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2017 (8) TMI 488 - HC - Income TaxStay of the demand - Levying a penalty under Section 271(1)(c) - Held that - Petitioner, has produced before this Court a copy of OM dated 31st July, 2017 which modifies the earlier OM, dated 29th February, 2016, issued by the Central Board of Direct Taxes ( CBDT ) stating that standard rate for grant of stay had been revised from 15% to 20% of the disputed demand. The impugned order clearly makes no reference to the central issue in the pending appeal or the grievance of the Petitioner regarding the order passed by the AO. The impugned order in short is without reasons and is therefore unsustainable in law. For the above reasons, the impugned order is set aside and a direction is issued that the Petitioner s application will once again be heard by the PCIT on merits and without reference to the OM dated 31st July, 2017, which, on the face of it, appears to curtail his discretion. The PCIT will dispose of the application with a reasoned order not later than two weeks from the date of receipt of this order. The CIT (A) shall also consider the request of the Petitioner for an expeditious disposal of the appeal.
Issues:
Challenge to order directing payment of tax demand for stay, validity of order by Principal Commissioner of Income Tax, applicability of Section 275(1)(a) regarding limitation period, revision of stay rate from 15% to 20% by CBDT, sustainability of impugned order without reasons. Analysis: The petition challenged an order requiring the Petitioner to pay 20% of a tax demand of ?32 crores to secure a stay of the demand pending appeal. The order was issued by the Principal Commissioner of Income Tax following an earlier order by the Assessing Officer levying a penalty under Section 271(1)(c) of the Income Tax Act, 1961. The Petitioner had filed an appeal before the CIT (A) and sought a stay of recovery proceedings under Section 220(6) of the Act. The AO had initially directed the Petitioner to deposit 15% of the tax demand, which was later modified to 20% by an Office Memorandum issued by the CBDT. The Petitioner contended that the limitation period under Section 275(1)(a) had expired, questioning the validity of the orders issued. The impugned order by the PCIT did not address the central issue in the appeal or the Petitioner's grievance against the AO's order, lacking reasons and thus being unsustainable in law. The Court set aside the impugned order and directed the PCIT to reconsider the Petitioner's application without being bound by the revised stay rate mentioned in the OM dated 31st July, 2017. The PCIT was instructed to provide a reasoned order within two weeks from the receipt of the Court's order. Additionally, the CIT (A) was directed to expedite the disposal of the appeal. The petition and pending application were disposed of accordingly, with a copy of the order to be provided promptly. This judgment highlights the importance of providing reasoned decisions in tax matters, ensuring that orders are not arbitrary and comply with legal requirements. It emphasizes the need for authorities to consider all relevant aspects of a case and act within the scope of their discretion, avoiding decisions that lack justification or fail to address key issues raised by the parties involved.
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