2020 (3) TMI 1176 - HC - Income Tax

Stay petition - applications for interim stay - Demand of the assessment as per the provisions of Section 220(6) - HELD THAT - This court while dealing in such matters, have come across many writ petitions preferred by the assessees, seeking intervention of this court under Art.226 for issue for direction and taking up applications for interim stay filed along with pending appeals. Even this court was apprised that the Appellate Authority are taking up the appeals, considering the predicament of such assessees including the petitioner, the directions having been issued, for consideration of at least interim In the instant case appeal filed has not been taken up rather the interim application, in such circumstances availed the remedy under Sec.220(6) 1961 Act, which resulted into impugned order Ext.P7, the order prima facie do not reflect any application of mind except reference to the contentions. The officers who are competent to pass orders, are enjoined obligations to pass reasoned orders, which, according to the affected party, may not be sustainable in accordance with law. But such orders, if are passed in routine, cannot escape from the judicial scrutiny of this court. Be that as it may, in order to prevent further mis-carriage of justice and in the interest of justice, deem it appropriate issuing directions to the 2nd respondent to take a call on the application for interim stay in support of the appeal Ext.P5 and take a decision thereon after affording an opportunity of hearing to the petitioner in accordance with law.

Summary

Issues:
Income tax assessment, rejection of explanations and evidences, demand order, penalty notice, statutory first appeal, stay application, application under Section 220(6) of the Income Tax Act, interim stay, judicial scrutiny of orders, directions for interim stay application.

Income Tax Assessment:
The petitioner, engaged in commission and brokerage business, declared a total income for the assessment year 2017-18. The return was selected for scrutiny, and notices under Section 143(2) and 142(1) were served based on CASS observations. The 1st respondent rejected explanations and evidences, issuing an assessment order with an exorbitant demand. The petitioner then filed a statutory first appeal against the assessment order before the Commissioner of Income Tax (Appeals) along with a stay application. Additionally, an application under Section 220(6) of the Income Tax Act was made to seek the demand of the assessment.

Interim Stay Application:
The petitioner's counsel argued that the demand had been stayed subject to the condition of depositing 20% of the demanded amount. However, due to the seniority-based appeal process of the Commissioner of Income Tax (Appeals), the stay application was not being taken out of turn. Consequently, the petitioner availed the remedy under Section 220(6) of the Income Tax Act, 1961.

Judicial Scrutiny of Orders:
The judge noted that many writ petitions were filed by assessees seeking intervention under Article 226 for directions on taking up applications for interim stay with pending appeals. Considering the predicament of assessees, the court had issued directions to consider interim applications and keep coercive measures in abeyance. In this case, the appeal was not taken up, leading to the remedy under Section 220(6) of the Act. The judge found that the impugned order did not reflect a proper application of mind and lacked reasoned decision-making. To prevent a miscarriage of justice, the court directed the 2nd respondent to consider the application for interim stay in support of the appeal and make a decision after hearing the petitioner.

Directions for Interim Stay Application:
The court ordered the demand to be kept in abeyance until a decision was made on the interim stay application. The 2nd respondent was instructed to take action within 45 days from the date of the judgment. The interim stay was to be in effect only until the adjudication of the interim application and not beyond, disposing of the writ petition with the mentioned directions.