2018 (4) TMI 1643 - HC - Income Tax

High Court emphasizes proper reasoning in stay petition rejections, directs filing before CIT (A) to avoid coercive action.

Sarrangan Ashok Versus Commissioner of Income Tax (Appeals), The Principal Commissioner of Income Tax-6, Chennai, The Income Tax Officer

The High Court set aside the order rejecting the petitioner's stay petition due to lack of reasons and emphasized the necessity for proper reasoning in ... Stay of demand - Held that:- Writ petition is allowed and the impugned order dated 02.03.2018 is set aside and the petitioner is directed to file a stay petition before the CIT (A) in the pending appeal and the CIT(A) shall take up the stay petition at the first instance or along with the appeal which is said to be posted on 26.04.2018 and take a decision on merits and in accordance with law. Till such decision is taken by the first respondent, no coercive action shall be initiated against the petitioner. No costs. Consequently, the connected miscellaneous petitions are closed. Issues:Challenge to order rejecting stay petition due to pending appeal before CIT (A); Failure to assign reasons for rejecting stay petition; Compliance with CBDT guidelines for review of assessing officer's decision; Lack of application of mind and recording of reasons in impugned order.Analysis:The petitioner challenged an order by the Principal Commissioner of Income Tax-6 rejecting their stay petition seeking to stay the demand following an assessment order. The impugned order lacked reasons for rejection, merely citing the pending appeal before the CIT (A) as grounds. The High Court found this manner of passing the order unacceptable, emphasizing the necessity for reasoning in such decisions.The petitioner had initially applied for stay of demand to the Assessment Officer, who directed payment of 20% of the demand following CBDT guidelines. Upon non-compliance, the petitioner filed another stay petition, but the Assessing Officer stated his inability to review the earlier decision. The petitioner then approached the second respondent for stay, which was summarily rejected. The High Court highlighted the need for authorities to exercise powers in accordance with the law and not in a summary manner, especially when guidelines provide for a review process.The High Court noted that the impugned order did not contain any reasons apart from mentioning the pending appeal before the CIT (A), which was deemed insufficient for rejecting a stay petition. It was emphasized that at least a brief application of mind and recording of reasons were necessary in such cases. Consequently, the High Court set aside the impugned order and directed the petitioner to file a stay petition before the CIT (A) in the pending appeal, ensuring no coercive action until a decision is made by the CIT (A).In conclusion, the High Court allowed the writ petition, emphasizing the need for proper application of mind and adherence to legal procedures in matters concerning stay petitions and assessments. The judgment highlighted the importance of providing reasons for decisions and following prescribed guidelines for review processes, ensuring fair treatment of taxpayers in such proceedings.