2019 (8) TMI 357 - HC - Income Tax

Stay demand - AO directed to pay 20% of demand for stay which was not complied - Ld. single Judge put precondition to 10% deposit to consider stay petition by Appellate Authority - HELD THAT - Power to grant stay of recovery pending disposal of the appeal is a power vested on the appellate authority which is discretionary in nature and which need to be exercised based on prima facie satisfaction about the merits of the appeal. Since the statute does not stipulate any pre-condition for deposit of any portion of the demand for consideration of the stay petition it is not just and proper for this court to insist upon any such pre-condition for consideration of the stay petitions. Non-compliance of the conditions stipulated by the Assessing Authority will not in any manner preclude the appellants from approaching the Appellate Authority seeking stay of the demand pending disposal of the appeal. Therefore we are inclined to allow the writ appeal and to modify the impugned judgments to the following terms- (i) There will be a direction to the 3rd respondent CIT(A) to consider and pass appropriate orders on Ext.P7 stay petitions filed by the appellants seeking stay of the recovery pending disposal of the statutory appeals at the earliest after affording an opportunity of personal hearing to the appellants. At any rate the stay petitions shall be disposed of within one month from the date of receipt of this judgment. (ii) Till the disposal of the stay petitions as directed above the demands impugned in the statutory appeals shall be kept in abeyance.

Summary

Issues:
1. Disposal of statutory appeals and stay petitions by Commissioner of Income Tax
2. Condition of deposit for consideration of stay petitions
3. Jurisdiction under Article 226 of the Constitution of India

Analysis:
1. The writ appeals were filed seeking directions for the Commissioner of Income Tax (Appeals) to dispose of statutory appeals and stay petitions. The Assessing Officer had directed the appellants to remit 20% of the demand as a pre-condition for considering stay applications, which the appellants did not comply with. The learned Single Judge directed the appellants to deposit 10% of the amount under demand within 4 weeks for consideration of stay petitions, and to expedite the process within 2 months. The appellants contested these conditions.

2. The appellants argued that the requirement of depositing 10% of the demand for interim stay consideration was unreasonable and interfered with the discretionary powers of the appellate authority. They contended that the power to grant stay is discretionary and should be decided based on the appeal's prima facie merit, without any statutory pre-condition. The Standing Counsel supported the Judge's decision, citing the appellants' delay in complying with the Assessing Officer's conditions.

3. The High Court noted that the power to grant stay pending appeal is discretionary and should be based on the appeal's merits. Since there is no statutory requirement for depositing any portion of the demand for stay consideration, the Court found it unjust to impose such a condition. Non-compliance with the Assessing Authority's conditions does not prevent the appellants from seeking stay from the Appellate Authority. The Court allowed the writ appeal and directed the Commissioner to consider and decide on the stay petitions promptly, with a deadline of one month from the judgment date. Until then, the demands in the statutory appeals were to be suspended.