2009 (2) TMI 149 - HC - Income Tax

Stay of Recovery of demand in pursuance of demand under section 220(6) - After receiving such notice of demand the petitioner had filed an application for stay which was rejected by an order dated November 10, 2008. Held that - section 220(6) of the Act, postulates that where an appeal under section 246 or under section 246A is pending, the Assessing Officer has the discretion, subject to such conditions as he may think fit to impose, to treat the assessee as not being in default in respect of the amount in dispute in the appeal, as long as such appeal remains pending though the time for payment might have expired. Consequently, a circular dated March 6, 1989, has been issued by the Revenue. - found that discretion has been exercised mechanically and without the application of mind writ petition allowed.

Summary

The High Court of Calcutta, in a judgment by Soumitra Pal J., considered a writ petition filed by M/s. New Rupayan Jewellers against an order by the Income-tax Officer, Ward-28(3), Kolkata, rejecting an application for stay of tax assessment. The petitioner had appealed the assessment for the year 2006-07 and sought a stay of the demand for payment. The court analyzed section 220(6) of the Income-tax Act, 1961, which allows discretion to the Assessing Officer to treat the assessee as not in default pending appeal. The court found the rejection of the stay application to be mechanical and lacking proper consideration, emphasizing that an assessee has a statutory right to appeal. The court set aside the order and directed the appeal to be resolved within eight weeks. The writ petition was allowed, and no costs were awarded. The judgment was issued without calling for affidavits, and the order was to be provided urgently to the parties upon request. The judgment highlighted the importance of judicious exercise of discretion by the Assessing Officer and the need to protect the interests of the Revenue while considering stay of tax realizations. The court's decision was based on ensuring fair treatment and proper application of statutory rights for the assessee. The judgment was detailed and thorough in its analysis of the legal provisions and the circumstances of the case, providing a clear rationale for the decision reached.