2018 (9) TMI 1852 - HC - Income Tax

High Court grants relief to petitioner, halts payment during appeals, emphasizes right to seek stay.

Bhupendra Murji Shah Versus Deputy Commissioner of Income Tax-15 (1) (1) and Ors.

The High Court granted relief to the petitioner by directing that during the pendency of the appeals for Assessment Year 2015-2016, the petitioner should ... Stay of demand - protection against collection and recovery - HELD THAT:- If that demand is under dispute and is subject to the appellate proceedings, then, the right of appeal vested in the petitioner/assessee by virtue of the Statute should not be rendered illusory and nugatory. That right can very well be defeated by such communication from the Revenue/Department as is impugned before us. That would mean that if the amount as directed by the impugned communication being not brought in, the petitioner may not have an opportunity to even argue his Appeal on merits or that Appeal will become infructuous, if the demand is enforced and executed during its pendency. In that event, the right to seek protection against collection and recovery pending Appeal by making an application for stay would also be defeated and frustrated. Such can never be the mandate of law. In the circumstances, we dispose both these petitions with directions that the Appellate Authority shall conclude the hearing of the Appeals as expeditiously as possible and during pendency of these Appeals, the petitioner/appellant shall not be called upon to make payment of any sum, much less to the extent of 20% under the Assessment Order/Confirmed Demand or claim to be outstanding by the Revenue. Issues:1. Challenge to demand raised for Assessment Year 2015-2016.2. Application for stay of demand pending appeal.3. Dismissal of application for stay by Deputy Commissioner.4. Concerns regarding the right of appeal and protection against collection during appeal.5. Directions regarding the pendency of appeals and restrictions on disposal of assets.Analysis:1. The petitioner challenged the demand raised for Assessment Year 2015-2016 by approaching the Commissioner of Income Tax (Appeals) in two petitions. The issue involved the pending appeal against the assessment order and the request for stay of demand until the appeal is decided.2. The petitioner, concerned about being treated as an 'assessee in default' by the Deputy Commissioner, sought to keep the demand in abeyance until the appeal's disposal. The Deputy Commissioner dismissed the application for stay and directed the petitioner to pay 20% of the outstanding amount as prescribed in Circulars of the Revenue.3. The High Court emphasized that when an appealable order is pending, the petitioner should have the opportunity to seek a stay during the appeal's pendency. The failure to provide such an opportunity could render the right of appeal illusory and nugatory, defeating the purpose of appellate proceedings.4. The Court clarified that the Deputy Commissioner's communication, dismissing the application for stay and demanding payment, could hinder the petitioner's ability to argue the appeal on merits. To prevent this, the Court directed that during the pendency of the appeals, the petitioner should not be required to make any payment towards the outstanding demand.5. The Court issued directions for the expeditious conclusion of the appeal hearings and ordered the release of any attachment on the petitioner's bank account. Additionally, the petitioner was restricted from disposing of movable assets and properties during the appeal process, except for normal business operations, to ensure compliance with the undertaking given to the Court.This detailed analysis of the judgment highlights the key issues addressed by the High Court regarding the challenge to the demand, application for stay, protection of the right of appeal, and restrictions imposed during the pendency of appeals.