2013 (7) TMI 700 - HC - Income Tax

Stay application - Opportunity for personal hearing not given - Held that - proposition of law is that the second respondent while examining an application for stay under section 220(6) of Income Tax Act, 1961 is required to pass a speaking order and if personal hearing is sought for, the same has to be extended - Assessee in the application for stay has sought for personal hearing which undisputedly has not been afforded by second respondent. Therefore matter has to be remitted back to second respondent for adjudication afresh on this issue - Decided in favour of assessee.

Summary

Issues:
1. Rejection of stay application under Section 220(6) of the Income Tax Act, 1961.
2. Requirement of affording opportunity of hearing and passing a speaking order.
3. Compliance with guidelines for disposal of stay petitions.
4. Failure to grant personal hearing by the Assessing Officer.
5. Remitting the matter back for fresh adjudication.
6. Direction to dispose of stay application within a specified time frame.

Issue 1: Rejection of Stay Application under Section 220(6) of the Income Tax Act, 1961:
The judgment revolves around a writ petition challenging the rejection of a stay application by the 2nd respondent under Section 220(6) of the Income Tax Act, 1961. The petitioner sought a direction for timely disposal of the stay application and contended that the rejection order was impugned due to lack of opportunity granted.

Issue 2: Requirement of Affording Opportunity of Hearing and Passing a Speaking Order:
The court emphasized the necessity for the Income Tax Officer to provide an opportunity of hearing to the assessee and pass a speaking order while exercising power under Section 220(6) of the Act. Citing relevant case laws, the judgment highlighted the importance of natural justice principles in such proceedings.

Issue 3: Compliance with Guidelines for Disposal of Stay Petitions:
The judgment analyzed the circulars issued by the board regarding the disposal of stay petitions under Section 220(6) of the Act. It underscored the need for a subjective satisfaction of the Assessing Officer to grant a stay, emphasizing the importance of explicit, clear, and speaking orders in such cases.

Issue 4: Failure to Grant Personal Hearing by the Assessing Officer:
The court noted that the Assessing Officer failed to provide a personal hearing to the petitioner despite the request made in the stay application. This failure was deemed crucial, leading to the decision to remit the matter back for fresh adjudication to ensure procedural fairness.

Issue 5: Remitting the Matter Back for Fresh Adjudication:
Due to the failure to grant a personal hearing, the court directed the 2nd respondent to reexamine the application for stay within a specified time frame. The judgment aimed to balance the interests of the Revenue with the rights of the assessee, highlighting the quasi-judicial nature of the Assessing Officer's role.

Issue 6: Direction to Dispose of Stay Application within a Specified Time Frame:
The judgment concluded with specific directions for the timely disposal of the stay application by the 2nd respondent and the CIT (Appeals) to prevent undue hardship to the assessee. The order also maintained the attachment of the assessee's accounts until the application was resolved, ensuring the protection of Revenue interests.

Overall, the judgment focused on upholding procedural fairness, adherence to legal guidelines, and balancing the interests of both the assessee and the Revenue in the context of stay applications under the Income Tax Act, 1961.