2020 (3) TMI 789 - HC - Income Tax

Stay of demand - HELD THAT - Writ-applicant preferred an application dated 14th February 2020 before the Principal Commissioner of Income Tax. It is informed by the learned senior counsel appearing for the writ-applicant that the Principal Commissioner of Income Tax has yet to look into the review application preferred by the writ-applicant. We clarify that the pendency of this writ-application shall not come in the way of the Principal Commissioner of Income Tax to look into the Review Application preferred by the writ-applicant herein and decide the same in accordance with law. If the Principal Commissioner of Income Tax takes up Review Application at the earliest and dispose of the same in accordance with law. Let this exercise be undertaken within a period of four weeks from the date of receipt of writ of this order. Till the final disposal of this writ-application, there shall not be any coercive recovery. Direct service is permitted.

Summary

Issues:
Assessment order under Income Tax Act,1961; Appeal against assessment order; Application for stay of demand; Rejection of stay application; Review application before Principal Commissioner of Income Tax; Direction for early disposal of review application; Coercive recovery during pendency of writ-application.

Analysis:
The judgment by the Gujarat High Court pertains to a case involving an assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, which the petitioner found to be a high pitched assessment. The petitioner had appealed against this assessment order before the Commissioner of Income Tax (Appeals) and had also filed an application seeking a stay on the demand. However, the respondent rejected the stay application and directed the petitioner to pay 20% of the demand in three equal installments. Subsequently, the petitioner filed a review application before the Principal Commissioner of Income Tax, which was yet to be considered. The court clarified that the pendency of the writ-application would not hinder the Principal Commissioner from reviewing the application and directed for an expeditious disposal of the review application within four weeks. The court also ordered that there should be no coercive recovery during the pendency of the writ-application, allowing only direct service.

This judgment highlights the importance of procedural fairness and timely consideration of applications in tax matters. It underscores the principle that the pendency of a writ-application should not obstruct the administrative authorities from performing their duties, such as reviewing applications filed by taxpayers. The court's directive for the early disposal of the review application aims to ensure that the petitioner's grievances are addressed promptly and in accordance with the law. Additionally, the court's decision to prevent coercive recovery during the pendency of the writ-application reflects a balance between the interests of the tax authorities and the taxpayer, safeguarding against any undue hardship that may arise from immediate enforcement actions. Overall, the judgment emphasizes the need for procedural efficiency and fairness in tax proceedings, promoting transparency and adherence to legal principles in the resolution of disputes between taxpayers and tax authorities.