2020 (9) TMI 154 - HC - Income Tax

Stay petition - payment of 20% of the disputed demand - HELD THAT - We find force in the contention of the petitioner that while passing Ext.P6 stay order, the first appellate authority was virtually acting under dictation, in that the first appellate authority felt compelled by the CBDT instructions relied upon in his order, to insist on a payment of 20% of the disputed demand, pending disposal of the appeal. When there was a specific direction in Ext.P5 judgment of this Court to the appellate authority to consider the stay application on merits, the appellate authority ought to have considered the stay application as directed by this Court, and without placing any reliance on the instructions issued by the CBDT directing the application to be decided in a particular way. It is obligatory on statutory authorities who are entrusted with quasi judicial powers under a statute, to adjudicate on issues without being bogged down by executive instructions that direct them to exercise their discretion in any particular manner. As a creature of the statute, on whom the discretionary power is conferred, the authority cannot abdicate his responsibilities by acting on the dictates of another who has no role to play under the statutory scheme. Also find force in the contention of the learned counsel for the petitioner that the appellate authority did not hear him while passing Ext.P6 stay order, and that this was a further act in contravention of the directions of this Court in Ext.P5 judgment. Quash Ext.P6 order and direct the first appellate authority to pass fresh orders in the matter after hearing the petitioner, either through a physical hearing or through video conference.

Summary

Issues:
1. Validity of Ext.P6 stay order passed by the first appellate authority in a stay application filed along with an appeal against the order of assessment under the Income Tax Act.
2. Consideration of stay application by the appellate authority in compliance with the directions of the Court.
3. Reliance on office memoranda issued by the CBDT by the appellate authority.
4. Denial of opportunity of hearing to the petitioner before passing the stay order.

Analysis:
The petitioner challenged Ext.P6 stay order passed by the first appellate authority, contending that the authority relied on CBDT instructions, demanding 20% of the disputed demand as a condition for granting stay, contrary to the directions of the Court and without providing an opportunity of hearing. The High Court observed that the appellate authority acted under dictation by following CBDT instructions, which was improper as quasi-judicial authorities should exercise discretion independently. The Court emphasized that statutory authorities must adjudicate issues without being influenced by external directives, especially when directed by the Court to consider matters on merits. The Court agreed with the petitioner's argument that the appellate authority's failure to hear him before passing the stay order violated the Court's directions from a previous judgment.

The High Court, after considering the submissions and circumstances, quashed the Ext.P6 order and directed the first appellate authority to pass fresh orders after hearing the petitioner either physically or through video conference. The Court emphasized that the authority should not be influenced by external instructions and must act independently as mandated by the statutory scheme. The High Court instructed the 2nd respondent to issue fresh orders within four months, during which recovery steps for the disputed amounts should be suspended. The petitioner was directed to provide a copy of the writ petition and the judgment to the 2nd respondent for further action in compliance with the Court's directions.