2013 (7) TMI 64 - AT - Income Tax

Assessee's Stay Application Dismissed in Section 263 Dispute

The Tribunal dismissed the Stay Application filed by the assessee seeking to stay the CIT's order under section 263 as the Assessing Officer had already ... Recovery - Stay of operation of order u/s 263 - CIT passed order u/s 263 pertaining to assessment year 2006-07 - Held that:- apparent that no demand by itself arises out of the order passed u/s 263 of the Act until and unless a consequential order is passed by the Assessing Officer and a demand notice is issued u/s 156 of the Act raising the demand - after consequential order was passed and demand was raised u/s 156 of the Act, granting stay of operation of the order passed u/s 263 of the Act becomes inconsequential as the Assessing Officer has already taken action by raising a demand in pursuance to such order - order passed by the Assessing Officer giving rise to a demand constitutes independent proceedings which may lead to appellate or further appellate proceedings arising therefrom - present Stay Application filed by the assessee for stay operation of the order passed by the CIT u/s 263 of the Act has become infructuous - Decided against the assessee. Issues:Stay application seeking stay operation of the order passed by the CIT under section 263 of the Act for the assessment year 2006-07.Analysis:The assessee filed a Stay Application seeking to stay the outstanding demand of Rs. 3,90,51,47,940. The contention raised was that the Assessing Officer merely implements the direction of the CIT, and the order passed by the Assessing Officer is synchronized with the CIT's order, lacking independent existence. The assessee sought stay operation of the CIT's order, including the direction and demand attached to it. On the other hand, the Departmental Representative argued that the demand is raised by the Assessing Officer while implementing the CIT's direction, making the Stay Application inconsequential as the demand notice had already been issued. The Tribunal observed that no demand arises solely from the CIT's order under section 263 until a consequential order is passed by the Assessing Officer, as seen in this case where the CIT's order led to the Assessing Officer raising a demand of Rs. 390,51,47,940. Thus, the Stay Application was deemed infructuous as the Assessing Officer had already taken action by raising the demand, leading to independent proceedings. Consequently, the Tribunal dismissed the Stay Application, directing the parties to file necessary documents for the upcoming appeal hearing.In conclusion, the Tribunal found that the Stay Application filed by the assessee seeking stay operation of the CIT's order under section 263 had become inconsequential as the Assessing Officer had already raised the demand in pursuance of the CIT's order. The Tribunal emphasized that the Assessing Officer's order giving rise to the demand constituted independent proceedings, rendering the Stay Application infructuous. Therefore, the Tribunal dismissed the Stay Application, instructing the parties to prepare for the appeal hearing scheduled for a later date.