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2020 Supreme(Mad) 268
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, J.
Ganapathy Haridaass - Appellant
Versus
Income Tax Officer, Non-Corporate Ward 4(4), Chennai - Respondent
Writ Petition Nos. 5767 & 5775 of 2020 & W.M.P. Nos. 6748 to 6750 & 6752 of 2020
Decided On : 06-03-2020
For the Petitioner:Ashwini Vaidialingam, Arun Karthik Mohan, Advocates. For the Respondent: Prabu Mukund Arun Kumar, Junior Standing Counsel.
Headnote:
Income Tax - Stay of Demand - Income Tax Act, 1961, Section 220(6), Instruction No. 1914, Office Memorandum F.No.404/72/93-ITCC - The court discussed the provisions of the Income Tax Act, 1961, particularly Section 220(6), and the guidelines and circulars issued by the CBDT regarding the grant of stay of demand. The court emphasized the need for assessing authorities to consider the existence of a prima facie case, financial stringency, and balance of convenience in the matter of granting stay, and criticized the non-speaking order passed by the assessing officer.
Fact of the Case:
The petitioner challenged an order rejecting his application for stay of demand arising from an assessment for Assessment Year 2017-18 under the Income Tax Act, 1961. The assessing officer disposed the stay application by way of a cryptic non-speaking order, prompting the petitioner to file a writ petition.
Finding of the Court:
The court found that the assessing officer's non-speaking order did not comply with the requirements for disposal of stay applications and failed to consider the essential factors of a prima facie case, financial stringency, and balance of convenience. The court also noted that the petitioner had pending applications under Section 154 and that the bank account had been attached, which was challenged in a separate writ petition.
Issues: The issues revolved around the assessing officer's rejection of the petitioner's application for stay of demand and the failure to consider the essential factors for granting stay as per the provisions and guidelines.
Ratio Decidendi: The court emphasized the need for assessing authorities to consider the existence of a prima facie case, financial stringency, and balance of convenience in the matter of granting stay, as per the provisions of the Income Tax Act, 1961, and the guidelines and circulars issued by the CBDT.
Final Decision: The court set aside the impugned order rejecting the stay application and directed the assessing authority to reconsider the stay application, keeping in mind the guidelines of the CBDT and the pending applications under Section 154. The court also ordered the lifting of the bank account attachment and directed the assessing authority to pass orders within six weeks, with no further recovery proceedings to be initiated until then. The writ petitions were disposed of with no costs.
JUDGMENT
(Prayer in W.P.No.5767 of 2020: PETITION filed under Article 226 of the Constitution of India praying for the issuance of Writ of Certiorarified Mandamus, calling for the entire records of the respondent contained in order dated 04.02.2020 bearing DIN and Letter No. ITBA/COM/F/17/2019-20/1024665005/(1) for Assessment Year 2017-18 for PAN:AAPPH6686J, quash the same and consequently direct the respondent and/or any of its subordinates, agents, representatives or any other person claiming under/through the respondent to forbear from taking any further steps towards the recovery of the demand issued pursuant to the assessment order dated 07.11.2018, issued for the Assessment Year 2017-18, pending disposal of the appeal filed by the petitioner before the Commissioner of Income Tax (Appeals).
W.P.No.5775 of 2020: PETITION filed under Article 226 of the Constitution of India praying for the issuance of Writ of Certiorari, calling for the entire records of the respondent contained in the impugned order issued under Section 226(3) of the Income Tax Act, 1961, dated 12.02.2020 bearing DIN & Letter No. ITBA/COM/F/17/2019-20/1025049142/(1) for Assessment Year 2017-18 for PAN:AAPPH6686J and quash the same.)
Common Order
1. The petitioner is an individual who has challenged an order dated 04.02.2020 rejecting his application for stay of demand arising from an assessment for Assessment Year (AY) 2017-18, passed in terms of the provisions of the Income Tax Act, 1961 (in short 'Act').
2. The said assessment is stated to be in appeal before the Commissioner of Income Tax (Appeals) (in short 'CIT(A)'). The Assessing Officer has, in the meantime, disposed the stay application by way of a cryptic non-speaking order reading as follows:
Sir/Madam/M/s,
Subject: Collection of tax demand - in your case (PAN:-AAPPH6686J)-A.Y.2017-18-reg.
Ref: 1. Assessment order u/s.144 of the IT Act, 1961 dated 07.11.2019
2. Petition for stay of taxes dated 07.01.2020.
Please refer to the above.
In connection with entire tax demand of Rs.96,46,082/- with respect to the assessment order cited in above reference in your own case for the A.Y.2017-18, it is understood from your petition for stay of taxes that you have preferred for appeal. But is seen from IT record that you have not remitted mandatory of Rs.19,29,210/- (being 20% of total tax demand Rs.96,46,082/-) far.
In view of the above, it is requested to pay Rs.19,29,210/- immediately and submit a copy of challan on or before 10.02.2020 without fail.
In case of failure in remitting the entire demand on or before the given date, the necessary IT recovery proceedings along with interest u/s.220(2) and penalty u/s.221 will be initiated. Also prosecution may be initiated against you as per the relevant provision of IT Act.
3. I am of the view, that the orders of this nature do not comply with the requirements that have been set out for disposal of stay applications. I have had occasion to deal with a similar issue in the case of Mrs. Kannammal vs. Income Tax Officer (W.P. No. 3849 of 2019 dated 13.02.2019) and have held as follows:
"7. The parameters to be taken into account in considering the grant of stay of disputed demand are well settled – the existence of. ‘Financial stringency’ would include within its ambit the question of 'irreparable injury' and ‘undue hardship’ as well. It is only upon an application of the three factors as aforesaid that the assessing officer can exercise discretion for the grant or rejection, wholly or in part, of a request for stay of disputed demand.
8. In addition, periodic Instructions/Circulars in regard to the manner of adjudication of stay petitions are issued by the Central Board of Direct Taxes (CBDT) for the guidance of the Departmental authorities. The one oft- quoted by the assessee is Office Memorandum F.No.1/6/69/-ITCC, dated 21.08.1969 that states as follows:
"1. One of the points that came up for consideration in the 8th Meeting of the Informal Consultative Committee was that incom
