Where proof of identity of loan depositors, capacity of creditors to advance loans and genuineness of transaction was in serious dispute, assessee’s writ challenging recovery and collection of tax was to be set aside
• Assessing Officer had made unexplained cash credit addition under section 68 and raised demand on assessee. Stay was granted to assessee, subject to payment of 20 per cent of demand in view of CBDT’s 2016 Office Memorandum (OM).
• Assessee by way of instant petition challenged the above order of recovery and collection of tax on ground that the assessment was made on a ‘high pitched basis’ and therefore, the recovery and collection of tax had to be held in abeyance till the disposal of appeal against the assessment order. Further, assessee had argued that revenue erroneously assumed the 20 per cent condition in CBDT’s OM to be mandatory, ignoring financial stringency faced by assessees and balance of convenience being in favour of assessees.
• The present matter is not a case of mechanical reliance on circulars/office memorandums. It is a case where proof of identity of the loan depositors, capacity of the creditors to advance loans and genuineness of transaction is in serious dispute. Though it is open to the statutory authorities to grant relief to deposit an amount lesser than 20 per cent if the facts of the case so warrant, however, on facts of instant case, as determined by the Assessing Officer, a prima facie case is not made out and such a relief is not warranted. Consequently, the instant writ petition and application being bereft of merits are dismissed.