2024 (10) TMI 1578 - HC - Income Tax

Rejection of stay petition filed u/s 220(6) - importance of considering prima facie case, financial stringency, and balance of convenience in stay petitions - HELD THAT - The law on this aspect has been settled by this Court in its decision rendered in Kannammal Vs. Income Tax Officer 2019 (3) TMI 1 - MADRAS HIGH COURT as held that Circulars and Instructions as extracted above are in the nature of guidelines issued to assist the assessing authorities in the matter of grant of stay and cannot substitute or override the basic tenets to be followed in the consideration and disposal of stay petitions. The existence of a prima facie case for which some illustrations have been provided in the Circulars themselves, the financial stringency faced by an assessee and the balance of convenience in the matter constitute the 'trinity', so to say, and are indispensable in consideration of a stay petition by the authority. The Board has, while stating generally that the assessee shall be called upon to remit 20% of the disputed demand, granted ample discretion to the authority to either increase or decrease the quantum demanded based on the three vital factors to be taken into consideration. The assessing officer has merely rejected the petition by way of a non-speaking order. Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. The issue on this aspect is also covered by a decision of the Hon'ble Supreme Court in LG Electronics India Private Limited 2022 (5) TMI 120 - SC ORDER Thus we set aside impugned order and AO is directed to pass orders de novo on the stay application filed by the petitioner in the light of the discussion as aforesaid.

Summary

Issues:
Challenge to Impugned Order rejecting stay petition under Section 220(6) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged the Impugned Order dated 29.11.2021, which rejected the stay petition filed under Section 220(6) of the Income Tax Act, 1961. The petitioner had suffered an adverse Assessment Order on 16.02.2021, making them liable to pay a significantly higher tax amount than initially filed. The petitioner filed an appeal against this Assessment Order and subsequently filed a stay petition. The court referred to a previous decision to emphasize the importance of considering prima facie case, financial stringency, and balance of convenience in stay petitions. The court criticized the non-speaking order of the assessing officer and set aside the Impugned Order, directing a fresh order to be passed within four weeks without commenting on the assessment's merits.

The court also cited a Supreme Court decision to support its analysis. The Impugned Order was deemed insufficient and lacking in details, leading to its setting aside. The case was remitted back to the respondents for a fresh order, with recovery proceedings to be halted in the meantime. The respondents were instructed to expedite the process, ideally completing it within three months. The Writ Petition was disposed of with the outlined observations and directions, with no costs incurred.