The duty of the assessing officer to consider the existence of a prima facie case, financial stringency, and balance of convenience in the matter of granting stay of demand, and the obligation to assist the taxpayer in claiming and securing reliefs.

JUDGMENT

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari calling for the records of the respondent contained in impugned order issued vide C.R.No.11/Addl.CIT-Vellore/Stay of Collection/2002-23 dated 22.08.2022 for the assessment year 2017-18 passed by the respondent, quash the same as arbitrary, unjust and illegal.)

1. Mrs.Hema Muralikrishnan, learned Senior Standing Counsel accepts notice for the respondent and is armed with instructions to proceed with the matter finally, even at the stage of admission.

2. The challenge is to an order of rejection of stay of demand arising out of an order of assessment dated 31.03.2022 which is stated to be pending in first appeal. The stay application filed by the petitioner has come to be rejected by way of impugned order dated 22.08.2022. The impugned order is nonspeaking and does not consider the existence or otherwise of a prima facie case, financial stringency or the consequent balance of convenience.

3. I had an occasion to consider a similar situation in Mrs.Kannammal V. Income Tax Officer (2019 (3) TMI 1- Madras High Court) and have therein 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 a prima facie case, financial stringency and the balance of convenience. ‘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 income-tax assessments were often arbitrarily pitched at higher figures and that the collection of disputed demand as a result thereof was also not stayed in spite of the specific provision in the matter in s. 220(6) of the IT Act, 1961.

2. The then Deputy Prime Minister had observed as under :

".........Where the income determined on assessment was substantially higher than the returned income, say twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeal provided there were no lapses on the part of the assessees."

3. The Board desire that the above observations may be brought to the notice of all the Income-tax Officers working under you and the powers of stay of recovery in such cases up to the stage of first appeal may be http://www.judis.nic.in exercised by the Inspecting Assistant Commissioner/Commissioner of Income-tax.'

9. Thereafter, Instruction No.1914 was issued by the CBDT on 21.03.1996 and states as follows:

1. Recovery of outstanding tax demands [Instruction No. 1914 F. No. 404/72/93 ITCC dated 2-12-1993 from CBDT] The Board has felt the need for a comprehensive instruction on the subject of recovery of tax demand in order to streamline recovery procedures. This instruction is accordingly being issued in supersession of all earlier instructions on the subject and reiterates the existing Circulars on the subject.

2. The Board is of the view that, as a matter of principle, every demand should be recovered as soon as it becomes due. Demand may be kept in abeyance for valid reasons only in accordance with the guidelines given below:

A. Responsibility:

i. It shall be the responsibility of the Assessing Officer and the TRO to collect every demand that has bee