2020 (5) TMI 554 - HC - Income Tax

Stay of demand - Condition of depositing 20% of the tax demanded complied with - respondent no.2 through Ext.P12 calls upon the petitioner to pay the balance of 80% tax under challenge in Ext.P4 appeal - HELD THAT - After chronologically taking note of the dates referred to above, this court is of the view that Ext.P12 ought not to have been issued once the petitioner has complied with the condition of depositing 20% of the tax demanded. It could be that, in Ext.P10 stay has been granted upto 30.09.2019 and the appeal in Ext.P4 is not yet heard. This Court is of the view that the amounts demanded through Ext.P12 if is carried out, the appeal filed by petitioner will be more in the nature of academic pursuit of objections. To meet the ends of justice, the writ petition stands disposed of by this judgment, in the circumstances of this case (a) Ext.P4 appeal is disposed of as expeditiously as possible, preferably within three months from the date of receipt of a copy of this judgment. (b) Stay granted in Ext.P10 order stands extended till the appeal is disposed of and order communicated to petitioner.

Summary

Issues:
- Stay petition for assessment order
- Compliance with conditions for stay
- Issuance of demand notice during pendency of appeal

Stay petition for assessment order:
The petitioner, a Co-operative Bank, filed an appeal and stay petition aggrieved by an assessment order. The stay petition was disposed of, granting stay for 80% of the demand until a specified date. The petitioner approached the court seeking direction to maintain the stay during the pendency of the appeal. The court noted the compliance with the conditions and the pending appeal, emphasizing that issuing a demand notice would render the appeal merely academic.

Compliance with conditions for stay:
The court observed that the petitioner had already paid 20% of the demanded tax, meeting the condition for the stay granted. Considering the circumstances, the court found that the demand notice issued for the remaining 80% should not have been done once the condition was fulfilled. The court highlighted the importance of ensuring justice and preventing the appeal from becoming a mere formality due to the demand notice.

Issuance of demand notice during pendency of appeal:
In response to the issuance of a demand notice for the balance tax during the pendency of the appeal, the court disposed of the writ petition. The judgment directed the expeditious disposal of the appeal within three months, extended the stay granted in the previous order until the appeal's disposal, and made no order as to costs. The court's decision aimed to ensure justice and prevent the appeal from being rendered ineffective by the demand notice, emphasizing the importance of maintaining the stay during the appeal process.