Court overturns rejection of stay application under Income Tax Act, grants personal hearing, prohibits action on demand notice.

The Court set aside the rejection of the Petitioner's stay application under Section 220(6) of the Income Tax Act by the Assessing Officer and the Principal Commissioner of Income Tax. The authorities were directed to reconsider the application, taking into account relevant court precedents. The Petitioner was granted a personal hearing opportunity, and the Respondent-Revenue was prohibited from taking action on the Notice of demand until the Assessing Officer's decision was communicated. The Court clarified that its order did not impede the pending appeal process before the Commissioner of Income Tax (Appeals). The Writ Petition was disposed of without costs.

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Issues Involved:
Challenge to rejection of stay application under Section 220(6) of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax and Principal Commissioner of Income Tax.

Analysis:

1. The Petitioner filed a petition challenging the rejection of their stay application under Section 220(6) of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax and the Principal Commissioner of Income Tax. The impugned orders were passed in relation to the pending appeal from the Assessment Order dated 22nd December, 2017 with the Commissioner of Income Tax (Appeals) [CIT(A)].

2. The Court noted that both the impugned orders had rejected the Petitioner's application without considering the Petitioner's case on merits. The orders failed to take into account the binding decisions of the Court in previous cases such as KEC International Ltd. v/s. B. R. Balakrishnan & Others and UTI Mutual Funds v/s. ITO. Despite being brought to the authorities' notice, they chose to ignore these precedents. The Court considered this omission as a possible mistake on the part of the authorities.

3. In light of the above circumstances, the Court set aside the orders passed by the Assessing Officer and the Principal Commissioner of Income Tax. The Petitioner's application was restored to the Assessing Officer for a fresh decision. The Authorities were directed to consider the decisions of the Court in previous cases while disposing of the stay application under Section 220(6) of the Act.

4. The Court clarified that if the Petitioner requested a personal hearing, both the Assessing Officer and the Principal Commissioner of Income Tax were obligated to grant the necessary hearing. During the hearing, the Petitioner could make further submissions in support of their application for stay.

5. Additionally, the Court directed that the Respondent-Revenue should not take action on the Notice of demand issued following the Assessment Order dated 22nd December, 2017 until one week after the Assessing Officer's decision under Section 220(6) of the Act was communicated to the Petitioner. If the Petitioner filed a representation to the Commissioner of Income Tax within one week, the Revenue was instructed not to act until the Commissioner disposed of the representation and an additional two weeks had passed.

6. The Court made it clear that its order did not prevent the CIT(A) from proceeding with the Petitioner's appeal scheduled on 17th April, 2018, from the Assessment Order dated 22nd December, 2017.

7. The Writ Petition was disposed of with no order as to costs, concluding the judgment.

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