2024 (2) TMI 1376 - HC - Income Tax

Prayer for stay against demand - second round of petition - order of demand has been stayed subject to depositing 10% of the demand - In the second round of writ petition, petitioner now submits that the authorities have again committed patent illegality and perversity and acted with arbitrariness in deciding the petitioner s application. HELD THAT - When the petitioner approached this Court by filing a writ petition earlier, this Court found that there was no proper application of mind and the authority, treating itself to be bound by administrative instructions, abdicated its judicial functions while deciding the matter. That prompted this Court to direct the authorities to re-consider the matter. We have gone through the order which has been passed by the authority while considering and disposing off the prayer for stay. The order refers to the material on record, the case of the petitioner, submissions followed by the order with regard to stay of recovery of demand, subject to payment of 10% of the demand. In our view, the authority having jurisdiction, has passed a brief order, keeping in view that it is only deciding the stay application and not the merits of the case. The argument of learned counsel for the petitioner that various figures and details which were given by him have not received consideration, does not merit acceptance. At this stage of consideration of stay application, the authority is not expected to go deep into the matter as if it is deciding the appeal finally. We find that the authority has not restricted the relief of 20% but has granted stay subject to deposit of only 10% of the demand. The demand is based on order of assessment. The matter is in appeal. It is a tax matter and a party cannot, as a right, claim that merely because he files an appeal, the demand should be stayed. It is well settled legal position that while entertaining a writ petition, the writ Court would not reassess the material on record and record its own findings of fact in substitution of what has been recorded. Further, if it is a case arising out of an order on stay application, the scope of judicial review is further restricted. It is not a case where the stay application has been decided without hearing the petitioner. In the absence of there being any procedural impropriety affecting the order on stay application, we are not inclined to interfere with the order. The grievance that in some other case absolute stay was granted, cannot be accepted. No parity could be claimed in the matter of stay. Every case has its own facts and circumstances. The petitioner s claim that even before deciding the stay application, the case ought to be mandatorily referred to High Pitched Scrutiny Assessment Committee, does not impress us. It is always open for the appellate authority to take recourse to the procedure as embodied in circular dated 23.04.2022 and at appropriate stage the step of referring the matter to the High Pitched Scrutiny Assessment Committee could be taken by the appellate authority. We would not say any further on this aspect as the authority is yet to take decision on the merits of the appeal.

Summary

Issues:
Prayer for stay against demand pending appeal; Allegations of illegality, perversity, and arbitrariness in deciding the application; Discrepancies in treatment compared to similar cases; Allegations of not applying due and proper application of mind; Mandate to refer the case to High Pitched Scrutiny Assessment Committee; Scope of judicial review in stay application orders; Claim of absolute stay in another case; Dismissal of the petition.

Analysis:
The petitioner, engaged in the handicraft business, sought a stay against the demand pending appeal after re-opening assessments for the years 2014-15, 2016-17, and 2020-21 based on a survey report. The appellate authority directed a deposit of 20% of the demand, leading to a writ petition. The High Court initially found the authority's decision mechanical and directed reconsideration. Subsequently, a fresh order was passed staying the demand upon depositing 10%. The petitioner alleged illegality, arbitrariness, and discrepancies in treatment compared to other cases, emphasizing the failure to refer the case to the High Pitched Scrutiny Assessment Committee.

Upon review, the High Court noted that the authority had considered the material and submissions before granting the stay subject to a 10% deposit. It clarified that the authority's role was limited to deciding the stay application, not the case's merits, and that a 20% relief was not restricted. The Court emphasized that the authority need not delve deeply into the case at the stay application stage, especially in tax matters, where filing an appeal does not automatically warrant a stay.

The Court highlighted that in a writ petition concerning a stay application, reassessing facts or substituting findings was inappropriate. As long as no procedural impropriety affected the stay order, the Court was reluctant to interfere. The Court rejected claims of parity with other cases, emphasizing the unique circumstances of each case. Additionally, the Court dismissed the argument mandating referral to the High Pitched Scrutiny Assessment Committee before deciding the stay application, leaving such decisions to the appellate authority.

Ultimately, the Court dismissed the petition, leaving the merits for the appellate authority to decide. The judgment underscores the limited scope of judicial review in stay application orders and the importance of case-specific considerations in granting relief.