2018 (4) TMI 609 - HC - Income Tax

Stay petition - Held that - This is a fit case, where the petitioner has to approach the first respondent by way of a stay petition. This so because, according to the assessee, identical issue is pending in appeals for the earlier assessment years and those appeals are pending before the first respondent at various stages. However, the petitioner has not prayed for any stay in those appeals, because taxes have been remitted without prejudice. Thus, the petitioner has to necessarily move the first respondent by way of a stay petition, and if such petition is moved, then it is open to the first respondent to consider the prima facie case which the petitioner would place before the authority and take a decision on merits and in accordance with law. The impugned communication dated 07.02.2018, is directed to be kept in abeyance for a period of four weeks from the date of receipt of a copy of this order. Within such time, the petitioner is directed to file a stay petition before the first respondent in the pending appeal dated 25.01.2018, and such stay petition shall be heard on merits

Summary

Issues:
Challenge to communication denying stay of tax demand pending appeal.

Analysis:
The petitioner challenged a communication from the second respondent denying a stay of tax demand for the assessment year 2011-12. The petitioner argued that they had appealed the assessment order and requested a stay due to financial constraints and the belief in winning the appeal. The second respondent directed the petitioner to pay 20% of the disputed demand, leading to the present writ petition.

The petitioner contended that the second respondent should have considered their points and provided a personal hearing before passing the order. Reference was made to guidelines by the Central Board of Direct Taxes (CBDT) and interpretations by the High Court of Delhi and Madras High Court in similar cases.

The Revenue's counsel argued that the Assessing Officer lacks the power to grant stay and that the petitioner should have applied to the Commissioner of Income Tax (Appeals) while filing the appeal. Legal precedents were cited to support this argument.

The court examined whether the petition could be considered a stay petition under the Income Tax Act. It was clarified that the Act does not grant the Assessing Officer the power to grant stay but to consider the facts presented to avoid treating the assessee as a defaulter. The court distinguished between the powers of the Assessing Officer and appellate authorities in granting stays.

The court found that the impugned communication was not an order but a response to the petitioner's stay request. It noted that the petitioner had not filed a stay petition before the Commissioner of Income Tax (Appeals) while filing the appeal. The court directed the petitioner to approach the first respondent with a stay petition, considering the pending appeals for earlier assessment years.

Consequently, the court directed the impugned communication to be kept in abeyance for four weeks, instructing the petitioner to file a stay petition before the first respondent within that time. The stay petition would be heard on merits and in accordance with the law within three weeks of filing. No costs were awarded, and connected miscellaneous petitions were closed.