2009 (10) TMI 54 - HC - Income Tax

Penalty proceedings extension of stay of recovery of penalty main appeal is pending for dispose off DCIT ordered that No further stay in this respect can not be granted. You are requested to make the payment of the demand of Rs.114.20 crore along with the interest u/s 220(2) of the IT Act within 7 days and show me the proof of payment of the same held that - no coercive steps be taken by the Respondents for recovery of the amount due appeal should be decided expeditiously by the CIT (A) regarding application for extension of stay dated 13.10.2009 - the application dated 13th October 2009 preferred by the Petitioner is rejected reasons in support of such a decision shall be given in the order. That order shall not be operative for a period of 15 days to enable to the Petitioner to seek further remedies as advised

Issues involved:
1. Disallowance of deductions by the Assessing Officer
2. Initiation of penalty proceedings under Section 271 (1) (c) of the Income Tax Act
3. Appeal against assessment order partly allowed by the Tribunal
4. Levying of penalty by the Assessing Officer
5. Application for stay of penalty demand
6. Extension of stay request declined by Respondent No.1
7. Lack of reasons provided for declining the extension of stay
8. Pending decision on quantum appeal and penalty proceedings
9. Coercive steps for recovery of amount due
10. Need for expeditious decision on the appeal against penalty proceedings
11. Requirement for reasons in case of rejection of the application

Detailed Analysis:

1. The Petitioner, a Government undertaking engaged in hydrocarbon exploration, faced substantial additions in deductions by the Assessing Officer for the assessment year 2002-03, leading to penalty proceedings under Section 271 (1) (c) of the Income Tax Act.

2. The Petitioner appealed against the assessment order, which was partly allowed by the Tribunal. However, the Assessing Officer proceeded with penalty proceedings, levying a significant penalty amount on the company based on confirmed additions.

3. Despite the Petitioner's efforts to seek relief through appeals and applications for stay of the penalty demand, the Respondent No.1 declined to grant further stay, requesting immediate payment of the penalty amount.

4. The court noted the lack of reasons provided for denying the extension of stay, considering the pending quantum appeal and the appeal against penalty proceedings, emphasizing the need for a fair decision-making process.

5. Given the circumstances, including the pendency of the application before the Additional Commissioner of Income Tax-13, the court directed that no coercive steps be taken for recovery until the decision on the application dated 13th October, 2009.

6. The court stressed the importance of expeditiously deciding the appeal against the penalty proceedings, highlighting the need for a prompt resolution to ensure fairness and justice for the Petitioner.

7. In case the application dated 13th October, 2009 is rejected, the court mandated that reasons for such a decision must be provided, and the order should not be immediately operative to allow the Petitioner to explore further legal remedies.

8. With these considerations, the court disposed of the writ petition, emphasizing the importance of a transparent and reasoned decision-making process in matters concerning tax assessments and penalty proceedings.

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