2022 (3) TMI 847 - HC - Income Tax

Stay petition - Application rejected as petitioner should approach the Appellate Authority to file such an application for stay - Penalty u/s 271(1)(c) initiated - HELD THAT - It is the claim of the petitioner that, it is a very low stake claim, wherein whether the petitioner has presentable case before the Appellate Authority has to be decided only by the Appellate Authority, for which appeal has been immediately filed, i.e., after receipt of the assessment order from the faceless assessment centre only on 23.12.2021 and in the meanwhile when application for stay was filed, for which the petitioner assessee is entitled to under Section 220(6) of the Act, the same should have been considered on merits, by using his discretion, of course by imposing certain conditions, however, the Assessing Authority, i.e., the respondent herein outrightly rejected the same by directing the petitioner to approach the Appellate Authority. If we look at the language used in Section 220(6) of the Act, it is the complete discretion of the Assessing Authority to deal with such application filed under the said section and it can be disposed of by the Assessing Authority by using his discretion, of course by imposing certain conditions depending upon the circumstances of the case. When that being so, the present order which is impugned herein, dated 07.02.2022, driving the petitioner to approach the Appellate Authority may not be good reason be construed as a reason that can be given by the Assessing Authority within the meaning of Section 220(6) of the Act. The impugned order is set aside and the matter is remitted back to the respondent, where the petitioner can make a fresh application also along with an earlier application, where if he needs to make any additional input or reason for considering his application for grant of stay and such application shall be considered and decided by the respondent Assessing Authority by using his discretion.

Issues:
1. Writ petition seeking a writ of certiorarified mandamus for quashing an assessment order and forbearing from recovery steps.
2. Delay in receiving the assessment order and subsequent filing of appeal.
3. Rejection of application for stay of demand under Section 220(6) of the Income Tax Act.
4. Dispute over the rejection of the application and direction to approach the Appellate Authority.
5. Interpretation of Section 220(6) regarding the Assessing Authority's discretion.
6. Court's decision on setting aside the impugned order and remitting the matter back to the Assessing Authority.

Detailed Analysis:

1. The petitioner filed a writ petition seeking a writ of certiorarified mandamus to quash an assessment order and prevent recovery steps pending appeal before the Commissioner of Income Tax (Appeals).

2. The petitioner claimed that she received the assessment order only during penalty proceedings and subsequently filed an appeal against it, facing delays due to non-service of the order.

3. A request for stay of demand under Section 220(6) was made by the petitioner, which was rejected by the Assessing Authority, directing her to approach the Appellate Authority for such relief.

4. The petitioner contested the rejection, arguing that the Assessing Authority should have considered the stay application on its merits rather than redirecting her to the Appellate Authority.

5. The Court analyzed Section 220(6) of the Income Tax Act, emphasizing the Assessing Authority's discretion in dealing with such applications and imposing conditions as deemed fit.

6. The Court found the rejection based on directing the petitioner to the Appellate Authority as insufficient reasoning under Section 220(6) and set aside the impugned order, remitting the matter back to the Assessing Authority for a fresh consideration of the stay application.

7. The Court directed the Assessing Authority to use discretion in deciding the application, including the possibility of imposing conditions, and instructed the petitioner to pursue the appeal before the Appellate Authority simultaneously.

By providing a detailed analysis of the judgment, the issues involved, and the Court's decision, the summary captures the essence of the legal proceedings and the outcome of the case effectively.

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