1970 (5) TMI 9 - HC - Income Tax

Petitioner wrote to the Income-tax Officer who made the assessment requesting postponement of payment of the tax assessed pending the disposal of the appeal to the Appellate Assistant Commissioner - authority righlty exercised his discretion by refusing postponement - merely because an appeal has been preferred, stay of realisation cannot be granted

Summary

Issues:
1. Interpretation of sub-section (6) of section 220 of the Income-tax Act, 1961 regarding the discretion of the Income-tax Officer to treat an assessee as not in default during an appeal.
2. Discretionary power of the Income-tax Officer in granting stay of tax realization pending appeal.
3. Jurisdiction of different Income-tax Officers in dealing with applications for stay of realization.
4. Compliance with principles of natural justice in decision-making by the Income-tax Officer.

Analysis:
1. The case involved the interpretation of sub-section (6) of section 220 of the Income-tax Act, 1961, which allows the Income-tax Officer to treat an assessee as not in default during an appeal. The petitioner had appealed against an assessment order for the year 1963-64 and requested postponement of tax payment pending the appeal. The Income-tax Officer, Collection, refused to stay the tax realization, citing that stay cannot be granted solely based on the filing of an appeal. The court held that the Income-tax Officer had considered relevant factors like the petitioner's belief in appeal success and financial difficulties, and thus, had not erred in exercising discretion.

2. The discretionary power of the Income-tax Officer in granting a stay of tax realization was challenged. The petitioner argued that the assessing Income-tax Officer (respondent No. 1) did not exercise his discretion as required by law, as the stay application was disposed of by another officer (respondent No. 2). However, the court noted that a Commissioner's order had assigned all functions of an Income-tax Officer under section 156 and Chapter VII to respondent No. 2, enabling him to handle the petitioner's stay application. Therefore, the court overruled this contention.

3. The jurisdictional issue arose regarding the authority of different Income-tax Officers in dealing with applications for stay of realization. The court found that the Commissioner's order had empowered respondent No. 2 to handle matters related to tax collection and realization from the petitioner, including the application for stay. Thus, the court dismissed the argument that the assessing officer did not exercise discretion as required.

4. The petitioner contended a denial of natural justice as respondent No. 2 did not provide an opportunity to be heard before deciding on the stay application. However, the court observed that the petitioner did not request a hearing in the initial letter and that respondent No. 2 had addressed the points raised in the petitioner's letter. Therefore, the court held that there was no denial of natural justice in this case.

In conclusion, the court dismissed the application challenging the Income-tax Officer's decision on the stay of tax realization, finding that the officer had appropriately considered the relevant factors and had the jurisdiction to handle the application. The court also ruled that there was no denial of natural justice in the decision-making process.