2020 (3) TMI 792 - HC - Income Tax

Attachment of bank accounts - Recovery of outstanding tax demands - Petition for stay of taxes - Applications under Section 154 are pending - recovery proceedings along with interest u/s.220(2) and penalty u/s.221 - HELD THAT - Orders of this nature do not comply with the requirements that have been set out for disposal of stay applications. We had occasion to deal with a similar issue in the case of Mrs.Kannammal V. Income Tax Officer 2019 (3) TMI 1 - MADRAS HIGH COURT The present matter as well, the impugned order does not deal with the aspects of prima facie case, financial stringency and balance of convenience. Hence, the impugned order is set aside. Applications under Section 154 are pending - bank account of the petitioner was attached on 22.02.2020, which has been challenged. According to the petitioner, the balance therein has also been appropriated. The attachment will stand lifted forthwith. The petitioner will appear before the Assessing Authority on Tuesday, the 17th of March, 2020 without expecting any further notice in this regard. The Assessing Authority is directed to reconsider the stay application filed by the petitioner keeping in mind the order aforesaid setting out the guidelines of the CBDT, as well the applications under Section 154 and pass orders within a period of six (6) weeks from date of first hearing. Till such time, no further recovery proceedings be initiated.

Issues Involved:
1. Challenge to the rejection of stay of demand application.
2. Compliance with guidelines for disposal of stay applications.
3. Consideration of prima facie case, financial stringency, and balance of convenience.
4. Pending applications under Section 154.
5. Attachment and appropriation of bank account.

Issue-wise Detailed Analysis:

1. Challenge to the Rejection of Stay of Demand Application:
The petitioner challenged the order dated 04.02.2020, which rejected his application for stay of demand arising from the assessment for AY 2017-18. The assessment is under appeal before the CIT(A). The Assessing Officer disposed of the stay application through a non-speaking order, which did not comply with the required parameters for such disposals.

2. Compliance with Guidelines for Disposal of Stay Applications:
The court highlighted that the order rejecting the stay application did not comply with established guidelines. The parameters for considering a stay of disputed demand include the existence of a prima facie case, financial stringency, and balance of convenience. The court referenced previous rulings and CBDT instructions that mandate a detailed and reasoned order when disposing of stay applications.

3. Consideration of Prima Facie Case, Financial Stringency, and Balance of Convenience:
The court emphasized the necessity of assessing these three factors when deciding on a stay application. The CBDT’s instructions, including Instruction No. 1914 and subsequent modifications, provide a framework for such considerations. The court noted that the Assessing Officer failed to address these aspects in the impugned order, rendering it inadequate.

4. Pending Applications under Section 154:
The petitioner indicated that multiple applications under Section 154 were pending. The court acknowledged this and directed the Assessing Authority to consider these applications while reconsidering the stay application.

5. Attachment and Appropriation of Bank Account:
The petitioner’s bank account was attached and appropriated on 22.02.2020, which was also challenged. The court ordered the attachment to be lifted immediately in light of the judgment. The petitioner was directed to appear before the Assessing Authority, who was instructed to reconsider the stay application and pass a reasoned order within six weeks, taking into account the guidelines and pending applications under Section 154. No further recovery proceedings should be initiated until then.

Conclusion:
The court set aside the impugned order due to non-compliance with the required guidelines and lack of a reasoned decision. The Assessing Authority was directed to reconsider the stay application, considering all relevant factors and pending applications, and pass a detailed order within six weeks. The attachment of the petitioner’s bank account was lifted, and no further recovery actions were to be taken until the new order was issued. The writ petitions were disposed of accordingly, with no costs.

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