2015 (9) TMI 71 - HC - Income Tax

Stay of Recovery of difference of tax - it is contended that, the impugned additions of income in the hands of a practising advocate are absolutely uncalled for and unjustified and said addiitons were made in the declared income of the practising advocate in the Department out of vengeance and mala fide reasons on the part of the Assessing Aurthority and therefore the impugned assessment order as well as interim stay orders with the aforesaid conditions of deposit of 40% of the disputed demand are liable to be quashed. - held that - The matter require consideration. - stay granted

Summary

Issues:
1. Stay of recovery of disputed tax demand during pendency of appeal.
2. Allegations of unjustified additions to income and mala fide intentions by Assessing Authority.

Analysis:
1. The petitioner argued that despite precedents like Maharana Shri Bhagwat Singh ji of Mewar v. ITAT and Maheshwari Agro Industries v. Union of India, the Assessing Authority did not fully stay the recovery of tax demand exceeding twice the admitted liability. Instead, the petitioner, a practicing income tax practitioner, was asked to pay 40% of the disputed demand in two installments. The petitioner contended that this was not in line with CBDT instructions and sought complete stay of recovery during the appeal process.

2. The petitioner further contended that the additions to income in the assessment order were baseless, done out of vengeance, and mala fide intentions by the Assessing Authority. The petitioner argued that the impugned assessment order and the conditions imposed for interim stay, requiring the deposit of 40% of the disputed demand, should be quashed. The court acknowledged the seriousness of these allegations and deemed the matter worthy of consideration.

3. The court issued a show-cause notice to the respondents, directing them to respond to the petition. The respondents were required to file a reply before the next hearing date. Meanwhile, the recovery of the disputed demand from the petitioner was stayed, and any attachment of the petitioner's bank account in this regard was ordered to be released immediately.

4. Additionally, the Income Tax Officer who passed the impugned order was directed to appear before the Court on the next hearing date. The court set a returnable date within three weeks and permitted direct service. The petitioner's counsel was instructed to provide proof of service to the respondents before the next hearing, ensuring compliance with the court's directives.

This detailed analysis highlights the issues raised in the judgment, the arguments presented by the petitioner, and the court's directives for further proceedings in the case.