2015 (10) TMI 2056 - HC - Income Tax

Stay of demand rejected - Held that - Since facts are more or less similar and the contentions raised before this court were also similar of in the case of Surat Urban Development Authority v. Deputy Commissioner of Income Tax (Exemptions) 2015 (10) TMI 1903 - GUJARAT HIGH COURT a similar order is required to be passed in the present case. However, considering the fact that an amount equal to two installments has already been recovered from the petitioner which comes to about 25% of the amount demanded, no further amount is required to be directed to be deposited as condition for grant of stay. In the light of the above discussion, the petition partly succeeds and is, accordingly allowed to the following extent. Having regard to the amount already paid by the petitioner, it shall not be treated as an assessee in default as contemplated under section 220(6) of the Act till the final disposal of the appeal before the Commissioner (Appeals). The Commissioner (Appeals) shall dispose of the appeal preferred by the petitioner under section 246 of the Act within a period of four months from the date of receipt of a copy of this judgment. The petitioner shall duly cooperate in the proceedings before the appellate authority. In case the Commissioner (Appeals) is not in a position to dispose of the appeal on account of default on the part of the petitioner, it would be open for the respondents to approach this court for modification of this order.

Summary

Issues:
1. Quashing of communication order rejecting stay of demand.
2. Coercive recovery actions against the petitioner.
3. Failure of authorities to consider relevant facts in stay petition.
4. Approach of respondent authorities towards local authority.
5. Similarity with another case involving coercive recovery.
6. Relief sought by the petitioner.

Analysis:
1. The petitioner sought to quash an order directing payment of outstanding demand in twelve installments. The petitioner, an urban development authority, had filed its return declaring nil income for the assessment year 2012-13. After assessment, a demand of Rs. 1,92,73,490 was raised, leading to a series of appeals and applications for stay of demand.

2. The court noted that coercive recovery actions were taken against the petitioner without proper consideration of facts. The petitioner, being a local authority, was subjected to coercive measures despite the pending appeal. The court highlighted the need for restraint by authorities until the appeal process is completed, especially considering the petitioner's prior nil assessment.

3. The court observed similarities with a previous case involving coercive recovery actions. It was noted that the authorities had not applied their minds to relevant facts while deciding on the stay petition under section 220(6) of the Income Tax Act, indicating a lack of proper consideration in the decision-making process.

4. Considering the circumstances and the amount already paid by the petitioner, the court partially allowed the petition. The petitioner was granted relief from being treated as an assessee in default until the appeal before the Commissioner (Appeals) was finalized. The Commissioner was directed to dispose of the appeal within four months, with a provision for modification of the order in case of default by the petitioner.

5. The court highlighted the need for cooperation from the petitioner in the appellate proceedings and made it clear that failure to do so could result in a modification of the order. The ruling aimed to provide relief to the petitioner while ensuring a timely resolution of the appeal process.

6. The judgment emphasized the importance of fair treatment and proper consideration of facts in matters involving tax assessments and stay of demands. It underscored the need for authorities to exercise restraint and allow due process to unfold, especially in cases involving entities like local authorities.