This Court In The Matter Of M/S Aarti Sponge & Power Ltd v. The Assistant Commissioner Of Income Tax Andothers, Decided On 10.04.2018 Indicated The Procedure Tobe Followed By The Assigning Officer As Under

2024:CGHC:45830 AFR HIGH COURT OF CHHATTISGARH, BILASPUR WPT No. 199 of 2024 M/s Singhania Buildcon Private Limited, 3rd And 4th Floor, Road Shyam Chambers,Raipur, Through- Its Director/authorized Signatory Subodh Singhania S/o Shri ShyamlalSinghania, Age 54 Years, R/o 5, School Road, Choubey Colony, Raipur Road, Raipur-492001. ... Petitioner versus1 - Central Board Of Direct Taxes, Through Its Chairman, Ministry Of Finance, (Depart-mentOfRevenue)NorthBlockNewDelhi-110002. 2 - Principal Chief Commissioner Of Income Tax, Madhya Pradesh And Chhattisgarh, In-come Tax Department, Aaykar Bhawan, Hoshangabad Road, Bhopal-462004, MadhyaPradesh. 3 - Commissioner Of Income Tax (Appeals)-(3), Income Tax Department, AaykarBhawan,CentralRevenueBuilding,Raipur,Chhattisgarh. 4 - Assistant Commissioner Of Income Tax, Central Circle-2, Income Tax Department,Aaykar Bhawan, Central Revenue Building, Raipur, Chhattisgarh. ... Respondents ------------------------------------------------------------------------------------------------------------- For Petitioner : Mr. Sumit Nema, Senior Advocate appears along with Mr. Aishwarya Kumar, Advocate For Respondents : Mr. Ajay Kumrani, Advocate appears on behalf of Mr. Amit Chaudhari, Advocate ------------------------------------------------------------------------------------------------------------- Hon'ble Shri Arvind Kumar Verma, Judge Order on Board 22.11.2024 1.Learned counsel for the Respondents accepted the advancecopy of the writ petition and with the consent of therespective parties, heard finally.copy of the writ petition and with the consent of therespective parties, heard finally. 2.By way of this petition, petitioner seeks to challenge the stayrejection order dated 14.06.2024 passed by the respondentno. 4 and rejection order dated 18.10.2024 passed byrejection order dated 14.06.2024 passed by the respondentno. 4 and rejection order dated 18.10.2024 passed by Respondent no. 2, whereby, stay petition filed by thepetitioner u/s 220(6) of the Income Tax Act, 1961 on30.04.2024 before Respondent no. 4 and stay applicationfiled before respondent no. 2 on 30.04.2024 respectively hasbeen rejected by an cryptic manner and without appreciatingthe detailed submissions made by the petitioner and withoutlooking into the financial stringency and balance ofconvenience and also without giving any opportunity ofhearing. 2.By way of this petition, petitioner seeks to challenge the stayrejection order dated 14.06.2024 passed by the respondentno. 4 and rejection order dated 18.10.2024 passed byrejection order dated 14.06.2024 passed by the respondentno. 4 and rejection order dated 18.10.2024 passed by Respondent no. 2, whereby, stay petition filed by thepetitioner u/s 220(6) of the Income Tax Act, 1961 on30.04.2024 before Respondent no. 4 and stay applicationfiled before respondent no. 2 on 30.04.2024 respectively hasbeen rejected by an cryptic manner and without appreciatingthe detailed submissions made by the petitioner and withoutlooking into the financial stringency and balance ofconvenience and also without giving any opportunity ofhearing. Learned counsel for the petitioner submits that applicationfiled under Section 220(6) before the respondent no. 2 and 4the petitioner had demonstrated its strong prima facie case,balance of convenience, financial hardship, Genuine hardshipand had also offered sufficient security for safeguarding theinterest of revenue. However, both the authority that is theRespondent no. 2 and 4 without appreciating the submissionmade by the Petitioner and without even adverting to thecontents of the said application and without any applicationof mind to the averments and submissions has passed theimpugned order rejecting the stay application and hasdirected the petitioner to deposit 20% of the demand as perinstruction no. 1914 dated 29.02.2016. That it is the settledlaw that Ld. Assessing Officer and his higher authority whileadjudicating the Stay Application is required to apply trinityPrinciple i.e. the existence of a prima facie case, financialstringency and the balance of convenience. That it is onlyupon an application of the three principle as aforesaid theassessing office or higher authority can exercise discretionfor the grant or rejection, wholly or in part, of a request forstay of disputed demand however in the instant case therespondent no. 2 and 4 passed the rejection order in anillegal and cryptic manner with even taking trinity Principleand also without granting any opportunity of hearing. Thusthe impugned orders dated 14.06.2024 and 18.10.2024 isillegal and passed in violation of Principle of natural justice. 4. On the other hand Mr. Ajay Kumrani, learned counsel for therespondent would oppose the submissions made by thelearned Senior Counsel for the petitioner and would supportthe orders impugned. 5. I have heard learned counsel for the parties, perused theimpugned orders and also went through the records withutmost circumspection. 6.This court in the matter of M/s Aarti Sponge & Power Ltd. V. The Assistant Commissioner of Income Tax andOthers, decided on 10.04.2018 indicated the procedure tobe followed by the Assigning Officer as under:- “18. In my opinion, the said question is no longer res integraand it has been well settled by a question of Bombay HighCourt in the matter of KEC International Ltd. V. B.R.Balakrishnan and others in which S.H. Kapadia, J, as then HisLordship was speaking for the Bombay High Court, whileconsidering the similar issue has laid down the followingguidelines:- “This is the consequence of an order beingpassed without giving any reasons. Hence, weintend to lay down certain parameters which arerequired to be followed by the authorities in caseswhere a stay application is made by an asseseepending appeal to the first appellate authority. Parameters: (a) While considering the stay application, theauthority concerned will at least set out the case ofthe assessee. “18. In my opinion, the said question is no longer res integraand it has been well settled by a question of