Assessing officer's decision set aside in income tax recovery proceedings

The Court set aside the assessing officer's decision denying absolute stay on recovery proceedings initiated under Section 220(6) of the Income Tax Act. Emphasizing compliance with CBDT guidelines and relevant precedents, the Court directed the assessing officer to follow the jurisdictional High Court's order on the depreciation claim issue. The impugned order was overturned, enabling the appellate authority to proceed with the pending appeal's hearing and disposal without influence from the Court's observations. The writ petition was allowed, and the matter was closed without costs.

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Issues involved:
Challenge to order denying absolute stay on recovery proceedings initiated by assessing officer under Section 220(6) of the Income Tax Act.

Analysis:

Issue 1: Denial of absolute stay on recovery proceedings
The petitioner, a charitable trust, contested an assessment order before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal regarding corpus donations and depreciation on fixed assets. The assessing officer rejected the claims, leading to recovery proceedings. The petitioner sought absolute stay under Section 220(6) of the Income Tax Act, citing High Court judgments and CBDT circulars in support. The assessing officer declined the request, directing partial payment in installments. The petitioner challenged this decision, emphasizing the assessing officer's failure to consider relevant guidelines and precedents.

Issue 2: Compliance with CBDT guidelines
The petitioner argued that the assessing officer overlooked Instruction No.1914 dated 2.12.1993 issued by the CBDT, which mandates staying demand only under specific circumstances, such as issues decided in favor of the assessee by appellate authorities or conflicting interpretations of the law. The petitioner contended that the assessing officer's refusal to grant absolute stay disregarded clear guidelines and relevant judicial decisions, causing undue hardship. In contrast, the respondent asserted that the assessing officer's decision was reasonable, considering the unresolved dispute over the depreciation claim for the assessment year 2009-10.

Issue 3: Judicial intervention and setting aside the impugned order
The Court, after considering arguments from both sides and referencing relevant precedents and the CBDT circular, held that the assessing officer must abide by the jurisdictional High Court's order on the depreciation claim issue. The Court emphasized the need for all authorities to act in aid of the High Court's decisions. Consequently, the impugned order denying absolute stay was set aside, allowing the appellate authority to expedite the pending appeal's hearing and disposal. The Court clarified that its observations should not influence the appellate authority's decision on the appeal's merits. The writ petition was allowed, and the related motion was closed without costs.

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