2022 (12) TMI 1432 - HC - Income Tax

Stay of demand - petition by directing the appellant to deposit 20% of the tax - high pitched assessments - HELD THAT - Admittedly, the assessments are high pitched assessments and when such high pitched assessments are appealed against and an order of stay is sought for either before the AO by filing an application u/s 220(6) orders are passed by the assessing officer either keeping the notice of recovery in abeyance and not treating the assessee as an assessee in default till the appeal is disposed of. There are yet another set of cases where the AO for reasons to be recorded imposes certain conditions as a condition for grant of stay. The appellant s case falls under the second category where the assessing officer has directed 20% of the demand to be paid by the assessee for being entitled to grant of stay. It is an undisputed fact that as against the impugned assessment order, appeal has been filed before the CIT (Appeals), second respondent on 25th January, 2018. It is not clear as to why the appeal is pending before the Commissioner (Appeals) for more than two years. Identical issues have come up for consideration before various High Courts and we would refer to two of the decisions of the High Court of Delhi, namely, Valvoline Cummins Limited 2008 (5) TMI 20 - HIGH COURT OF DELHI and Soul 2008 (8) TMI 502 - DELHI HIGH COURT . In both these cases, the Hon ble Division Bench of the High Court of Delhi has considered high pitched assessments and has also taken note of the instruction issued by the CBDT and have held that when the assessments are unreasonably high pitched, the notices of recovery should remain stayed till the disposal of the appeal by the first appellate authority. In cases on hand, the return filed by the assessee was a loss return. However, the assessing officer has assessed the income and it is definitely a high pitched assessment. That apart, we find that the appeal was filed before the Commissioner of Income Tax (Appeals) well within the period of limitation and is pending since 25th January, 2018. We are informed by the Advocate appearing for the appellant that till date the notice of demand has not been enforced on the assessee. Thus, considering the peculiar facts and circumstances of the case, we are of the view that the appeal itself should be directed to be disposed of by the Commissioner of Income Tax (Appeals) at an early date and until then, recovery proceedings should be kept in abeyance. Appeals are allowed and the order passed in the writ petitions is set aside with a direction to keep the recovery notices issued by the assessing officer kept in abeyance and direct the CIT(Appeals), the appellate authority, to disposed of the appeals on merits.

Summary

Issues:
Delay in filing the appeal, Dismissal of writ petitions challenging assessing officer's order, High-pitched assessments, Stay of recovery proceedings, Pending appeal before Commissioner of Income Tax (Appeals), Directions for disposal of appeals.

Analysis:
1. Delay in filing the appeal: The judgment addresses the issue of condonation of delay in filing the instant appeal. The court heard arguments from both parties and was satisfied with the reasons provided in the affidavit supporting the application. Consequently, the delay of 469 days was condoned, and the application for condonation of delay was allowed.

2. Dismissal of writ petitions challenging assessing officer's order: The appellant had filed writ petitions against an order by the assessing officer directing the appellant to deposit 20% of the tax as determined. The appellant raised various grounds challenging the order, including lack of reasons and hardship not being pleaded. The Single Bench dismissed the writ petitions citing the absence of hardship plea. However, the court noted that high-pitched assessments are appealable, and in similar cases, recovery notices are stayed until appeal disposal. The court directed the Commissioner of Income Tax (Appeals) to expedite the appeal hearing within 45 days.

3. High-pitched assessments and stay of recovery proceedings: The court observed that the appellant's return was a loss return, but the assessing officer made a high-pitched assessment. Citing precedents from the High Court of Delhi, the court emphasized that recovery notices should be stayed for unreasonably high assessments until appeal resolution. Notably, the court directed the assessing officer to keep recovery proceedings in abeyance until the appeal is disposed of by the Commissioner of Income Tax (Appeals).

4. Pending appeal before Commissioner of Income Tax (Appeals): The judgment highlighted that the appeal was filed before the Commissioner of Income Tax (Appeals) in January 2018 and had been pending for over two years. The court directed the appellate authority to expedite the appeal process and afford a personal hearing to the authorized representative of the assessee within 45 days from the date of the judgment.

5. Directions for disposal of appeals: The court allowed the appeals, set aside the writ petition order, and directed the Commissioner of Income Tax (Appeals) to decide the appeals on merit and in accordance with the law. The appellant was granted the opportunity to present all factual and legal issues before the appellate authority. No costs were awarded, and the parties were to receive certified copies of the order promptly upon compliance with legal formalities.