Bombay HighCourt in the matter of KEC International Ltd. V. B.R.Balakrishnan and others in which S.H. Kapadia, J, as then HisLordship was speaking for the Bombay High Court, whileconsidering the similar issue has laid down the followingguidelines:- “This is the consequence of an order beingpassed without giving any reasons. Hence, weintend to lay down certain parameters which arerequired to be followed by the authorities in caseswhere a stay application is made by an asseseepending appeal to the first appellate authority. Parameters: (a) While considering the stay application, theauthority concerned will at least set out the case ofthe assessee. (b) In cases where the assessed income under theimpugned order far exceeds returned income, theauthority will consider whether the assesseee hasmade out a case for unconditional stay. If not,whether looking to the questions involved in apeal, apart of the amount should be ordered to bedeposited for which purpose, some short primafacie reasons could be given by the authority in itsorder. (c) In cases where the assessee relies upon financialdifficulties, the authority concerned can brieflyindicate whether the assessee is financially soundand viable to deposit the amount if the authority wants the assessee to so deposit. (d) The authority concerned will also examinewhether the time to prefer an appeal has expired.Generally, coercive measures may not be adoptedduring the period provided by the statute to go inappeal. However, if the authority concerned comesto the conclusion that the assessee is likely todefeat the demand, it may take recourse tocoercive action for which brief reasons may beindicated in the order. (e) We clarify that if the authority concernedcomplies with the above parameters while passingorders on the stay application, then the authoritieson the administrative side of the Department likerespondent no. 2 herein need not once again givereasoned order.” 19. The aforesaid guidelines have been followed later-onagain by the Bombay High Court in the matter of UTIMutual Fund V. Income Tax Officer 19(3)(2) andOthers in which Dr. D.Y. Chandrachud, J(as then HisLordship was) while following the decision rendered in KECInternational Ltd.(supra) again held some more guidelinesas under:- “These are, we may say so with respect, sageobservations which must be borne in mind by theassessing authorities. Consistent with the parameterswhich were laid down by the Division Bench in KECInternational and the observations in the judgment inCoco Cola, we direct that the following guidelinesshould be borne in mind for effecting recovery: 1. No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; (b) Disposal of a stay application, if any, movedby the assessee and for a reasonable periodthereafter to enable the assessee to move a higherforum, if so advised. Coercive steps may, however, beadopted where the authority has reasons to believethat the assessee may defeat the demand, in whichthe case brief reasons may be indicated. 2. The stay application, if any, moved by the assesseeshould be disposed of after hearing the assessee and bearing in mind the guidelines in KEC International; 3. If the Assessing Officer has taken a view contraryto what has been held in the preceding previous yearswithout there being a material change in facts or law,that is a relevant consideration in deciding theapplication for stay; 4. When a bank account has been attached, beforewithdrawing the amount, reasonable prior noticeshould be furnished to the assessee to enable theassessee to make a representation or seek recourse toa remedy in law; 2. The stay application, if any, moved by the assesseeshould be disposed of after hearing the assessee and bearing in mind the guidelines in KEC International; 3. If the Assessing Officer has taken a view contraryto what has been held in the preceding previous yearswithout there being a material change in facts or law,that is a relevant consideration in deciding theapplication for stay; 4. When a bank account has been attached, beforewithdrawing the amount, reasonable prior noticeshould be furnished to the assessee to enable theassessee to make a representation or seek recourse toa remedy in law; 5. In exercising the powers of stay, the Income TaxOfficer should not act as a mere tax gatherer but as aquasi judicial authority vested with the public duty ofprotecting the interest of the Revenue while at thesame time balancing the need to mitigate hardship tothe assessee. Though the AO has made anassessment, he must objectively decide theapplication for stay considering that an appeal liesagainst his order: the matter must be considered fromall its facets, balancing the interest of the assesseewith the protection of the Revenue.” 7.Reverting to the facts of the present case, it appears thatAssigning Officer has not adopted the correct procedure indeciding the stay applications of the petitioners and has notfollowed the guidelines as stated by Bombay High court inKEC International Ltd. (supra) and in UTI Mutual Fund(supra) and also the decision rendered by this Court in M/s Aarti Sponge & Power Ltd. (supra). 8. In view of aforesaid discussion, the impugned orders datedare hereby set aside and the matter is remitted to theAssigning Officer to consider the stay applications afresh inthe light of the guidelines as stayed by the Bombay HighCourt and followed by this Court in M/s Aarti Sponge &Power Ltd. (supra) and pass a reasoned and speaking orderwithin three weeks from the date of receipt of certified copyof this order after hearing the parties in light of theobservations made for deciding the applications for grant ofstay of the disputed demand. alfiza 9.Also, till the decision of the stay application, no coercivesteps shall be taken against the petitioners. Meanwhile,petitioner is directed to appear before the AssigningOfficer(authority)/ Respondent no. 2 positively on 2[nd] ofDecember, 2024.steps shall be taken against the petitioners. Meanwhile,petitioner is directed to appear before the AssigningOfficer(authority)/ Respondent no. 2 positively on 2[nd] ofDecember, 2024. 10.With the aforesaid observations, the writ petitions aredisposed of. disposed of. 11.No order as to cost(s). sd/- (Arvind Kumar Verma) Judge