2015 (6) TMI 767 - HC - Income Tax

Stay of demand - whether assessee be not treated as defaulter under the provisions of Section 220 (6) and the assessee has a good prima facie case in its favour? - Held that - The Powers of Assessing Officer under Section 220 (6) of the Act, cannot be said to be power to grant stay against the recovery of disputed demand. The said provisions gives discretion to the Assessing Authority, not to treat the assessee in default subject to such conditions as he may think fit, to impose in the circumstances of the case, so long as such appeal filed under Section 246 or 246A of the Act is pending, so as to save the assessee from the consequences, which would otherwise follow, if the assessee is to be treated as assessee in default , namely, payment of interest under Section 220(2) and penalty under Section 221 of the Act. Mere filing of appeal does not suo-moto stay the recovery proceedings and on presentation of appeal under Section 246 of Section 246 A, the Assessing Officer is empowered to exercise his discretion, subject to conditions as he may think fit to impose in the circumstances of case, for treating the assessee as not being in default in respect of amount in dispute in appeal, even though the time for payment has expired, as long as such appeal remains disposed of. Here the application in question lacked necessary material particulars, as such, there is no infirmity in decision, so taken, in view of this, as far as this Court is concerned, this Court is not at all interfering with the order impugned but certainly as petitioner has already moved Appeal in question alongwith the stay application, we proceed to ask the Appellate Forum to decide the stay application of petitioner/assessee, in accordance with law, within a period of one month from the date of receipt of certified copy of this order and, thereafter, all attempt and endeavor should be made to decide the appeal in question, subject to convenience/roster and statutory provisions holding the field for decision of Appeal by the Appellate Forum.

Summary

Issues:
1. Assessment order for A.Y. 2005-06 challenged by petitioner.
2. Request for stay of tax demand under Section 220 (6) of the Income Tax Act.
3. Discretion of Assessing Officer to grant stay against recovery of disputed demand.
4. Lack of necessary material particulars in the application for stay.

Analysis:

1. The petitioner challenged the assessment order for the assessment year 2005-06, which was initially set aside by the Commissioner of Income Tax in favor of the petitioner. However, a fresh assessment order was made in March 2015, leading to a disputed tax demand. The petitioner requested to keep the tax demand in abeyance under Section 220 (6) until the Income Tax Appeal is disposed of by the Commissioner of Income Tax (Appeals) - III, Lucknow.

2. The Assessing Officer rejected the petitioner's request for stay of the tax demand, citing that the grounds provided were not acceptable solely based on the pending decision of the appeal. The Officer directed the petitioner to deposit the demanded tax promptly, warning of coercive measures otherwise. The petitioner's counsel argued vehemently for the relief sought, emphasizing the failure in exercising proper authority by the concerned party.

3. The court clarified that the Assessing Officer's powers under Section 220 (6) do not automatically grant a stay against the recovery of disputed demand. The provision allows the Officer discretion to not treat the assessee as in default, subject to conditions imposed. The court highlighted that filing an appeal does not automatically stay recovery proceedings, and the Officer must consider various factors before granting relief, such as assessment history, conduct, points raised in the appeal, and chances of recovery upon appeal dismissal.

4. The court noted that the petitioner's application lacked necessary material particulars to justify the request for stay. As a result, the court did not find any infirmity in the decision taken by the Assessing Officer. The court directed the Appellate Forum to decide on the stay application within a month and urged for the timely resolution of the appeal. The petitioner was allowed to file a fresh application under Section 220 (6) with the required details.

In conclusion, the court disposed of the writ petition with the aforementioned observations and directions, emphasizing the importance of providing detailed information when seeking relief under Section 220 (6) of the Income Tax Act.