2019 (4) TMI 1674 - HC - Income Tax

Application for stay - precondition for grant of stay on demand - assessee has to deposit 20% of the tax demanded as precondition for grant of stay - HELD THAT - The assessee himself voluntarily disclosed certain amount of income over and above the regular income during the course of survey proceedings. The case of the petitioner appears to be that the same has been retracted. The said aspect has not been considered by the authority. It is discretion of the authority to direct payment of particular percentage of the amount as a precondition for stay. However while considering the stay petition the prima facie case put forth by the parties is required to be considered. The authority has to deal with the contentions raised by the parties so as to disclose the application of mind by the authority to the contention put forth by the parties. Reasons are required to be given. Reasons now are considered to be one of the pillar of the principles of natural justice. The case put forth by the petitioner has been dealt with while passing impugned order so as to substantiate the discretion exercised by him. If after considering the case put forth by the petitioner, the authority may come to the conclusion about the quantum of the amount the petitioner is required to deposit as a precondition for stay. The impugned orders are quashed and set aside. The authority shall consider the stay application filed by the petitioner on its own merits and take decision prima facie meeting out the case put forth by the petitioner

Summary

Issues:
Application for stay rejected based on CBDT guidelines - Discretionary powers of the authority restricted - Consideration of case put forth by the petitioner - Observations on administrative circular - Prima facie case consideration required - Reasons for decision as pillar of natural justice.

Analysis:
The petitioner challenged the order rejecting the application for stay and the review order on the same. The petitioner argued that the CBDT guidelines should not restrict the discretionary powers of the authority, citing judgments by the Apex Court and the Delhi High Court. The respondent contended that the authority did consider the petitioner's case, including a declaration made during a survey. The Apex Court clarified that administrative circulars do not limit the powers of quasi-judicial authorities like CIT, allowing for deposit orders of amounts less than 20% pending appeal.

The authority's impugned order cited an office memorandum requiring 20% tax deposit for stay, with exceptions based on the nature of the disputed demand. The review order reiterated this stance, noting the petitioner's voluntary disclosure of additional income during a survey. The authority's discretion to specify the deposit amount was acknowledged, but it was emphasized that the prima facie case presented by the parties must be considered, with reasons given, as a principle of natural justice.

The Court found that the authority did not adequately address the petitioner's case in the impugned orders to justify the exercise of discretion. It was ruled that the orders be quashed, and the authority reconsider the stay application, ensuring a prima facie decision based on the petitioner's case. The petitioner was directed to cooperate for an expedited resolution, with the writ petition being disposed of without costs.