2013 (4) TMI 118 - HC - Income Tax

Stay petition - Held that - The impugned order of the first respondent, dated 17.2.2012, is set aside. The first respondent is directed to hear the stay petition filed in the appeals preferred by the petitioner, before the third respondent, for the assessment years 2005-06, 2006-07 and 2008-09, on merits and in accordance with law, after giving an opportunity of hearing to the petitioner, within a period of two weeks from the date of receipt of a copy of this order - The respondents shall not proceed against the petitioner to recover the income tax arrears said to be payable by the petitioner, as per the notice of demand issued under Section 156 of the Income Tax Act, 1961, until appropriate orders are passed by the first respondent, in the stay petition filed by the petitioner, as stated above.

Summary

Issues:
1. Validity of the order passed by the first respondent directing the petitioner to pay eleven crores in installments.
2. Authority of the first respondent to pass such an order.
3. Lack of indication in the impugned order regarding the hearing and decision on the stay petition.
4. Absence of evidence showing petitioner's admission to the claimed amount payable.
5. Lack of agreement by the petitioner to furnish a payment scheme.

Analysis:

The petitioner challenged the order passed by the first respondent, directing payment of eleven crores in installments, contending that the first respondent lacked the authority to issue such a directive. The petitioner argued that the order should have either rejected the stay petition on merits or granted a stay with conditions. The Government Advocate, representing the respondents, justified the order by highlighting the substantial arrears of sixty-seven crores owed by the petitioner for specific assessment years. However, the Court observed that the impugned order did not reflect a hearing or decision on the merits of the stay petition, nor did it show any admission by the petitioner regarding the claimed amount. Additionally, there was no evidence of the petitioner agreeing to provide a payment scheme.

Given the lack of proper consideration and procedural gaps in the first respondent's order, the Court set aside the impugned decision. The first respondent was directed to hear the stay petition concerning the appeals filed by the petitioner for specified assessment years and to make a decision based on merits and in accordance with the law. The Court emphasized the importance of providing the petitioner with an opportunity to be heard within a stipulated two-week period from the receipt of the order. Until the first respondent made appropriate decisions on the stay petition, the respondents were prohibited from taking any actions to recover the income tax arrears claimed to be payable by the petitioner as per the notice issued under the Income Tax Act, 1961.

Consequently, the writ petition was disposed of without any costs, and the connected motions were closed. The judgment underscored the necessity for a fair and lawful consideration of the petitioner's stay petition, ensuring due process and the protection of the petitioner's rights in the matter.