2019 (1) TMI 755 - HC - Income Tax

Stay petition - CIT(A) rejected the appeal - Held that - In this case, they have gone before the Principal Commissioner viz., the first respondent herein and sought for stay, who unfortunately rejected the petition by a single line order, without stating any reason or finding as to why the application is liable to be rejected. Therefore, find that the said order of the first respondent cannot be sustained. However, this Court is not inclined to remit the matter back to the first respondent for considering the petition once again, since the petitioner is entitled to file such stay petition before the Commissioner of Income Tax (Appeal) himself, where the appeal is admittedly pending. Accordingly, this writ petition is allowed and the impugned order is set aside. Consequently, the petitioner is directed to file a stay petition before the Commissioner of Income Tax (Appeals) in the pending appeal within a period of two weeks from the date of receipt of a copy of this order. If any such application is filed, the CIT (A) shall take up the same and dispose at first instance on merits and in accordance with law within a period of four weeks thereafter. Till such decision is taken by the Appellate Authority, no coercive action shall be taken against the petitioner.

Summary

Issues involved:
1. Rejection of stay petition by the first respondent
2. Justifiability of the rejection of the stay petition
3. Failure to pay 15% of the tax liability as demanded by the Assessing Officer
4. Entitlement of the petitioner to file a stay petition before the Appellate Authority
5. Setting aside the impugned order and directing the petitioner to file a stay petition before the Commissioner of Income Tax (Appeals)

Detailed Analysis:
1. The petitioner challenged the order of the first respondent dated 05.12.2018, which rejected the assessee's application for a stay of demand of disputed taxes until the appeal by the CIT (A) -1 was disposed of. The petitioner filed a writ petition before the High Court seeking relief.

2. The petitioner argued that the rejection of the stay petition by the first respondent was unreasonable and unjustifiable since the appeal against the assessment order was still pending before the Appellate Authority. The petitioner cited a previous court order in a similar case where the court allowed the assessee to file a stay petition before the Appellate Authority.

3. The Standing Counsel for the respondents contended that the petitioner had not filed a stay petition before the Appellate Authority and had failed to pay 15% of the tax liability as demanded by the Assessing Officer. Therefore, the order of the Principal Commissioner was justified.

4. The High Court noted that the order of assessment had not reached finality as the appeal was pending before the CIT (A). The court emphasized that the petitioner was entitled to file a stay petition before the Appellate Authority and present all relevant points. The court found fault with the first respondent's rejection of the petition without providing any reasons or findings.

5. The High Court allowed the writ petition, setting aside the impugned order. The petitioner was directed to file a stay petition before the Commissioner of Income Tax (Appeals) within two weeks. The CIT (A) was instructed to dispose of the application on merits and in accordance with the law within four weeks. No coercive action was to be taken against the petitioner until the Appellate Authority made a decision.