1999 (3) TMI 56 - HC - Income Tax

Summary

Issues:
1. Disallowance of deductions and raised tax demand for assessment year 1996-97.
2. Rejection of stay of demand by Assessing Officer and Commissioner of Income-tax.
3. Exercise of judicial discretion by Assessing Officer under section 220(6) of the Income-tax Act, 1961.
4. Availability of interim relief for the petitioner pending appeal.

Analysis:
1. The petitioner claimed that the Assessing Officer disallowed certain deductions and imposed a heavy tax demand for the assessment year 1996-97. The petitioner appealed to the Commissioner of Income-tax (Appeals) Guwahati, which is still pending. The petitioner sought a stay of the demand under section 220(6) of the Income-tax Act, 1961, but both the Assessing Officer and the Commissioner rejected the request, leading the petitioner to file a writ petition under article 226 of the Constitution to challenge these decisions.

2. The petitioner argued that the Assessing Officer failed to exercise judicial discretion under section 220(6) and did not provide any reasons for rejecting the stay request. On the other hand, the senior standing counsel for the Income-tax Department contended that the proper course for the petitioner would have been to request a stay from the Commissioner of Income-tax (Appeals). It was highlighted that appellate authorities like the Commissioner of Income-tax (Appeals) have the power to grant stays during pending appeals, as established by decisions from other High Courts.

3. The court opined that the petitioner should seek interim relief from the Commissioner of Income-tax (Appeals) within 15 days, as per precedents from the Allahabad High Court. If the petitioner files an application within this period, the Commissioner must consider it promptly and make a decision within 15 days of receiving the application. The Commissioner is directed to apply judicial reasoning and hear the petitioner before deciding on the stay application. Until the Commissioner makes a decision, the demand in question will remain stayed. However, if the petitioner fails to file an application within the specified time, the stay order will be lifted.

4. The judgment emphasizes the availability of interim relief for the petitioner pending the appeal process, directing them to approach the Commissioner of Income-tax (Appeals) for a stay of the demand. The court's decision aligns with established legal principles and procedural fairness, ensuring that the petitioner has a recourse for seeking relief during the ongoing dispute over tax assessments and deductions.