the tax payer is still unhappy, he can approach the jurisdictional administrative Principal Commissioner or Commissioner.
CBDT said that “It has been reported that field authorities often insist on a payment of a very high proportion of the disputed demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand. “