2012 (10) TMI 313 - HC - Income Tax

Court sets aside income tax orders lacking reasoning, directs issuance of reasoned order, and outlines future guidelines.

The Court set aside the income tax orders dated 22nd February, 2008, 26th March, 2008, and 14th March, 2012, due to lack of reasoning. It directed the ... Stay of Recovery proceedings - DCIT stated that the mere filing of an appeal cannot be a ground for withholding the tax demand and directed the petitioner to pay fifty per cent of the demand immediately and stayed the balance demand till the disposal of the appeal. He further stated that if the petitioner failed to deposit the amount within one week of the receipt of the letter, coercive measures would be taken for the recovery of the demand, without further notice. - Held that:- stay granted with direction t protect the interest of the revenue. Issues:1. Writ petition seeking to quash and set aside income tax orders and seeking stay of demand.2. Legality of orders dated 22nd February, 2008, 26th March, 2008, and 14th March, 2012.3. Application for stay under section 220(6) of the Income Tax Act, 1961.4. Lack of reasons provided in the orders.5. Delay in hearing the petitioner's applications and appeal.6. Coercive action threatened for non-compliance with demand deposit.7. Protection of revenue while ensuring petitioner's rights.Detailed Analysis:1. The petitioner filed a writ petition seeking to quash and set aside income tax orders dated 22nd February, 2008, 26th March, 2008, and 14th March, 2012. The petitioner also requested a stay of demand until the disposal of their appeals for the assessment years 1999-2000 to 2006-2007.2. The orders in question lacked reasons, making them contrary to law. The Deputy Commissioner of Income-tax (DCIT) directed the petitioner to pay fifty percent of the demand immediately in the order dated 22nd February, 2008, without providing any justification. The subsequent order dated 14th March, 2012, also lacked reasoning and was based on non-compliance with previous conditions.3. The petitioner had filed an application for stay under section 220(6) of the Income Tax Act, 1961, which was dismissed without reasons. Various stay applications were made before the Commissioner of Income-tax (Appeals) without any response or hearing, leading to delays in the process.4. Despite the lack of coercive steps taken against the petitioner for non-compliance with the demand deposit, the appeal and stay applications were not heard promptly. The delay in forwarding remand reports and scheduling hearings contributed to the prolonged process without resolution.5. The Court acknowledged the revenue's right to protect its interests but emphasized the need to balance this with the petitioner's rights. An undertaking was accepted from the petitioner not to deal with certain properties until a specified date, ensuring protection for both parties.6. The final judgment set aside the previous orders, directed the DCIT to pass a reasoned order on the petitioner's application for stay, and provided guidelines for further proceedings, including the petitioner's undertaking and the revenue's rights to protect the recovery of the demand within legal boundaries.