2015 (9) TMI 1050 - HC - Income Tax

Recovery of tax and stay operation - Held that - Since the order passed by the Assessing officer under Section 220 (6) of the Income Tax Act, 1961 is not under challenge, it is not proper for this Court to interfere with the same. Therefore, we hereby provide that if the petitioner is not in a position to follow the same, he may challenge it before the appellate authority, who shall consider it and pass appropriate order. Learned counsel for the petitioner undertakes to file an appeal within two days, therefore, we hereby provide that on submission of appeal, the appellate authority shall dispose of petitioner s application for interim relief, with due notice to the respondents within two weeks.

Summary

Issues:
1. Petition for writ of Mandamus to stop tax recovery during pending appeal.
2. Interpretation of Section 220(6) of the Income Tax Act regarding default in tax payment during appeal.
3. Discretionary power of Assessing Officer to stay recovery under Section 220(6).
4. Validity of conditions imposed by Assessing Officer for staying tax recovery.
5. Right of petitioner to challenge Assessing Officer's order before appellate authority.

Analysis:
1. The petitioner sought a writ of Mandamus to prevent the recovery of tax and stay a notice issued under Section 156 of the Income Tax Act until the Income Tax Appeal is resolved. The petitioner had already appealed the assessment order before the Commissioner, Income Tax (Appeal), Lucknow.

2. The petitioner's counsel referred to Section 220(6) of the Income Tax Act, which allows the Assessing Officer discretion to treat the assessee as not in default during the appeal period. The argument was that the petitioner should not be required to deposit the tax during the appeal.

3. On the other hand, the respondent's counsel argued that Section 220(6) gives the Assessing Officer discretionary power to stay recovery. He highlighted clauses 3 and 4, stating that recovery can proceed during the appeal if no stay order is issued by the appellate authority.

4. The Assessing Officer had passed an order specifying conditions for staying the recovery, including options for the petitioner to provide a bank guarantee or make specific installment payments. The court noted that since the order was not challenged, it was inappropriate for the court to interfere, suggesting the petitioner challenge it before the appellate authority.

5. The court directed the petitioner to file an appeal within two days, and upon submission, the appellate authority was instructed to consider and decide on the petitioner's application for interim relief within two weeks. The writ petition was disposed of with these observations, emphasizing the right of the petitioner to challenge the Assessing Officer's order before the appropriate appellate authority.