2023 (1) TMI 484 - HC - Income Tax

Stay application - Refund along with up-to-date interest after adjusting 20% of the disputed demand - HELD THAT - Petitioner may be right in saying that the concerned officer could not have recovered the entire demanded amount since an appeal was pending. Petitioner, in our view, is responsible for its own woes as it did not take further action when in the first instance cause of action arose in December 2021 and thereafter when the notice under Section 226(3) of the Act was issued on 30.09.2022. Petitioner was following-up with the department. According to us, that is not a good enough answer. Even after notice u/s 226(3) of the Act was issued, which was in September 2022, the petitioner did not take immediate steps to approach the court. Given this position, no relief, at this juncture, can be granted. All that we can direct is an expeditious disposal of the appeal pending before the CIT(A). CIT(A) is requested to take up the appeal for hearing and dispose of the same within the next four weeks. The period of four weeks will commence from the date of receipt of a copy of the order passed today.

Summary

Issues:
1. Application for staying the demand rejected by Assistant Commissioner of Income Tax
2. Recovery of entire demanded amount contrary to circulars
3. Appeal pending before Commissioner of Income Tax (Appeals)
4. Delay in taking action by the petitioner

Analysis:

1. The petitioner filed an application for staying the demand, which was rejected by the Assistant Commissioner of Income Tax. The rejection led to the recovery of the entire amount of Rs.6,95,43,498 concerning the Financial Year 2013-2014.

2. The petitioner argued that the rejection of the application and subsequent recovery were against the respondent's own circulars dated 29.02.2016 and 31.07.2017. The petitioner offered to pay 20% of the demand, making the rejection and recovery unwarranted.

3. An appeal against the order from which the demand originated was pending before the Commissioner of Income Tax (Appeals). The court acknowledged that the concerned officer should not have recovered the entire amount while an appeal was pending.

4. Despite the pending appeal, the petitioner did not take immediate action when the cause of action arose in December 2021 and when the notice under Section 226(3) of the Income Tax Act was issued in September 2022. The court noted that following up with the department was not sufficient, and the petitioner should have approached the court promptly.

5. The court decided that no relief could be granted at the current stage. Instead, it directed an expeditious disposal of the appeal pending before the CIT(A) within four weeks from the date of the order. The writ petition was disposed of with this direction for the CIT(A) to hear and decide the appeal promptly.