2019 (3) TMI 1320 - HC - Income Tax

Stay granted by AO in term of CBDT circular - delay in disposal of the appeal before the Commissioner - Whether stay shall vacated automatically after six month - HELD THAT - There is no allegation that the petitioner is responsible for delay in disposal of the appeal before the Commissioner. Merely relying upon the decision of the Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd 2018 (7) TMI 924 - SUPREME COURT OF INDIA Revenue Authorities now held a belief that any stay against the recovery granted would automatically lapse after six months. This is neither the purport of the judgment of the Supreme Court, nor the observations made in the said judgment in the context of civil and criminal litigation can be imported in present set of quasi judicial proceedings. The power of the Assessing Officer to review the situation every six months, would not authorized him to lift the stay previously granted after full consideration and insist on full payment of tax without the assessee being responsible for delay in disposal of the appeal or any other such similar material change in circumstances. Revenue prayed for time for filing reply. By way of ad-interim relief, the impugned orders dated 22.1.2019 and 11.2.2019 are stayed. The respondents are prevented from carrying out any further recoveries pursuant to the order of assessment in respect of the petitioner for assessment year 2013-14.

Summary

Issues:
Challenge to orders passed by Assessing Officer and Commissioner of Income Tax regarding tax demand adjustment and stay granted to the assessee.

Analysis:
1. The petitioner, an assessee, challenged the orders passed by the Assessing Officer and Commissioner of Income Tax regarding a tax demand of ?205 crore for the assessment year 2013-14. The Assessing Officer initially granted a stay to the assessee based on CBDT Circular and later adjusted refunds against the demand. Subsequently, the Assessing Officer revoked the stay based on a Supreme Court decision and directed the petitioner to pay the outstanding demand for two assessment years within seven days.

2. The petitioner approached the Principal Commissioner of Income Tax, who rejected the request for stay, citing the Supreme Court decision and CBDT instructions. The Commissioner emphasized that stays cannot continue indefinitely and that the Assessing Officer has the authority to review and adjust refunds against the demand. The Commissioner concluded that the Assessing Officer followed the prescribed procedure and there was no justification for interfering with the stay revocation order.

3. The High Court observed that the Revenue Authorities erred in automatically revoking the stay granted to the assessee after six months, without considering the delay in disposal of the appeal. The Court highlighted that the Assessing Officer's power to review every six months does not authorize lifting the stay without valid reasons or changes in circumstances caused by the assessee.

4. The Court found that the Revenue Authorities misinterpreted the Supreme Court judgment and failed to consider that the assessee was not responsible for the delay in appeal disposal. The Court stayed the impugned orders to prevent further recoveries by the respondents and scheduled a hearing for further proceedings.

In conclusion, the High Court criticized the Revenue Authorities for their hasty decision to revoke the stay without proper justification and emphasized the importance of considering individual circumstances before taking such actions. The Court's interim stay provided relief to the petitioner until a detailed examination of the case could be conducted.