2017 (9) TMI 826 - HC - Income Tax

Attachment of the petitioner's bank account - stay of demand - seeking directions u/s 144A from the Additional Commissioner of Income Tax - Held that - while granting an order of interim stay, the Court or the Appropriate Authority is entitled to take note of the factual and legal submissions made and examine as to whether a prima facie case has been made out by the appellant/assessee for grant of interim order. Taking note of the fact that hearing of the appeal has already commenced, there will be an order of interim stay of all further proceedings pursuant to the impugned order dated 04.9.2017 subject to the condition that the petitioner pays 15% of the income tax demanded i.e 15% of ₹ 1,58,18,050/-. It is stated that pursuant to the attachment of the petitioner's bank account, certain sums have already been realized by the Department. If that be so, then, whatever the amount that has already been realized shall be given credit to while arriving at the balance payable by the petitioner for complying with the above conditional order. The petitioner is directed to effect payment of the amount within a period of 90 days from the date of receipt of a copy of this order. If the petitioner fails to pay the said amount within the time stipulated, it is open to the first respondent to proceed further in accordance with law. As it has already been stated that the Commissioner of Income Tax (Appeals) has commenced hearing of the appeal petition, the appeal petition shall be finally disposed of as expeditiously as possible by following the appropriate legal procedure.

Summary

Issues:
Challenge to order of assessing officer for stay of demand of arrears of income tax for assessment year 2014-15. Lack of opportunity for petitioner before directions under Section 144A of Income Tax Act. Validity of order denying stay based on failure to pay 20% of arrears. Consideration of case laws by assessing officer. Grant of interim stay by the Court.

Analysis:
1. The petitioner challenged the order of the assessing officer seeking a stay on the demand of arrears of income tax for the assessment year 2014-15. The assessment was completed under Section 143(3) of the Income Tax Act, 1961, with the petitioner being assessed for a total income of ?3,71,05,196.

2. The petitioner contended that the Additional Commissioner of Income Tax did not provide a due opportunity to be heard before passing directions under Section 144A of the Act, which was prejudicial to their interests. The assessing officer issued a notice of demand, prompting the petitioner to file an application for stay.

3. The assessing officer, in the impugned order, stated that the petitioner failed to make the 20% payment as required for consideration of stay, and no valid reason was provided for this failure. The petitioner's financials were also cited as not reflecting any financial difficulty.

4. The assessing officer dismissed the case laws relied upon by the petitioner, stating they were decisions from writ cases and did not involve substantial questions of law. The petitioner argued that the assessing officer's dismissal of the case laws was incorrect and contrary to established legal precedents.

5. The Court noted that the assessing officer did not consider whether the petitioner had made out a prima facie case for the grant of an interim stay. Failure to assess this aspect rendered the impugned order liable for interference.

6. The Court granted an interim stay on further proceedings related to the demand, subject to the condition that the petitioner pays 15% of the income tax demanded. The petitioner was directed to make the payment within 90 days, with credit given for any amounts already realized by the Department.

7. The Court emphasized the need for expeditious disposal of the appeal petition before the Commissioner of Income Tax (Appeals) and directed compliance with appropriate legal procedures. The writ petition was disposed of with the outlined directions, and no costs were awarded.

In conclusion, the judgment addressed the issues raised by the petitioner regarding the lack of opportunity before the directions under Section 144A, the denial of stay based on non-payment of 20% of arrears, the consideration of case laws, and the grant of interim stay by the Court. The Court's detailed analysis and directions aimed to ensure fairness and adherence to legal procedures in the taxation matter.