2023 (7) TMI 1285 - HC - Income Tax

Stay of demand - recovery proceedings - scope and ambit of enabling provision namely Section 220(6) - petitioner apart from other reliefs also prayed for not insisting to take 20% of the demand and grant complete stay without any deposit - Respondent No.3 rejected the prayer of petitioner and directed him to deposit 20% of disputed demand - HELD THAT - Respondent No.3 has not taken pains to deal with the factual backdrop, the relevant statutory provision and the judgments cited by the petitioner in support of his contention in the said application (Annexure P/4). While reaching to a 'conclusion', the respondent No.3 has not assigned any 'reason' as to why stand taken by the petitioner was not treated to be trustworthy by the respondent No.3. The reasons are held to be heart beat of conclusions. In absence of reasons, conclusion cannot sustain judicial scrutiny. Apex Court in the case of M/s. Kranti Associates Pvt. Ltd and another Vs. Masood Ahmed Khan and others 2010 (9) TMI 886 - SUPREME COURT emphasized the need of assigning reasons in administrative, quasi-judicial and judicial function/order. Thus it is be clear that the impugned order is devoid of any reason. Thus, it deserves to be jettisoned. Accordingly, the impugned order dated 03.01.2023 is set aside. The matter is restored in the file of respondent No.3 at the stage of consideration of application (Annexure P/4). Since that order was passed because of non-payment of disputed amount of 20% and this Court while setting aside the impugned order dated 03.01.2023 is kind enough in remanding the matter for fresh consideration, the said attachment order may also be stayed till fresh decision.

Summary

Issues involved:
The challenge to the order rejecting the petitioner's application under Article 226/227 of the Constitution, specifically regarding the demand deposit and stay without deposit.

Issue 1: Challenge to the rejection of the petitioner's application
The petitioner challenged the order rejecting their application, which requested a stay without depositing 20% of the disputed demand. The petitioner cited Section 220(6) of the Income Tax Act, 1961, and various judgments to support their contention. The petitioner argued that the respondent did not consider the statutory provision, factual background, and judgments provided. The respondent's order lacked reasons and failed to address the petitioner's arguments adequately.

Issue 2: Lack of reasons in the impugned order
The High Court emphasized the importance of providing reasons in administrative, quasi-judicial, and judicial functions/orders, citing the need for transparency and accountability. The court referred to the case of M/s. Kranti Associates Pvt. Ltd, highlighting that reasons are essential for judicial review and ensuring decisions are based on relevant facts. The impugned order was found to be devoid of reasons, leading to its setting aside and remand for fresh consideration.

Issue 3: Remand for fresh consideration and stay of attachment order
The High Court set aside the impugned order and remanded the matter to the respondent for fresh consideration of the petitioner's application. The court stayed the attachment order on the petitioner's bank account until a fresh decision is made on the application. It was clarified that the court did not express any opinion on the case's merits, and the petition was disposed of accordingly.

This summary provides a detailed breakdown of the issues involved in the legal judgment, highlighting the challenges faced by the petitioner, the importance of providing reasons in judicial decisions, and the court's decision to remand the matter for fresh consideration while staying the attachment order.