Court orders reevaluation of tax collection stay application, adjusts amount, withdraws bank account attachment, sets strict timeline

The Court deemed the rejection of the stay application for tax collection without hearing the petitioner as contrary to law. The Appellate Authority was directed to reconsider the matter, pass appropriate orders, and hear the petitioner. The Court ordered the adjustment of the collected amount against dues and withdrawal of the bank account attachment. The Authority was instructed to promptly reconsider the appeal and stay application, ensuring compliance with the law and disposing of the stay application within 30 days and the main appeal within three months, with a directive against coercive steps until the stay application review.

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Issues:
1. Rejection of stay application for tax collection for the assessment year 2011-12 without hearing the petitioner.
2. Legality of bank accounts attachment and amount encashment during the pendency of the writ petition.
3. Compliance with Section 246-A of the Income Tax Act regarding appeal process and stay application.

Analysis:
1. The petitioner sought to quash the order rejecting the stay application for tax collection for the assessment year 2011-12. The First Appellate Authority rejected the stay application without hearing the petitioner, which was deemed contrary to law. The Court emphasized that the Appellate Authority must consider appeals properly to uphold the purpose of statutory appeals. The order was considered non-speaking, and the Authority was directed to reconsider the matter, pass appropriate orders, and hear the petitioner before making a decision.

2. The petitioner contended that the attachment of bank accounts and encashment of funds were unlawful. During the writ petition's pendency, a significant amount was collected from the petitioner, which was less than 7% of the total demand. The Court ordered that the collected amount be adjusted against the dues. If the petitioner succeeds in the appeal, the respondent must refund the collected amount with interest as per the law. The attachment of bank accounts was to be withdrawn by the respondents following the quashing of the order.

3. Section 246-A of the Income Tax Act provides for the appeal process before the Appellate Authority. The petitioner had appealed against the assessment and rectification orders, along with a stay application. The failure of the First Appellate Authority to hear the petitioner and reject the stay application without due consideration was deemed contrary to law. The Court directed the Authority to reconsider both the appeal and stay application promptly, ensuring compliance with the law. The Authority was instructed to dispose of the stay application within 30 days and the main appeal within three months from the date of the order, with a directive for the respondents not to take coercive steps until the stay application was reviewed.

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