2023 (4) TMI 746 - HC - Income Tax

Stay of demand - order made on the lone basis that Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017 does not apply to the writ petitione r - AO had come to the conclusion that there is unaccounted capital drawings and unexplained interest credit both under Section 56 - this Court is informed that the appeal is under Section 246A of IT Act; that pending appeal, writ petitioner moved the first respondent (Assessing Officer) under Section 220(6) of IT Act with an interim prayer - HELD THAT - There is no disputation or disagreement as between the petitioner's counsel and the learned Revenue counsel that this is incorrect. This is evident and obvious from the first and second sentences in the first paragraph of impugned order. The first sentence says that stay of demand is governed by said instruction and second sentence says that writ petitioner is not covered by said instruction. As there is no disputation or disagreement that the writ petitioner's case i.e., writ petitioner's plea that interim order is covered by said instruction read with Section 220(6) of IT Act and as the only ground on which the prayer has been negatived is that the writ petitioner is not covered by said instruction, this Court deems it appropriate to interfere qua the impugned order. Order As passed a) the impugned order i.e., order dated 12.12.2022 bearing reference ITBA/COM/F/17/2022-23/1047945987(1) made by the first respondent is set aside. The impugned order is set aside on the sole ground that it has proceeded on the lone erroneous basis that said instruction (Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017) does not apply to the writ petitioner; b) The petition of the writ petitioner seeking interim order is remitted back to the first respondent for consideration on its own merits and in accordance with law inter alia by applying said instruction; c) The above exercise shall be completed by the first respondent as expeditiously as his business would permit and in any event, within three weeks from today i.e., on or before 12.01.2023; d) Though obvious it is made clear that the writ petitioner's petition styled 'petition to keep the demand of tax in abeyance' before the first respondent now gets revived and the same will stand over for consideration by the first respondent as per the aforementioned directive within aforementioned time line.

Summary

Issues Involved:
1. Interpretation of Instruction No.1914 dated 02.12.1993 as modified by office memoranda dated 29.02.2016 and 31.07.2017 in relation to a writ petitioner's case.
2. Validity of the order dated 12.12.2022 by the Assessing Officer negating the writ petitioner's interim prayer under Section 220(6) of the Income Tax Act.

Interpretation of Instruction No.1914 dated 02.12.1993:
The judgment revolved around the interpretation of Instruction No.1914 dated 02.12.1993, as modified by office memoranda dated 29.02.2016 and 31.07.2017, in the context of the writ petitioner's case. The impugned order by the Assessing Officer was solely based on the premise that the writ petitioner's case was not covered under this instruction. Both the petitioner's counsel and the Revenue counsel acknowledged that this basis was incorrect. The court noted that there was no dispute regarding the applicability of said instruction to the writ petitioner's plea under Section 220(6) of the Income Tax Act. Consequently, the court found it appropriate to intervene in the matter due to the erroneous basis on which the prayer had been denied.

Validity of the Assessing Officer's Order:
The court set aside the order dated 12.12.2022 made by the Assessing Officer, emphasizing that it was primarily flawed in concluding that the writ petitioner was not covered by the relevant instruction. The judgment directed the petition seeking an interim order to be reconsidered by the Assessing Officer based on its own merits and in compliance with the law, specifically by applying the said instruction. The court provided a timeline for this reconsideration, requiring the Assessing Officer to complete the process within three weeks. Additionally, the court clarified that it had not expressed any opinion on the merits of the case, and the facts were presented solely for the purpose of the order. The writ petition was disposed of with the outlined directives, and the associated Writ Miscellaneous Petition was closed without any order as to costs.

This detailed analysis highlights the court's meticulous examination of the interpretation of the relevant instruction and the subsequent invalidation of the Assessing Officer's order, emphasizing the need for reconsideration in accordance with the law and the applicable instruction.