2024 (8) TMI 1029 - HC - Income Tax

Stay of the demand raised against the petitioner and to lift the bank attachments - ex parte order passed by the second respondent - counsel contended that the impugned order is liable to be quashd as the first respondent has mechanically passed a non-speaking order without even considering any of the submissions and judgment placed on record by the petitioner during the course of hearing and petitioner has not been heard before passing the impugned order. HELD THAT - Admittedly, challenging the assessment order passed by the first respondent, Appeal is pending for consideration before the second respondent. Further, it is seen that recovery proceedings initiated against the petitioner is only due to dismissal of the Appeal by the second respondent, which order, was in fact, an ex parte order passed by the second respondent, however, by virtue of order passed by ITAT, the Appeal preferred by the petitioner against the assessment order was rejuvenated, since it was an ex parte order. Thus, fact that the petitioner undertaken before the ITAT that they would prosecute the case before the second respondent, by virtue of which, the Appeal filed by the petitioner was allowed, this Court, in the interest of justice, is inclined to pass the following order - i) The second respondent is directed to dispose of the Appeal filed by the petitioner within six weeks from the date of receipt of a certified order copy by the second respondent. ii) Till the disposal of the Appeal, the petitioner shall not be put to any harassment by the firsts respondent in pursuance of the impugned order. WP allowed.

Summary

Issues: Challenge to order for recovery proceedings and stay petition rejection.

Analysis:
The Writ Petition challenges an order by the first respondent dated 04.07.2024, seeking to quash the order and direct a stay on recovery proceedings pending the Appeal filed by the petitioner before the second respondent. The petitioner, an individual assessee, filed a return of income for the AY 2018-19, which was selected for scrutiny. The first respondent assessed the petitioner's income and unexplained investment, leading to an Appeal before the second respondent. Due to oversight, the petitioner failed to respond to email proceedings, resulting in an ex parte order by the second respondent. The petitioner then appealed to the ITAT, which remanded the matter back to the second respondent. Subsequently, the first respondent rejected the petitioner's stay petition, directing payment of 20% of the disputed demand. The petitioner contended that the order was passed mechanically without considering submissions or judgment, violating principles of natural justice.

The petitioner argued that the first respondent's order was non-speaking and failed to consider the financial difficulties faced by the petitioner. The petitioner requested a stay on the demand and lifting of bank attachments, which were rejected by the first respondent. The first respondent directed the petitioner to pay a specific amount, which the petitioner found unreasonable. The petitioner claimed that the order was unsustainable and violated principles of natural justice as there was no opportunity for the petitioner to be heard before the order was passed. On the other hand, the Senior Standing Counsel for respondents argued that the petitioner was required to pay 20% of the demand as per CBDT's circular and that the petitioner had been given opportunities to present their case before the order was issued.

After considering the submissions and records, the Court noted that the recovery proceedings were initiated due to the dismissal of the Appeal by the second respondent, which was an ex parte order. However, the ITAT's order rejuvenated the petitioner's Appeal against the assessment order. The Court, in the interest of justice, directed the second respondent to dispose of the Appeal within six weeks and ordered that the petitioner should not face harassment by the first respondent until the Appeal's disposal. As a result, the Writ Petition was allowed without costs, and connected Miscellaneous Petitions were closed.