2012 (4) TMI 268 - HC - Income Tax

Application of stay of demand - Asst. Commissioner passed an Order stating that merely filing an appeal against the assessment order before the appellate authority is not sufficient reason to stay the recovery of demand Assessee file a Writ stating that Commissioner while passing the order has not taken into consideration the law laid down by the Hon ble Supreme Court, this Court and also the mandatory circulars issued by the department of Income Tax itself - the view of the assessee is supported by the judgment of the hon able Delhi High Court in the case of Soul v. Deputy Commissioner of Income - 2008 - TMI - 76546 - DELHI HIGH COURT - Income Tax Held that - when the assessed income is more then double of the returned income then the demand should be stayed till the decision of appeal - it is apparent that while deciding the stay application, the Assistant Collector has not taken into consideration the judgment and circulars cited by the petitioner - quash the order remanding to the Assistant Collector of Income Tax to consider the stay application afresh by providing an opportunity of hearing to the petitioner and also by taking into consideration judgments and circulars cited by the petitioner in favour of assessee.

Summary

Issues:
1. Stay of demand application under Income Tax Act, 1961.
2. Consideration of law laid down by Hon'ble Supreme Court, High Court, and circulars issued by the Income Tax department.

Analysis:
1. The petitioner, an Urban Improvement Trust, filed a stay of demand application under section 154 of the Income Tax Act, 1961. The Assistant Commissioner of Income Tax issued a rectified demand notice for a significant sum. Subsequently, the petitioner sought a stay of demand, which was denied by the Assistant Commissioner citing the availability of funds with the petitioner for payment.

2. The petitioner challenged this decision through a writ petition, arguing that the Assistant Commissioner did not consider the legal precedents set by the Hon'ble Supreme Court, High Court, and circulars issued by the Income Tax department. The petitioner specifically referred to circulars emphasizing the stay of recovery in cases where the assessed income significantly exceeds the returned income, as per CBDT instructions. Reference was made to a High Court judgment highlighting the binding nature of CBDT circulars on tax authorities.

3. The High Court, after considering the arguments, noted that the Assistant Commissioner had not taken into account the legal judgments and circulars cited by the petitioner. Consequently, the court quashed the Assistant Commissioner's order and remanded the matter back for fresh consideration. The Assistant Collector was directed to review the stay application, provide a hearing to the petitioner, and consider the relevant judgments and circulars. The deadline for the new decision was set, and the petitioner was instructed to report for the process accordingly.

In conclusion, the High Court's judgment emphasized the importance of considering legal precedents and circulars while deciding on matters such as stay of demand applications under the Income Tax Act. The court's decision to remand the case for fresh consideration highlighted the necessity of adhering to established legal principles and guidelines in such matters.