2015 (10) TMI 1755 - HC - Income Tax

Stay of collection of tax rejected - demand for the AY 2012-13 arose on account of wrong claim of deductions u/s 54 - Held that - Assessing Officer is required to act in a fair manner and need to consider the stay petition independently and pass a speaking order stating reasons as to why the stay application of the petitioner is not required to be considered, as the order passed by the Assessing Officer may either be upheld or otherwise revised by the appellate authority. In the present case, as the order passed by the Assessing Officer in the stay application being a non-speaking order, the same is liable to be set aside. Accordingly, the impugned order is set aside. The 1st respondent is directed to consider the stay application afresh keeping in view the instructions in CBDT Circular No.1914 dated 02.12.1993. The petitioner is given liberty to submit further representation and bring additional facts, if any, to the notice of the Assessing Officer. It is needless to mention that an opportunity of hearing may be afforded, if the petitioner so desires.

Summary

Issues:
Challenge to rejection of stay of tax collection pending appeal for Assessment Year 2012-13.

Analysis:
The writ petition questioned the rejection of stay of tax collection by the 1st respondent for the Assessment Year 2012-13. The petitioner claimed exemption under Section 54(2) of the Income Tax Act for the amount deposited under the Capital Gains Account Scheme, which was rejected by the Assessing Officer. Additionally, the claim for exemption on the amount paid after filing the return was also denied. The petitioner filed an appeal before the 4th respondent, seeking a stay of the demand, but it was rejected by the Assessing Officer. The Assessing Officer justified the rejection stating that the assessment order would likely be confirmed by the Appellate Authorities, and filing an appeal did not automatically grant a stay of collection. The High Court noted that the Assessing Officer did not properly consider the necessary factors required when a stay application is filed. The court referred to CBDT Instructions No.1914 dated 02.12.1993, which provide guidelines for staying demand, emphasizing that a demand should only be stayed if there are valid reasons, and illustrative situations where stay could be granted were outlined.

The court highlighted that the Assessing Officer must act fairly, consider the stay petition independently, and provide a speaking order stating reasons for rejecting the stay application. The petitioner's counsel cited a previous case where a similar stay rejection order was set aside by the court, emphasizing the need for a proper consideration of the stay application. In the present case, as the Assessing Officer's order was non-speaking, the court deemed it necessary to set it aside. Consequently, the impugned order was set aside, and the 1st respondent was directed to reconsider the stay application in accordance with the CBDT Circular No.1914 dated 02.12.1993. The petitioner was granted liberty to submit further representation and bring additional facts to the notice of the Assessing Officer, with an opportunity for a hearing if desired. The writ petition was allowed, with no costs imposed, and any pending miscellaneous petitions were to be closed.