2019 (4) TMI 1241 - HC - Income Tax

Stay of demand u/s 220(6) - in order rejecting stay no reference is made to the facts of prima facie case, financial stringency and balance of convenience - opportunity to personal hearing has also not been granted - directed to pay 20% of the arrears immediately in the view that CBDT office memorandum in F.No.404/72/93-ITCC dated 29.12.2016, being mandatory - HELD THAT - As far as first two points are concerned, there is clear violation of principles of natural justice insofar as no personally opportunity has been granted and the order itself is mechanical and non speaking. As far as the third aspect is concerned, I have had occasion to deal with similar orders passed by assessing officers in order of MRS. KANNAMMAL VERSUS INCOME TAX OFFICER WARD 1 (1) TIRUPUR 2019 (3) TMI 1 - MADRAS HIGH COURT The above order is applicable on all fours to the facts of the present case. In the light of the fact that the personal hearing sought for has not been granted accordingly, the order is not speaking and mechanical and there is absolutely no application of mind of the officer to the existence of prima facie case, financial stringency and balance of convenience, there is a merit in the submission of the petitioner that the order requires to be set aside. I accordingly do so. The officer shall fix a date for hearing of the stay application, issue notice to the petitioner and pass orders in accordance with law, within a period of four weeks from the date of receipt of a copy of this order. Till the disposal of the said petition, no coercive proceedings shall be initiated as regards recovery of the disputed demand. - writ Petition is disposed

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Mechanical and non-speaking order.
3. Application of CBDT Office Memorandum.
4. Lack of personal hearing.

Detailed Analysis:

Violation of Principles of Natural Justice:
The petitioner contested an order by the 1st respondent regarding a stay application filed on 01.03.2019. The court observed that the assessing officer failed to consider the facts of the prima facie case, financial stringency, and balance of convenience, leading to a violation of the principles of natural justice. The officer did not grant a personal hearing, which was confirmed by the respondent's counsel. The court emphasized that the parameters for considering a stay—existence of a prima facie case, financial stringency, and balance of convenience—were not adhered to, highlighting a clear violation of natural justice principles.

Mechanical and Non-Speaking Order:
The impugned order dated 12.03.2019 was deemed mechanical and non-speaking as it did not reference the specifics of the case or the petitioner's financial condition. The order merely cited the CBDT Office Memorandum, mandating a 20% payment of the disputed demand without a detailed examination of the petitioner's situation. The court referenced its previous judgment, emphasizing the necessity for assessing officers to issue speaking orders that consider all relevant factors, including the petitioner's financial hardship and prima facie case.

Application of CBDT Office Memorandum:
The assessing officer relied on the CBDT Office Memorandum F.No.404/72/93-ITCC dated 29.12.2016, which mandates a 20% payment of the disputed demand for granting a stay. The court noted that while the memorandum provides guidelines, it does not override the need for a detailed and reasoned order. The court reiterated that the guidelines allow discretion to adjust the quantum of demand based on the specific circumstances of the case, such as financial hardship or a strong prima facie case.

Lack of Personal Hearing:
The petitioner had requested a personal hearing, which was not granted. The court found this to be a significant oversight, as personal hearings are crucial for ensuring that all aspects of the case are thoroughly examined. The absence of a personal hearing contributed to the mechanical nature of the order and the failure to apply judicial mind to the petitioner's circumstances.

Conclusion:
The court set aside the impugned order due to the lack of a personal hearing and the mechanical nature of the decision. It directed the officer to schedule a hearing for the stay application, issue notice to the petitioner, and pass a reasoned order within four weeks. Until the disposal of the stay petition, no coercive measures for recovery of the disputed demand were to be initiated. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.