Court sets aside order on stay application, directs no recovery pending appeal. Misconduct allegations prompt CBDT investigation.

The court set aside the CIT(A)'s order on the petitioner's stay application, directing no recovery proceedings until appeal disposal. Allegations of misconduct were noted, urging CBDT investigation. CIT(A) lacks explicit power to stay demand but possesses inherent powers. CBDT tasked to ensure fair administration. Appeal dismissed, no costs ordered.

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Issues Involved:
1. Legitimacy of the CIT(A)'s procedure in handling the petitioner’s appeal and stay application.
2. Allegations of misconduct by the CIT(A) and the office of the CIT(E).
3. The inherent powers of the CIT(A) to stay the demand.
4. The necessity of the CBDT's intervention.

Detailed Analysis:

1. Legitimacy of the CIT(A)'s Procedure:
The petitioner challenged the method and procedure adopted by the CIT(A) in dealing with the appeal filed under Section 246A of the Income Tax Act, 1961. The primary grievance was that the CIT(A), after hearing the appeal on its merits, did not dispose of the appeal but instead passed an order on the stay application. The petitioner argued that there is no statutory requirement under the Act for the tax demanded to be paid before the appeal can be entertained or considered on merits. The court noted that once the appeal hearing is concluded, the stay application becomes infructuous as the appeal itself should be disposed of by an appropriate order. The court found the CIT(A)'s action of hearing the stay application after the appeal hearing concluded to be without merit and appeared to be an attempt to collect revenue before the financial year-end.

2. Allegations of Misconduct:
The petitioner alleged serious misconduct by the CIT(A) and the office of the CIT(E), including incorrect dates in the order sheet and threats of attachment of bank accounts and reopening assessments if a certain amount was not deposited. These allegations were not denied by the CIT(A) or CIT(E) through any affidavit. The court found these allegations serious and indicative of potential misconduct, suggesting that if true, corrective action should be taken by the CBDT to prevent such behavior from becoming the norm.

3. Inherent Powers of the CIT(A):
The court noted that while the CIT(A) does not have explicit statutory power to stay the demand arising from the order under appeal, it possesses inherent powers as an appellate authority to make its appellate powers effective. This includes the power to stay the effect of the order under appeal until the disposal of the appeal. However, this power should only be exercised to aid the hearing and disposal of the appeal. Once the appeal is heard on merits, the necessity of exercising this inherent power ceases.

4. Necessity of CBDT's Intervention:
The court directed the CBDT to investigate the allegations made by the petitioner and take corrective measures if the allegations were found to be true. The court emphasized that the officers of the Revenue should administer the Act with fairness and loyalty to the law. The CBDT was tasked with ensuring that its officers do not engage in overzealous revenue collection practices that disregard the law.

Conclusion:
The court set aside the order dated 23rd March 2018 passed by the CIT(A) on the petitioner’s stay application and directed the Revenue not to initiate any recovery proceedings against the petitioner until the CIT(A) disposes of the appeal and for two weeks thereafter. The court also directed the registry to serve a copy of the order to the CBDT and mandated an enquiry into the allegations made by the petitioner. The appeal was dismissed with no order as to costs.

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