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2018 (7) TMI 1625 - HC - Income TaxStay of demand - recovery proceedings - respondent has directed the Assessee to pay 20% of the tax demanded on or before 26.03.2018 and if such condition is complied, the collection of remaining 80% of the tax will remain stayed - Held that - Instruction issued by the Board are illustrative and not exhaustive. The instruction itself was issued to bring about uniformity in the manner in which the stay petitions have to be dealt with by the Assessing Officers. Even in the said instruction, discretion has been given to the Assessing Officer to impose conditions which are just and proper. Therefore, to state that CBDT instruction does not cover facts and circumstances like the assessee s case is incorrect way of interpreting the issue which has arisen for consideration before the second respondent. In the light of the above discussion, this Court is of the view that the impugned order calls for interference. However, since the appeals are pending before CIT (A) and as admitted by the second respondent that the case as canvassed by the petitioner has to be dealt with by the CIT (A) on the merits of the additions made by the Assessing Officer, with a view to avoid double exercise, I propose to pass the following order, while setting aside the impugned order. Writ petition is allowed and the impugned order is set aside with a direction to the petitioner to file a stay petition before Commissioner of Income Tax (Appeals) within a period of one week from the date of receipt of a copy of this order. On receipt of the stay petition, the Commissioner of Income Tax (Appeals) is directed to afford an opportunity of personal hearing to the authorized representative of the Assessee and pass orders on the stay petition on merits and in accordance with law. It is made clear that this Court has not rendered any finding on merits of the assessment.
Issues Involved:
1. Legitimacy of the high-pitched assessment orders for the Assessment Years 2009-10 and 2010-11. 2. Applicability of CBDT Instruction No.96 dated 21.08.1969 versus Instruction No.1914 dated 22.12.1993. 3. Impact of the judgment of the Special Court acquitting the accused on the income tax assessment proceedings. 4. Validity of the impugned order directing the Assessee to pay 20% of the disputed tax demand. Issue-wise Detailed Analysis: 1. Legitimacy of the High-Pitched Assessment Orders: The petitioner contended that the assessment orders dated 31.12.2017 for the Assessment Years 2009-10 and 2010-11 were unduly high-pitched. The petitioner argued that the Central Board's Instruction No.96 dated 21.08.1969 mandates that collection of disputed demands should be stayed until appeals are heard and disposed of when assessments are high-pitched. The court noted that the second respondent did not provide reasons to support the claim that the assessments were not high-pitched. The court found substantial reference to the CBI charge sheet in the assessment orders, indicating that the assessments were influenced by the CBI proceedings. The correctness of these findings is to be tested by the CIT (Appeals), where the appeals are pending. 2. Applicability of CBDT Instruction No.96 versus Instruction No.1914: The Revenue argued that Instruction No.96 dated 21.08.1969 was superseded by Instruction No.1914 dated 22.12.1993. However, the court referred to the decision in N.Jegatheesan Vs. Deputy Commissioner of Income-Tax, which held that Instruction No.96 continues to hold the field despite the issuance of Instruction No.1914. The court emphasized that Instruction No.96, issued with the consent of the Informal Consultative Committee, remains binding on all assessing authorities. Therefore, the court concluded that Instruction No.1914 does not specifically supersede Instruction No.96. 3. Impact of the Judgment of the Special Court: The petitioner argued that the assessment orders were mirror images of the CBI charge sheet, and since the accused were acquitted by the Special Court, the income tax proceedings should consider this judgment. The court noted that the second respondent failed to consider the prima facie effect of the Special Court's judgment while examining the stay petition. The court highlighted that income tax proceedings are civil in nature, and the rules of evidence applicable in criminal proceedings do not strictly apply. However, the court found that the substantial reference to the CBI proceedings in the assessment orders required consideration of the Special Court's judgment's impact. 4. Validity of the Impugned Order: The impugned order directed the Assessee to pay 20% of the disputed tax demand. The court found that the second respondent did not adequately consider the prima facie case, balance of convenience, and irreparable hardship to the petitioner. The court held that the impugned order required interference as it did not appropriately address the petitioner's contentions regarding the high-pitched assessments and the impact of the Special Court's judgment. The court directed the petitioner to file a stay petition before the Commissioner of Income Tax (Appeals) and instructed the CIT (Appeals) to afford an opportunity for a personal hearing and pass orders on the stay petition on merits and in accordance with the law. Conclusion: The court allowed the writ petition, set aside the impugned order, and directed the petitioner to file a stay petition before the Commissioner of Income Tax (Appeals). The CIT (Appeals) is to consider all aspects during the hearing and decide on the stay petition's merits. The court did not render any findings on the merits of the assessment, leaving it to the CIT (Appeals) to address all issues comprehensively.
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