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2019 (3) TMI 77 - HC - Income TaxStay petition - recovery proceedings - the existence of a prima facie case - financial stringency and the balance of convenience - seeking grant of stay as addition made is sixty (60) times of the returned income and the assessment order passed is 'high pitched and biased to the interest of the revenue' - HELD THAT - Case of MRS. KANNAMMAL VERSUS INCOME TAX OFFICER WARD 1 (1) TIRUPUR 2019 (3) TMI 1 - MADRAS HIGH COURT to be followed as held AO insisted on payment of significant portions of the disputed demand prior to grant of stay resulting in extreme hardship for tax payers. Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. Inclined to set aside the impugned order dated 11.10.2018, as being mechanical and passed without application of mind. Equally mechanical is the stay petition filed by the assessee, which simply relies upon the circulars issued without reference to the existence of a prima facie case, financial stringency and balance of convenience.
Issues Involved:
1. Validity of the assessment orders for the years 2010-11 to 2013-14. 2. Legitimacy of the petitioner's request for a stay on the recovery of disputed tax demands. 3. Compliance with Central Board of Direct Taxes (CBDT) circulars and guidelines regarding the stay of tax demands. 4. Proper exercise of discretion by the assessing officer in rejecting the stay petition. Issue-wise Detailed Analysis: 1. Validity of the assessment orders for the years 2010-11 to 2013-14: The petitioner, an assessee, challenged the assessment orders dated 29.12.2017 for the assessment years 2010-11 to 2013-14 before the Commissioner of Income Tax (Appeals) [CIT(A)] on 30.01.2018. The appeals were partially heard and pending disposal. The petitioner claimed that the assessment orders were "high pitched and biased to the interest of the revenue," as the additions made were sixty times the returned income. 2. Legitimacy of the petitioner's request for a stay on the recovery of disputed tax demands: The petitioner filed stay petitions on 04.10.2018, seeking to stay the recovery of the disputed demands, citing that the assessment was substantially higher than the returned income. The petitioner relied on CBDT Instruction No. 95 of 1969, which suggests that the collection of tax should be held in abeyance if the assessed income is significantly higher than the returned income. 3. Compliance with Central Board of Direct Taxes (CBDT) circulars and guidelines regarding the stay of tax demands: The petitioner referred to CBDT circulars and instructions, including Instruction No. 1914 and subsequent modifications, which outline the guidelines for staying tax demands. These guidelines emphasize the need for a prima facie case, financial stringency, and balance of convenience. The assessing officer is required to consider these factors and pass a speaking order. 4. Proper exercise of discretion by the assessing officer in rejecting the stay petition: The assessing officer rejected the stay petition with a non-speaking order, stating, "Petition is rejected. AO to collect 20% as per Board's Circular ASAP." The court observed that the rejection was mechanical and lacked application of mind. The assessing officer failed to consider the conditions precedent for granting a stay and did not pass a reasoned order. Conclusion: The court set aside the impugned order dated 11.10.2018, deeming it mechanical and passed without proper consideration. The court directed the petitioner to appear before the Principal Commissioner of Income Tax on 05.03.2019 with a detailed stay petition covering the three aspects: prima facie case, financial stringency, and balance of convenience. The Principal Commissioner was instructed to pass appropriate orders within two weeks from the personal hearing. Until the disposal of the stay petitions, the status quo regarding recovery was to be maintained. Consequently, the writ petitions were disposed of, and miscellaneous petitions were closed with no costs.
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