2018 (4) TMI 1914 - HC - Income Tax

Stay of recovery of disputed demand - AO has rejected the applications for stay simply stating that the request of the balance demand cannot be accepted at present and the said applications have been rejected without assigning any reason - HELD THAT - AO has not adopted the correct procedure in deciding the stay applications of the petitioners and has not followed the guidelines as stated by Bombay High Court in KEC International Ltd 2001 (3) TMI 32 - BOMBAY HIGH COURT and in UTI Mutual Fund 2012 (3) TMI 333 - BOMBAY HIGH COURT and also the decision rendered by this Court in M/s Aarti Sponge Power Ltd. 2018 (4) TMI 1284 - CHHATTISGARH HIGH COURT In view of aforesaid discussion, the impugned orders are hereby set aside and the matter is remitted to the Assigning Officer to consider the stay applications afresh in light of the guidelines as stated by the Bombay High Court and followed by this Court in M/s Aarti Sponge Power Ltd. 2018 (4) TMI 1284 - CHHATTISGARH HIGH COURT and pass a reasoned and speaking order within two weeks from the date of receipt of certified copy of this order. Also, till the decision of the stay applications, no coercive steps shall be taken against the petitioners.

Summary

Issues involved:
1. Rejection of applications for stay of recovery of disputed demand without providing reasons.
2. Compliance with guidelines for deciding stay applications as per Bombay High Court and Chhattisgarh High Court decisions.

Detailed Analysis:
Issue 1: The petitioners' applications for stay of recovery of disputed demand were rejected without reasons by respondent No. 3, and their revision petitions were also rejected without assigning any rationale by respondent No. 1. The petitioners argued that a portion of the disputed amount had already been deposited, making the impugned orders unsustainable and legally flawed.

Issue 2: The High Court analyzed the procedure followed by the Assigning Officer in deciding stay applications. Referring to previous judgments, including one by the Bombay High Court, the Court highlighted the parameters to be considered while granting stay, such as setting out the case of the assessee, examining financial difficulties, and avoiding coercive measures during the appeal period. The Court noted that the Assigning Officer did not adhere to the correct procedure and guidelines established by previous judgments.

The Court set aside the impugned orders and remitted the matter to the Assigning Officer to reconsider the stay applications in line with the Bombay High Court guidelines and previous decisions of the Chhattisgarh High Court. The Assigning Officer was directed to pass a reasoned and speaking order within two weeks after hearing the parties. Additionally, the Court ordered that no coercive steps should be taken against the petitioners until a decision on the stay applications was made. The writ petitions were disposed of with no order as to costs.