2012 (7) TMI 75 - HC - Income Tax

Petition against dismissal of stay petition by CIT(A) - Held that - This court in the matter of KEC International Ltd. v. B.R. Balakrishnan & Ors., (2001 (3) TMI 32 (HC)) has laid down the parameters for granting stay pending the disposal of the Appeals. It is laid that while considering/deciding the stay application, the authority must (i) briefly state the case of the party; (ii) consider whether the party has made out a case for unconditional stay; (iii) the financial difficulty if pleaded be considered and (iv) in case the authority concerned comes to the conclusion that by granting of stay the assessee is likely to defeat the claim of the department then brief reasons for the same be indicated. In the present case, CIT(A) has completely ignored the parameters laid down by this court in the matter of KEC Ltd. and has passed an order without considering all the submissions of the petitioners and also failing to point out as to why the interim payment of 50% of demand is necessary in the facts of the present case. Therefore, order of CIT(A) is set aside and is directed to pass a fresh order with reasons on the petitioner s stay application. Notices issued u/s 226(3) to the various bankers of the petitioners will continue.

Summary

Issues:
Challenge to order of Commissioner of Income Tax (Appeals) on stay application & notices under section 226(3) of Income Tax Act, 1961.

Analysis:
The petition under Article 226 challenges the order dated 11.05.2012 by the Commissioner of Income Tax (Appeals) on a stay application filed by the petitioners for Assessment Years 2004-05 to 2007-08. The petition also seeks a stay on notices under section 226(3) of the Income Tax Act attaching the petitioner's bank accounts. The Assessing Officer passed assessment orders raising a demand of Rs.6.33 crores. The petitioner moved an application for stay before the Assessing Officer, which was rejected. Pending appeal disposal, notices were issued to the petitioner's bankers attaching funds for tax liability. The petitioner filed a writ petition challenging these notices. The CIT(A) dismissed the petitioner's stay application on 11.05.2012.

The petitioner argued that the CIT(A) did not consider their submissions, including jurisdiction issues and financial hardship. They cited a CBDT Circular and previous court directions. The respondent argued against granting stay, pointing out the petitioner's lack of evidence on financial hardship and high assessments due to hawala transactions. The court noted that the CIT(A) did not consider all submissions and failed to provide reasons for the interim payment requirement. The court referred to parameters for granting stay and found the CIT(A) ignored these. The petitioner had not submitted financial particulars, but the court emphasized the relevance of the balance sheet.

The court set aside the impugned order and directed the CIT(A) to pass a fresh reasoned order on the stay application within two weeks. The petitioner's undertaking regarding an immovable property was accepted. The notices to the petitioner's bankers would continue, and property attachment under Section 281B of the Act would also continue. The court emphasized the need to protect the revenue's interest and disposed of the petition without costs.