2019 (10) TMI 264 - HC - Income Tax

Grant stay on recovery - as seeked Revenue should not adopt any coercive proceedings till the disposal of the appeal by CIT(A) - HELD THAT - Once it is held that an appeal under the Act is maintainable from the impugned order dated 14th March, 2010 passed by the Assessing Officer, then all incidence of an appeal would equally apply in the case of the Petitioner. It is also not disputed that once the Petitioner has filed an appeal before the CIT(A), it is open to the Petitioner to make appropriate application before the Authorities under Section 220 (6) of the Act, for stay of the demand till the final disposal of the appeal before the CIT(A). It would, therefore, be open to the Petitioner to take such measures as are available under the Act to obtain an appropriate order, seeking a stay of the recovery of the demand confirmed by an order dated 14th March, 2019. Looking at the huge demand and the attitude of the Revenue in curtailing the normal period of 30 days available to party to make a payment, it would be appropriate that till the disposal of the Petitioner s application under Section 220(6) of the Act and if the order on such application is adverse to the Petitioner, then for a period of two weeks thereafter, no coercive proceedings will be adopted by the Revenue. This, of course, subject to the Petitioner filing the necessary application within a period of two weeks from today. In the above view, we are not inclined to grant direction (a) as sought by the Petitioner. Addl. Solicitor General states that the CIT(A) would endeavor to dispose of the appeal as expeditiously as possible and preferably within a period of six months from today.

Summary

Issues:
1. Challenge to tax demand and direction to pay without allowing time for appeal.
2. Availability of efficacious alternate remedy under the Income Tax Act.
3. Withdrawal of petition and prosecution of appeal before CIT(A).
4. Stay on recovery till appeal disposal by CIT(A).
5. Direction for expeditious disposal of appeal by CIT(A).

Issue 1: Challenge to Tax Demand and Direction to Pay Without Allowing Time for Appeal
The Petitioner challenged the action of the Assessing Officer in raising a tax demand of a significant amount and directing immediate payment without allowing time for appeal. The Court noted the unsustainable nature of the order and the violation of the Petitioner's right to approach the Appellate Authority before enforcement of the tax demand. Stay against tax recovery was granted considering the peculiar facts of the case and the need to assess the prima facie case of the Petitioner.

Issue 2: Availability of Efficacious Alternate Remedy under the Income Tax Act
The Petitioner invoked the extraordinary jurisdiction of the Court, arguing the absence of an efficacious alternate remedy under the Income Tax Act. The Respondents pointed out the availability of an appeal under section 246A to the Commissioner (Appeals), contrary to the Petitioner's claim. The Court directed the Petitioner to file an appeal within three weeks, allowing the Commissioner of Income Tax (Appeals) to determine the appeal's maintainability under section 246A. Withdrawal of the petition was contingent upon the Commissioner's decision, emphasizing that it would not restrict the Petitioner from challenging other orders under the Act.

Issue 3: Withdrawal of Petition and Prosecution of Appeal Before CIT(A)
The parties informed the Court that the appeal against the Assessing Officer's order was maintainable before the Commissioner of Income Tax (Appeals). The Petitioner sought to withdraw the petition and proceed with the appeal before the CIT(A), given the substantial demand involved. The Petitioner requested directions to prevent coercive proceedings by the Revenue until appeal disposal and for expeditious handling of the appeal by the CIT(A).

Issue 4: Stay on Recovery Till Appeal Disposal by CIT(A)
The Petitioner sought a stay on recovery until the CIT(A) disposed of the appeal, citing a precedent from the Delhi High Court. However, the Revenue did not commit to refraining from enforcement during the appeal process. The Court highlighted the Petitioner's ability to seek stay under Section 220(6) of the Act and decided not to grant a stay on recovery. It allowed the Petitioner to take necessary measures for obtaining a stay order and directed a brief period of no coercive actions by the Revenue post an adverse decision on the stay application.

Issue 5: Direction for Expeditious Disposal of Appeal by CIT(A)
The Court noted the Revenue's assurance that the CIT(A) would expedite the appeal's disposal, aiming for completion within six months. Consequently, the direction sought for expeditious disposal of the appeal did not require further intervention. The petition was disposed of as withdrawn, with the Court providing guidance on the appeal process and stay of recovery pending appeal resolution.