2022 (12) TMI 1400 - HC - Income Tax

Stay of demand - financial stringency faced by an assessment and the balance of convenience in the matter constitute the 'trinity', so to say, and are indispensable in consideration of a stay petition by the authority . HELD THAT - It is apparent from the impugned order that while requiring the Petitioner to pay 20% of the disputed payment by 19.10.2022, his request for stay of the demand has been rejected without even awaiting compliance of the aforesaid requirement, which vitiates the entire proceedings. In such circumstances, the impugned order in DIN Letter which cannot be sustained, is set aside and the matter is remitted to the First Respondent to be decided afresh taking note of what has been stated supra. It shall be incumbent upon the First Respondent to deal with each of the contentions raised including additional submissions said to have been made on 12.12.2022 and pass a reasoned order on merits

Summary

Issues:
Challenge to order under Section 220(6) of the Income Tax Act for not treating as an 'assessee in default' and rejection of stay of demand.

Analysis:
The petitioner appealed under Section 246-A of the Income Tax Act against an order passed by the First Respondent under Section 143(3) of the Act. While the appeal was pending, the petitioner applied under Section 220(6) of the Act not to be treated as an 'assessee in default.' The First Respondent rejected the stay of demand application, citing non-payment of 20% of disputed demand as per a Board's Office Memorandum. The petitioner challenged this order in a Writ Petition.

The petitioner argued that the impugned order contradicted principles established by the court in previous cases. Reference was made to a case where the court emphasized the importance of a prima facie case, financial stringency, and balance of convenience in considering stay petitions. Another case highlighted the need for the assessing officer to be proactive and consider the trinity principles while passing orders on stay petitions.

The court found that the impugned order required the petitioner to pay 20% of the disputed demand by a specific date, rejecting the stay request preemptively. The court deemed this premature rejection as invalidating the entire process. Consequently, the impugned order was set aside, and the matter was remitted to the First Respondent for a fresh decision, emphasizing a thorough consideration of all contentions raised, including additional submissions.

In conclusion, the Writ Petition was disposed of with the direction for the First Respondent to reevaluate the matter and provide a reasoned decision by a specified date. The court emphasized adherence to the law and communication of the decision to the petitioner within the given timeframe.