2010 (3) TMI 769 - HC - Income Tax

Demand - Stay application - assessment order had been passed against the petitioner under Section 143(3) of the Income Tax, 1961, determining the total income of the petitioner as Rs.1,94,75,590/-, and raising a demand of Rs.26,92,572/-, payable by the petitioner - In view of the averments made in the affidavit filed in support of the petition and in view of the submissions made by the learned counsels appearing on either side - The petitioner shall co-operate, fully, in the proceedings before the first respondent, appellate authority - The writ petition is ordered accordingly

Summary

Issues: Assessment order passed without giving opportunity of hearing, appeal challenging assessment order, conditional order of stay, writ petition under Section 226 of the Constitution of India.

Assessment Order Passed Without Giving Opportunity of Hearing:
The petitioner's counsel contended that the assessing authority passed the assessment order without providing an opportunity of hearing to the petitioner and without giving proper reasons for the order. The petitioner filed an appeal challenging the assessment order before the first respondent and also submitted a stay petition. The first respondent issued a conditional order of stay under Section 220, Clause 6 of the Income Tax Act, directing the petitioner to pay 50% of the tax and interest demanded. Consequently, the petitioner filed a writ petition under Section 226 of the Constitution of India before the High Court.

Challenging Assessment Order:
The respondents' counsel argued that an assessment order was passed against the petitioner under Section 143(3) of the Income Tax Act, determining the total income and raising a demand payable by the petitioner. The counsel claimed that sufficient opportunity was given to the petitioner before the assessment order was passed.

Court's Direction:
After considering the submissions and the affidavit filed in support of the petition, the High Court directed the first respondent to dispose of the petitioner's appeal challenging the notice of demand on merits and in accordance with the law within eight weeks from the receipt of the court's order. The court instructed that the first respondent should not insist on the payment of 50% of the demand by the petitioner as per the assessing authority's order. The petitioner was required to cooperate fully in the proceedings before the first respondent.

Conclusion:
The High Court ordered the writ petition accordingly, without imposing any costs. The connected miscellaneous petitions were closed as a result of the judgment.