Tax  assessees can now file a stay application against demands for advance payment of tax raised by the income-tax authorities, where tax demands raised are double or more than what the assessee has declared in the returns filed, the Income Tax Appellate Tribunal has ruled.

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Many large-sized demands have been raised by IT authorities following high-pitched assessments made by assessing officers. Coercive action is then used for the recovery of demands, lawyers said.

Assessees concerned have to liquidate assets to meet the tax demands raised by the authorities.

This is despite the Central Board of Direct Taxes having issued a circular way back in 1969 allowing assessees to file a stay application till the issue is resolved.

"In most cases, tax demands raised do not survive. However, considering the long time involved in litigation, the assessee usually has paid out more than 50 per cent of the tax demanded till justice is done," said senior corporate lawyers.

Even as many sectors have been given tax exemptions, tax officers tend to hound them to pay more. As the judicial system takes its own time, assessees meanwhile have to pay a 50 per cent advance.

The tribunal's judgement therefore comes as a major breather for tax assessees whose assessed income is large even as they are normally exempted from paying tax.

In CBDT's circular of August 1969, the authority had said: "Income-tax assessments are arbitrarily pitched at high figures and that the collection of disputed demands as a result thereof was also not stayed in spite of the specific provision".

The IT department had then decided that when the income determined on assessment was twice the income shown in the return filed, the collection of the tax in dispute should be held in abeyance till the matter has been settled in the appeals process.

In a specific case, Elcid, a building society  was made to cough up tax even though such societies are exempt from tax liabilities.

The Mumbai ITAT tribunal held that full stay of tax demand raised is to be granted as the income assessed is twice or more than the return filed, said advocate Prakash Jotwani, who was fighting on behalf of the society in question.

The tribunal chaired by R Chauhan and K K Boliya accepted the stay application, giving the society a six-month stay or till the disposal of the tax appeals, which ever is earlier.