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2019 (3) TMI 1478 - HC - Income TaxStay of recovery - non speaking order rejecting stay petition - HELD THAT - AO 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. Notwithstanding that the assessee may not have specifically invoked the three parameters for the grant of stay, it is incumbent upon the assessing officer to examine the existence of a prima facie case as well as call upon the assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. see decision of MRS. KANNAMMAL VERSUS INCOME TAX OFFICER WARD 1 (1) TIRUPUR 2019 (3) TMI 1 - MADRAS HIGH COURT Thus set aside the impugned order dated 07.02.2019, as being mechanical and passed without application of mind. In the light of the above, the Writ Petition is disposed in the following terms i) The petitioner will appear before the Principal Commissioner of Income Tax-1, the first respondent herein, on 08.03.2019 at 02 30 pm along with a stay petition covering the three (3) aspects as referred to aforesaid. ii) After hearing the petitioner, the Principal Commissioner of Income Tax shall pass a reasoned and speaking order in accordance with law and in accordance with the circulars issued by Central Board of Direct Tax (CBDT) within a period of two (2) weeks from the date of conclusion of the personal hearing i.e. on or before 22.03.2019.
Issues Involved:
1. Rejection of the petitioner's application for stay of recovery of tax demand. 2. The adequacy and legality of the reasons provided by the tax authorities for rejecting the stay application. 3. Compliance with CBDT Circulars and Instructions regarding the grant of stay. Issue-wise Detailed Analysis: 1. Rejection of the petitioner's application for stay of recovery of tax demand: The petitioner challenged an order dated 07.02.2019, by the 1st respondent, rejecting their application for a stay of recovery of a tax demand amounting to ?62,77,980/- for the Assessment Year 2011-12. The petitioner had filed an appeal against the reassessment order dated 20.12.2018, which was pending before the Commissioner of Income Tax (Appeals). 2. The adequacy and legality of the reasons provided by the tax authorities for rejecting the stay application: The petitioner initially approached the 2nd respondent for a stay of recovery, which was rejected on 17.01.2019. Subsequently, a second stay application was filed before the Principal Commissioner of Income Tax I, who also rejected it on 07.02.2019. The rejection was communicated as follows: "Petition rejected vide Board's Instruction. AO to collect 20% demand." The court found this rejection to be "cryptic and non-speaking," lacking proper reasoning and failing to consider the parameters for granting a stay, such as financial stringency, irreparable injury, and undue hardship. 3. Compliance with CBDT Circulars and Instructions regarding the grant of stay: The court referenced various CBDT Circulars and Instructions, including Instruction No. 1914 and its modifications, which provide guidelines for the grant of stay. These guidelines emphasize that stay petitions should be disposed of within two weeks, and decisions should be communicated promptly. The guidelines also allow for discretion in demanding a percentage of the disputed amount, typically 20%, but this should be adjusted based on the specific circumstances of each case. The court noted that the assessing officer's rejection of the stay petition did not comply with these guidelines, particularly the requirement for a "speaking order" that considers the existence of a prima facie case, financial stringency, and balance of convenience. Conclusion: The court set aside the impugned order dated 07.02.2019, deeming it mechanical and passed without application of mind. The petitioner was directed to appear before the Principal Commissioner of Income Tax-1 on 08.03.2019 with a stay petition addressing the three critical aspects. The Principal Commissioner was instructed to pass a reasoned and speaking order in accordance with law and CBDT circulars within two weeks from the personal hearing. Until the disposal of the stay application, the status quo regarding recovery was to be maintained. Consequently, the miscellaneous petitions were closed with no costs.
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